What: A BCG survey of about 10,200 consumers in ten markets across Europe, North America and Australia finds that 54% trust advertised prices at year-end sales events at least somewhat, while 20% actively distrust them.

Why it is important: Shoppers now check whether a discount is real, and department stores with established names hold an advantage over rivals competing on the size of the markdown.

Black Friday awareness stands at 95%, and intent among those aware rose two points to 81%, half of last year’s rise. Search starts earlier: 62% begin looking for deals in October or early November, and 76% of those planning to shop hold back purchases at least sometimes to wait for the events.

Trust in advertised prices varies by market: about two-thirds of US consumers trust them, against about a third in Denmark, the Czech Republic and Germany. Among shoppers planning to spend less or skip the events, 22% believe deals are available all the time. Retailer reputation and a money-back or free-returns policy earn 65% net trust each, and verified purchase reviews 59%. Real-time scarcity messages score 8%, AI-generated review summaries 4% and influencer recommendations 3%.

Among those planning to shop, 56% have used GenAI for shopping or plan to, led by Gen Z at 66%. They trust it most for comparing prices across retailers (39%) and product features (37%), and only 7% for buying. Social media as a source of shopping inspiration fell nine points to 46%.

IADS Notes: In beauty, overlapping promotions across Amazon, Sephora, Ulta, TikTok Shop and brand websites risk training shoppers to wait for deals, which is pushing brands toward selective, loyalty-led offers (BoF, July 2026). In Ireland, Brown Thomas Arnotts avoided a conviction after advertised Black Friday discounts on electronics and accessories did not reflect the lowest price of the previous 30 days, as the law requires (Breaking News IE, March 2026). Consumers use AI to research but not to buy: 81% of US and 53% of European consumers expect to use AI agents when shopping, yet only 4% would let an agent complete a purchase (BCG, October 2026), and 42% of US consumers would not trust AI to buy at all (a16z, October 2026).

For year-end sales events, trust is the new currency

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In May 2025, Nordstrom left the New York Stock Exchange after more than fifty years as a public company, following a deal with its second-largest shareholder (after the Nordstrom family), Mexico’s Puerto de Liverpool (which by then owned 9.6%), valuing the business at $6.25 billion. The move was then widely described as an acquisition by Liverpool: it is neither that nor an operational merger, but a family-led take-private in which members of the Nordstrom family hold 50.1% and control, while El Puerto de Liverpool holds 49.9% as a minority strategic and financial partner. In other words, Nordstrom continues to operate independently under the same leadership. 

For the department-store world, the interest in this deal lies less in its size than in its shape: a legacy U.S. retailer buying itself time away from public markets, financed and de-risked by a Latin American group extending its reach north without integrating operations.

The convenient shorthand, “Liverpool absorbs Nordstrom”, misstates both the economics and the intent, and it proved persistent: although the official May 2025 press release (“Nordstrom Announces Completion of Acquisition by Nordstrom Family and Liverpool”) named the family as the first acquirer, the brothers were still correcting the record in the press nine months later, and the facts are clear: Liverpool did not take control, but the Nordstrom family did. On closing, the family holds a 50.1% majority stake, and the two co-chief executives who ran the listed company continue to run it privately. Liverpool holds 49.9% as the minority partner, having built its position from a passive 9.9% stake first acquired in September 2022 for about $294 million (5.9 billion pesos) — around 9.6% by the time of the offer — which already made it the second-largest shareholder behind the family.

The legal vehicle is a merger. The buying group formed an acquisition subsidiary, “Navy Acquisition Co.”, into which the listed company was folded. But the substance of the deal is a going-private buyout by insiders, not an industrial combination of two retailers. Nordstrom and Liverpool are not merging stores, banners, buying, or even systems.

Nordstrom: a service-led department store that became a multi-banner platform

Nordstrom was founded in 1901 in Seattle as Wallin & Nordstrom, a shoe shop opened by Swedish immigrant John W. Nordstrom and shoemaker Carl F. Wallin, whom Nordstrom had met prospecting for gold in the Klondike. Nordstrom had reached New York in 1887, aged 16, with five dollars and no English, and staked the partnership with the $13,000 he brought back from Alaska; under his sons and grandsons, the firm grew into the U.S.'s largest independent shoe chain.

