Fields: The Strength of an Idea
Fields store, Carlyle, Saskatchewan, 2006
The man who made this concept a reality is Joseph Segal. Born in Vegreville, Alberta in 1925, Segal moved to Edmonton as a child. After two years’ service overseas in WWII, he returned to Canada in 1946, settling in Vancouver. It was there that he started in retail. In 1948, he created a private company under the name of Commercial Distributors. He had one store on Main St. in Vancouver, which sold war surplus supplies. In 1950 he opened the first Fields store on West Hastings
Joseph Segal, n.d.
Fields started as a family clothing store. The success of the business soon led to a series of stores in the Lower Mainland, including downtown Vancouver, New Westminster, Burnaby, and Richmond. The opening of the North Vancouver store at Capilano Mall in 1968 brought the total of Fields stores to eight. How did Joseph Segal account for Fields continued success? As he explained in a 1969 interview:“Our marketing policy calls for maximum utilization of sales space rather than frills. We operate primarily on a cash-and-carry basis, thereby limiting the heavy sales and accounting force required with credit buying.” Simple retail policies and quality discount goods are what have driven Fields from the start.
Frederick Graves, n.d.
Gordon Chapman, n.d.
Expansion began in Victoria, where Fields acquired family-run Spencer’s Stores Ltd., in 1968. The acquisition of the Payless Store in Abbotsford, and Mackenzie’s Ltd., a department store in Williams Lake, followed that same year. With these purchases, Fields began to make a name for itself in B.C. The next phase of expansion marks the first time that Fields and Hbc crossed paths. In 1969 Fields purchased three small Hbc stores in Kimberley, Nelson and Powell River, BC. Converted to Fields stores, the decision was made to retain the Hbc staff and managers, recognizing that their knowledge of the industry was an asset worth holding on to. These three stores, along with the recently acquired MacKenzie’s store in Williams Lake, became the nucleus of the new Department Store division of Fields. This was a clear decision to continue providing these local communities with what they were used to, namely stores with a broader focus than the original Fields concept.
In 1969, Fields expanded its operating scope. It purchased Lounge Fashions Clothes Ltd., a men’s clothing manufacturer, and Imperial Imports Ltd., which imported men’s, ladies’ and children’s clothing from the Far East for wholesale distribution across Canada to department stores, national chains and independent stores. It also acquired a controlling (75%) interest in two Manitoba firms, Diamond & Co. Ltd. and Harbrook Knitting Mills. These transactions led to the establishment of both Manufacturing and Import divisions within the Company.
The year 1970 was a watershed. The company was on a roll. The Annual Report proudly declared net earnings of $1.23M on sales of over $21 million – an increase of 40%. In early 1970, Fields acquired McKee’s Stores Limited (3 family clothing stores in the Vancouver area) and also merged with local retailer Hamilton Harvey on a share exchange basis. Hamilton Harvey became a subsidiary and continued to operate its two stores, in Vancouver and Surrey, under its own name. Finally, the year saw the arrival of a new retail division: Fedco.
Fedco stores were mass merchandise department stores with self service. Gordon Chapman likened the concept to “a department store operat(ing) in the same manner as a food supermarket.’” Along with clothing and housewares, Fedco also sold items such as small appliances, auto accessories, and toys. According to Joe Segal:“The establishment of Fedco as a department store carrying all lines except furniture and heavy appliances was a natural development in an urban market as an arm or subsidiary of Fields stores with its traditions as a family clothing retailer with high sales turnover due to mass buying and its continuing appeal to the public.” C. Frederick Graves declared, “We’re not running a stereotype type of department store that offers a full range in all departments. This operation is more a mix in constant change depending on the availability of merchandise we want.” Clearly, getting customers the best value for their money was always the longstanding ideology behind any Fields store – and if it meant doing away with some of the frills and services then so be it! As the 1970s began, Fields was on track for continued growth – and, ultimately, a rather surprising entry into the Hbc family of stores.
The year 1971 saw Fields enter the specialty market with the introduction of “boutique” stores selling men’s and women’s pants and tops to the young consumer. The concept was to sell high volumes of specialized merchandise in a small retail space. Five Pants Plus stores opened that year. These, along with 15 other new stores, brought to 43 the number of Fields outlets in operation by year-end. Among the milestones was the expansion of Fields outside B.C. with the opening of a junior department store in Edmonton in August, 1971. These stores carried all the same merchandise lines as the full-line department stores except for major appliances and furniture. But the company’s expansion was not only geographic.
Marshall Wells head office, 1972
On December 2, 1972, Fields purchased Marshall Wells Ltd. from Gamble Canada Ltd. for $7.5 million, thereby making Marshall Wells totally Canadian-owned for the first time in its 70 year history. Marshall Wells was an entirely new business, a hardware company headquartered in Winnipeg and operating in western Canada as far east as the Lakehead. This was a large-scale acquisition: Marshall Wells comprised 186 franchise-dealerships supplying durable goods and hardware in addition to a wholesale industrial account business serving mechanical, electrical and construction trades from warehouses in Edmonton and Winnipeg. Synergies between the two firms were immediately exploited with Marshall Wells providing expertise in durable consumer goods to 12 Fields outlets while Fields introduced summer footwear to Marshall Wells – the first wave of a planned clothing program. The following year Fields was able to report that the acquisition of Marshall Wells had helped push sales to over $68M, an increase of 89% over the previous year, and that Marshall Wells accounted for approximately one third of the company’s total business.
On the retail side, 1973 saw Fields purchase, for $566,472, 13 Columbia Stores across B.C., of which 11 were converted to Fields stores and 2 were closed. Unsurprisingly, this fast-paced growth necessitated the move and expansion of the Fields warehouse to a new building located at 549 Carrall St. in Vancouver. At 190,000 ft.2 it also housed the company’s head office. Chargex and Mastercharge were introduced as forms of tender at all Fields stores. By the end of the year, the company was had 70 stores, not including the Marshall Wells outlets.
In 1974 Fields expanded into Saskatchewan market, opening a store in Moose Jaw. That year also saw C. Frederick Graves, VP Finance, become Executive VP of Fields, assuming a greater role in the management of the company. Working closely with him was a new VP Administration, John Levy. Levy joined Fields from Hudson’s Bay Company, where he had been working as Controller for the Western Region. The introduction of a computerized stock management system began at Fields that year and was accompanied by specialized staff training provided with assistance of Canada Manpower.
The opening of two new Fedco stores in 1975 heralded yet another fresh idea: Fedco Drugs Ltd.. These were in-store pharmacies. (On the West Coast this idea dates back to the early years of Woodward’s.) Eric and Norman Paul, brothers and pharmacy graduates from UBC, started the venture in three Fedco stores in the Vancouver and Lower Mainland Area. Fedco Drugs carried not only prescription drugs at low prices, but also items such as greeting cards, candies, cosmetics and photographic services. With these new stores, by 1976 Fields was operating 75 retail venues, a mixture of family clothing stores, department and junior department stores.
What happened next is perhaps one of the most exciting, if least well-known events in Fields history. In 1976 the majority shareholder of Zellers, Ltd., founded by Walter P. Zeller in 1931, was the W.T. Grant Company of New York, a much larger American retailer operating similar stores. Joseph Segal, in an attempt to create a national discount retailer by joining together department store chains from eastern and western Canada, made the bold move of trying to acquire Zellers from the Grant Company. What transpired was a bidding war in a New York court room pitting Joseph Segal and Fields against Macleod Stedman Ltd. of Winnipeg (owned by Gamble-Skogmo Inc. of Minneapolis, MN). Segal emerged victorious.
Cover of Zellers Forum, Fall 1976
In 1978 Hbc acquired a controlling interest in Zellers, thereby acquiring Fields in the process. But the simplicity of that statement belies the dramatic events that preceded the takeover. Once again, it was Joseph Segal’s dynamic approach to business that set things in motion. Zellers’ Chairman at the time, Segal had, in fact, set out to acquire Hbc for Zellers. He believed it would be a strong strategic move to bring the two companies together and create an entity that would cover all ends of the retail market.