The pivot came in 1963, when Nordstrom bought the Seattle clothier Best Apparel, carrying it from footwear into apparel and, by 1966, into the Nordstrom Best banner. The company went public in 1971, opened its first off-price Nordstrom Rack in the basement of its Seattle store in 1973 (the year sales passed $100 million, and the firm took the name Nordstrom, Inc.), and in 1978 opened its first full-line store outside the Northwest, at South Coast Plaza in Southern California. It became a national retailer in 1988 with a store at Tysons Corner, Virginia, and launched Nordstrom.com in 1998, giving it an early digital platform. It entered Canada in the 2010s and wound those operations down in 2023.

The business model is highly specific to the United States: large-format, multi-brand fashion retail with strong service, wide geographic coverage, and dependence on mall, suburban and urban destination-shopping patterns. The Rack format, in particular, reflects U.S. scale, logistics and a mature appetite for branded off-price fashion.

This implies that, while the operating logic behind Nordstrom's overall success (excellent execution of curation, differentiation through in-store service, and the seamless integration of physical and digital channels) is no different from that of other successful department stores worldwide, Nordstrom’s USP is hardly exportable. The specific store formats, the physical network built around American malls and suburbs, and the brand architecture layered across full-line and off-price banners are the product of distinctly U.S. conditions. In other words, the very features that make it strong at home are also what make it hard to export, limiting the opportunities for foreign investors willing to acquire a globally resonating brand. Liverpool itself, asked in October 2026 whether a Rack-style off-price format could work in Mexico, replied that it was not focusing on off-price for now.

Liverpool: a Mexican omnichannel ecosystem of retail, credit and real estate

El Puerto de Liverpool traces its origins to 1847, when French merchant Jean-Baptiste Ebrard sold fabrics in Mexico City and began importing goods through the English port of Liverpool, which gave the store its name. The 1936 opening of the Liverpool Centro flagship, home to Mexico City’s first escalators, marked its arrival among the capital’s modern department stores (the first one was El Palacio de Hierro, which opened in 1891 and was rebuilt in 1921 after a fire). From the 1960s onward, the group expanded geographically and through acquisitions. It acquired the Suburbia value-fashion chain from Walmart de México in 2016 (completed in 2017), doubling down on middle-income customers, and later folded its legacy Fábricas de Francia banner into the Liverpool and Suburbia formats. This ecosystem ambition continues with a 2023 foray into electric-vehicle distribution with BYD through in-mall showrooms and integrated credit (an alliance it exited in 2025), the 2022 minority stake in Nordstrom, and the 2024 agreement to take Nordstrom private. Since then, it has entered wholesale through a new division, G.L.A.M., which holds an exclusive long-term licence for Dockers in Mexico,xiv and in September 2026 it announced a franchise partnership to bring Primark to Mexico.

Today, El Puerto de Liverpool operates across three segments: retail (Liverpool department stores, Suburbia, boutiques and digital platforms), financial services (store-brand credit cards, loans, insurance) and real estate (Galerías shopping centres). In 2025, consolidated revenue reached 229,137 million pesos, up 6.7%, with retail contributing 201,635 million. EBITDA fell 4.7% to 35,801 million pesos and net income 25.9% to 17,150 million, weighed down by higher financial costs and the first acquisition-accounting charges linked to Nordstrom. Capital expenditure reached 10,654 million pesos, 40% of it in logistics and IT. The group ended the year with 25,265 million pesos of cash, though no longer in a net-cash position: with borrowings up 71% after a US$1 billion bond issued in January 2025, net debt stood at 0.52x EBITDA, against −0.04x a year earlier. Its financial arm passed 8.4 million cardholders, while Galerías centres closed the year at 94.2% occupancy. At the time of the deal, the group ran around 310 stores under the Liverpool and Suburbia banners, 119 specialised boutiques and 29 shopping centres. By September 2026, the group operated 321 stores under the Liverpool and Suburbia banners, 173 specialised boutiques and 30 shopping centres, with more than 8.8 million cardholders. It also holds 50% of Unicomer, a leading group in retail and financial services, active in more than 20 Latin American countries.xix The holding is led by group chief executive Enrique Güijosa, with Carlos Marín heading the Liverpool department-store division.