In June of 1978 Segal met with Hbc President Don McGiverin and proposed that Zellers buy a 51% stake in Hbc. Segal’s proposal came from out of the blue; Hbc’s leadership was totally taken aback. Stalling for time McGiverin said any serious bid would have to be for cash and 100% control. A few days later Segal had put together an offer on those terms.
In the two years that Segal had been at the helm Zellers had become very profitable, its pre-tax profit from operations rising 53.7% in a 1977 alone. Recognizing this, and the fact that the two companies operated in different areas of the retail market, Hbc decided that the sensible option was that it should buy Zellers instead. When the deal was finalized on Oct. 3, 1978, Hbc had acquired 57.1% of Zellers. Hbc would acquire complete control by 1981.
In Segal’s own words:
“I recognized the Hudson’s Bay Company as a sleeping giant with a tremendous, understated balance sheet. The Company would have been the greatest leveraged buyout in history. Its breakup value was huge, except that I wouldn’t have broken it up but would have maximized the value of its assets – and that meant merging it with Zellers to create the largest retailing entity in Canada. I didn’t particularly care which of the two companies emerged on top, as long as it was done."
James Balfour, Zellers President and CEO summarized these events to his shareholders in May, 1979:
"I must confess that I did not predict last year, at this time, that within six months Zellers would become a subsidiary of the Hudson’s Bay Company. As you will recall, in August, the Board of Directors of Zellers Limited indicated their full support of this proposed association. Looking back, it would appear that their judgment was sound. Zellers enters 1979, not only as a stronger and more vigorous company in itself, but it is now backed by the resources of the parent company. … It was fortunate for everyone associated with Zellers – including shareholders – that Mr. Segal – perhaps it would be better if I said Joe Segal – that he and his associates were successful in their bid. He was certainly the right man in the right place at the right time."
C. Frederick Graves became the President of Fields in March 1979, replacing Segal who remained as Chairman of Fields and a director of both Zellers and The Bay. But by June that year Segal had left Hbc to pursue other ventures. Meanwhile at Fields, now part of Hbc, it was business as usual.
Fields flyer, late 1970s.
In 1982, Marshall Wells, Fields’ hardware subsidiary, was transferred to Hbc’s ownership. In 1985, Hbc agreed to sell off Marshall Wells Ltd. for $20 million to Cochrane-Dunlop Ltd. of Winnipeg. This move was part of Hbc’s new strategy to dispose of assets not consistent with department store retailing. But the major driver behind that strategy was the fact that Hbc’s recent acquisitions – Zellers and Simpsons – had landed the company with a lot of debt, a debt load exacerbated by an economic slowdown and rising interest rates. Similarly, selling Fields itself was also considered for a time. The tentative asking price was $14 million. But on Sept. 30, 1986 Richard Baker, President of Fields since 1984, announced that Fields was no longer on the market and would be retained as an integral component of the Hbc family.
During 1988, Fields created yet another new retailing concept, PSS: Plus Sizes, Plus Savings. Small retail outlets featuring discount clothing for larger-sized women, four PSS stores opened that year. Their success led to the opening of an additional 6 outlets over the next two years. That same year Fields moved from being a subsidiary of Zellers to officially becoming a division of Hbc.
In the summer of 1989 a different sort of milestone was reached when Hbc hired its first female president. A 16 year veteran of The Bay, who had worked her way through the ranks as a clerk, buyer, promotions coordinator and manager, Janis Ostling took over the helm at Fields. In the fall of 1990, a Fields Frequent Buyer’s Club was introduced reward customer loyalty. By the end of January 1993, 119 Fields stores and 6 PSS stores were in operation, including Fields’ first venture into the Northwest Territories.
Interior of Fields store, Devon, Alberta, 2005