Liverpool’s ecosystem rests on three pillars:

• A trusted, aspirational brand,
• A pervasive proprietary credit system,
• Control of prime physical space through owned malls.

This triad is strongly shaped by Mexican conditions: widespread use of store cards and instalment payments to access durable and fashion goods, and a mall culture in which centres act as community hubs. In markets with deeper banking penetration or saturated malls, a retailer-driven credit-and-real-estate ecosystem may travel less well. In the case of Liverpool, the exportable ideas are the ecosystem logic, format diversification and real-estate integration, but the execution remains highly local.

The transaction

Navy Acquisition, the buying group, agreed to acquire all Nordstrom shares it did not already own for $24.25 per share in cash, valuing the company at about $6.25 billion on an enterprise basis and just over $4 billion in equity value.xx The price represented a premium of around 42% to the “unaffected” share price of $17.06 recorded on 18 March 2024, the day before the family’s intentions were first reported. Shareholders also received a special cash dividend.xxi The deal closed on 20 May 2025, and Nordstrom was delisted from the New York Stock Exchange the following day.

This was not a first attempt — the family had explored going private before, notably in 2018, when the board rejected the offer as too low. The current process opened in February 2024, when a special committee was formed after Erik and Pete Nordstrom signalled interest; former chairman Bruce Nordstrom died in May 2024, as the process was underway. Liverpool and the family first offered $23.00 in September 2024, then raised it to $24.25. Upon the committee’s unanimous recommendation, the board approved the transaction on 23 December 2024, with Erik and Pete Nordstrom recusing themselves.

The structure is notable for how lightly it burdens the business. Liverpool guided its investment to a range of $1.2–1.4 billion, later revised to roughly $1.7 billion. The package layered a direct equity contribution, a $367 million shareholder loan to a Nordstrom-family special-purpose vehicle (treating part of the commitment as debt rather than equity), an asset-based lending facility, and more than $1 billion of Nordstrom’s own cash (a tax-efficient, covenant-light arrangement, part pre-funded through the international bond market).

Our take on the logic on each side 

It is tempting to read a deal of this size as a synergy play, which it is not: the principals have explicitly chosen not to integrate operations. The value on each side comes from ownership structure and capability exchange, not from combining two retailers.

Regarding the Nordstrom family, it was a way to escape the quarterly need to report results. Public-market sentiment on the department-store category had been persistently negative, and the take-private frees the business from quarterly scrutiny. In the words of GlobalData, private ownership lets the family take a long-term view, make necessary investments and changes free from short-term public-market pressure, and act on strategy faster than a listed company could. In other words, running the business as a retailer rather than a financial instrument.

On Liverpool’s side, Güijosa frames the deal as “an emblematic transaction” — a continuation of a strategy of diversifying across countries and currencies, begun in 2010 with Unicomer, alongside a company with the same core business. Liverpool’s own annual report states the aim as geographic and currency diversification plus the chance to share and adopt best practices in e-commerce, logistics, loyalty programmes and customer service. Crucially, Liverpool insists the deal does not come at the expense of its Mexican core (even though it is worth more than a billion USD), and Nordstrom continues to operate independently; the two teams exchange practices rather than merge functions. The governance reflects this: the post-closing board has seven members — Erik, Pete and Jamie Nordstrom, three Liverpool executives and one independent director, all of them retailers. So far, the cost to Liverpool has been mostly an accounting one: acquisition-related charges cut its third-quarter 2026 net income by 14.5%, which would otherwise have risen by about 5.8%.

Conclusion: a credible new financial route for the industry?

The take-private emerges here as a credible route to transformation, but only for department stores that can still afford it. Every element of this deal was a precondition rather than a detail: a committed family block, a partner in the same core business, a sound balance sheet and willing lenders. Freed from quarterly earnings pressure, a service-led, multi-banner retailer gains room to reshape its model on a multi-year horizon — a proposition we believe is worth weighing for any department store company whose listed status constrains its transformation.

Also, the deal offers a lighter template than classic M&A: cross-border capability sharing without operational integration. A partner can bring capital, balance-sheet strength and specific competences (in Liverpool’s case, e-commerce, loyalty and logistics) while each business retains its identity, management and market. For groups wary of the cost and cultural risk of full mergers, this “exchange, don’t absorb” model deserves attention. 

Seventeen months after closing, the first evidence suggests the exchange remains thin: Liverpool’s chief financial officer describes the impact of the collaboration on the Mexican side as relatively low, limited to best-practice sharing in customer experience, loyalty programmes and cybersecurity, with no deeper integration planned in the short term.xxxii For now, the model reads less as a capability transfer than as a long-term financial partnership between two operators who chose not to interfere with each other’s business.

Finally, a Latin American group taking a near-equal co-stake in a U.S. institution inverts the usual flow of retail capital and expertise and suggests that headquarters geography matters less than the ability to bridge markets, capital and consumer insight.

The open question the deal poses is the one facing the whole category: can a service-rich, multi-banner, digitally integrated model generate enough differentiation and productivity to justify department-store cost structures in an increasingly fragmented, digital market, and does patient private ownership give it more room to prove it than public listing? Three markers will tell: where the freed-up cash flow is reinvested, whether the capability exchange materialises beyond the boardroom, and how the balance between Rack and the full-line stores evolves.

Credits: IADS (Selvane Mohandas du Ménil)

What: A Journal du Net column argues that gift card distributors have become audience ecosystems and advertising networks, making the gift card a media platform for retailers.

Why it is important: Gift card distributors sell paid visibility, a new media cost for any department store that sells gift cards through them.

Writing in Journal du Net, Clémence Mazars of Buybox says gift card distributors have stopped being simple sales channels. The move from physical to digital cards saturated retailers' catalogs, so platforms became advertising networks that monetize their audience and use users' purchase-history data. A retailer's goal shifts from being listed to holding a visible, consistent position in the distributor's catalog.

Mazars notes that retailers usually activate gift cards only at peak periods such as Christmas, Black Friday and Mother's Day. The column describes retailers planning around a brand calendar instead: mass exposure for awareness, a new product line launch, or acquisition when purchase intent forms.

Visibility is paid for in one of two ways, a dedicated media budget or, for retailers with fewer resources, a temporary higher commission to the distributor, similar to affiliate marketing. Mazars frames the spend as an investment aimed at undecided consumers, planned and measured over time.

The column ends by calling the gift card a brand currency that serves acquisition, loyalty and retention while offering advertising space, and says retailers should pick distributors able to activate the brand.

IADS Notes: Orange Advertising opened store screens and operator data to the sellers on its marketplace, so partner sellers can now buy visibility (Orange Advertising, October 2026). Selfridges set a rate card for its in-store and digital assets and approached non-endemic brands, starting with a Disney Christmas campaign (Mi3, November 2025). UK online retail media grew 32% to £2bn in the first half of 2026 as commerce data moved from conversion targeting to full-funnel brand building (Internet Retailing, October 2026). Retail media loses credibility when ad revenue outranks relevance (The Robin Report, August 2026), and brands hold back in-store budgets until effect can be proven (Journal du Net, October 2026).

What: Two CX experts say US stores can serve constrained holiday shoppers through localized preparation, supported associates and fast fixes when something goes wrong.

Why it is important: The article says holiday success comes from supporting shoppers' own objectives rather than standing out, with lines, stock gaps and pricing errors as the failures to fix first.

Nikki Baird of Aptos says financially constrained shoppers will be narrowly focused on keeping holiday traditions and gifting alive. She points to back-to-school, when cash-strapped consumers still bought outfits for their children while delaying their own wardrobe refresh. Stores should shape decor and assortments to regional traditions, for example Denver versus Chicago.

Shep Hyken says marketing brings customers in but the experience decides whether they return, and shoppers expect the same result in busy and slow periods. He recommends short pre-open meetings where associates share how they helped a customer, and managers who pull aside a frustrated associate. Baird adds that managers should be empowered to buy the team lunch on days when workers would otherwise miss it.

On problems, Baird says anything that costs a customer money, such as a mis-rung item or promotion, must be fixed immediately, with no rain checks or follow-up emails. Customers with too many items for self-checkout should be removed from that queue. For out-of-stocks, Hyken suggests free delivery or a hold at another location; Ace Hardware goes further by calling nearby competitors for the customer. He also urges personalised follow-up messages after a positive visit, a tactic brick-and-mortar stores underuse.

IADS Notes: NRF forecasts US holiday sales to grow 4.2% to \$1.013 trillion in November and December, with consumers prioritising the season while staying mindful of their budgets and retailers expected to hire 325,000 to 375,000 seasonal workers (NRF, October 2026). Target expanded its myDay app to prioritise store tasks so associates spend more time with customers, as part of a \$1 billion guest experience investment this year that adds labour hours (Customer Experience Dive, October 2026). Frontline retention is a separate issue: more than 60% of US workers hold a frontline retail job early in their careers, yet 72% leave retail within five years (The Robin Report, October 2026). On availability, Macy's is moving an AI forecasting overlay for inventory replenishment from pilot to broader rollout to improve in-stock levels (Supply Chain dive, September 2026).

How store CX can help US consumers feel the holiday spirit

What: A WWD and BCG report based on 4,000+ U.S. consumer survey responses and 10 executive interviews finds fashion shoppers weighing style, fit and quality ahead of price, and names product, cultural leadership and selective use of AI as the growth levers.

Why it is important: U.S. fashion shoppers judge value by what a product delivers rather than what it costs, and when price becomes a barrier they change where they buy, not what they want.

Amid falling U.S. consumer confidence, BCG's survey finds shoppers in every income group becoming more deliberate: 79% are more selective about discretionary spending, 91% research fashion purchases rather than rely on familiar brands, and only 14% cite impulse as a top-five driver of their latest purchase. Style, fit and quality now outrank price and promotions, and 53% see quality for the price as the main driver of value. Of the 40% who walked away from a purchase over price or value, 71% shop at outlet or factory stores.

About one in four U.S. adults is a current, lapsed or potential GLP-1 user, and BCG's directional estimates, based on self-reported data, put the apparel and footwear tailwind at $2.6B in 2026 and $5.8B by 2030, with a growing need for fitting rooms and styling services. Of the 77% of fashion consumers who engage with sport, 66% believe fashion brands have a natural role in major sporting events. Cultural relevance matters more to younger shoppers, and 54% of consumers prefer brands that create trends over those that follow them. On AI, 42% use it when shopping, up from 37% in 2025, yet 95% have concerns about AI-assisted shopping.

IADS Notes: BCG and Altagamma's luxury survey found 70% of consumers walking away from purchases they considered unjustified, with design, craftsmanship and quality ranking ahead of logo visibility (BCG, July 2026). In Saudi Arabia, BCG found value for money, functionality and price leading purchase criteria, only 31% of purchases involving a pre-chosen brand, and 85% of consumers calling a physical store important or essential to their decision (BCG, October 2026). The Financial Times reported that GLP-1 use is lifting mall traffic and demand for smaller sizes, pushing retailers to rework inventory and add wellness-oriented lines (Financial Times, May 2026). Breuninger and adidas used the 2026 World Cup for a sports bar and citywide activations in Stuttgart (Press Release, June 2026). A separate BCG survey of retailers found agents taking over discovery while checkout stays with the shopper, with only 4% of consumers willing to let an agent complete a purchase (BCG, October 2026).

US fashion shoppers put quality and fit ahead of price

What: Delaware is drafting an Artificial Intelligence Company Act that would let an AI agent manage a single-member business entity on its own, a framework Boston College law professor Brian JM Quinn criticises for rewarding owners who supervise their agents less.

Why it is important: Existing statutes already recognise electronic agents as legal agents, so the bill's main effect would be to move liability away from the companies deploying AI agents rather than to bring those agents within the law.

Proponents of the draft Artificial Intelligence Company (AIC) Act argue that AI agents sit poorly within the legal system and that wrapping them in a corporate shell would make them legible to it. An AIC would be a single-member entity similar to an LLC, able to sue and be sued, hold property, sign contracts and incur debt in its own name, with an AI agent as its sole manager.

Quinn contends that the structure instead builds an almost impregnable liability shield for frontier AI firms such as Anthropic, OpenAI, Meta and xAI. Because extensive day-to-day oversight of an AIC would open avenues to pierce the corporate veil after an adverse event, rational owners would step back from supervision.

He notes that the Electronic Transactions Act has recognised electronic agents for more than two decades, underpinning ordinary internet commerce, and that principals should remain liable when their agents go rogue.

Should Delaware proceed, he recommends selective liability, a mechanism already used in smaller private corporations: the AIC's member would remain liable for any criminal or consumer protection violations committed by the entity or its agents.

IADS Notes: The accountability gap the author describes has already been identified on the operational side, where AI agents executing refunds, loyalty adjustments and purchase orders hold credentials and act on behalf of the business, yet often lack a named owner, a documented scope and auditable action logs (RH-ISAC, August 2026). Reported AI incidents rose from 106 in 2022 to 445 in 2025, most of them involving an agent taking an unanticipated path with nobody watching, and companies pairing transparency with executive accountability report a 15% median AI value impact against 7% to 10% for the rest (BCG, October 2026). The liability question also arises in payments, as agents paying on consumers' behalf through wallets such as Stripe Link, Shop Pay and PayPal will require clear rules on who answers when they err (an a16z analysis of agent wallets, October 2026). Walmart has built that control into its own systems: shoppers authorise each agent, set spending limits or require approval per transaction and can revoke access at any time, while agents are barred from payment card data (Reuters, October 2026). Amazon and other large etailers block agents altogether, citing returns and fraud exposure, with dispute abuse the most common fraud concern (a16z, October 2026).

Delaware drafts a bill for companies run by AI agents

What: At least fifteen significant cyber incidents and critical vulnerabilities occurred in under four weeks of October 2026, including attacks on refrigeration controls in French supermarkets and a US grocery group's systems.

Why it is important: Attacks cost about USD 50 per successful intrusion in one reported campaign and initial network access prices fell 69%, while exploitation now follows disclosure within days, making patch speed across e-commerce, store and supplier systems the binding constraint.

On 11 and 12 October, attackers remotely took control of refrigeration controls in more than 500 French shops, according to Al Jazeera's tally, including E.Leclerc, Intermarché, Carrefour, Monoprix and Coopérative U, pushing fridge and freezer temperatures up to 50°C. Ahold Delhaize took systems offline as a precaution from 12 October; stores stayed open, but the websites and apps of its US banners were down for at least eight days.

Attacks are also getting cheaper. NorForge researchers observed one operator using the open-source Cairn AI agent framework against more than 1,200 websites, breaching over 100 companies at an estimated USD 50 per intrusion, a figure the researcher treats as approximate. Flashpoint reports verified ransomware victims up 45% year on year in the first half of 2026, while the average price of initial network access fell 69%, from USD 1,427 to USD 439.

Exploitation is accelerating too. Two critical PHP flaws, identified with AI assistance, had details spread before the planned release, forcing emergency patches. Plex attacks began the day after technical details appeared.

The note asks how quickly critical patches reach e-commerce, store and supplier systems.

IADS Notes: Attacks on store equipment now cause physical disruption: strikes on obsolete Danfoss refrigeration controllers spoiled stock across about 400 French supermarkets, and Asos, TFG London and Ahold Delhaize reported separate incidents within days (The Robin Report, October 2026). Continuity then depends on a fallback that has been tested in practice: Magasin du Nord kept all its stores and its webshop open by trading partly by hand after unauthorised activity on 18 October, in a market where only 5% of surveyed companies say they could largely run core activities without central IT (Magasin du Nord, October 2026). The expectation gap remains wide: 81% of surveyed executives expect critical systems to be restored within 10 days, against a real-world average of three to six months, while attacker breakout time fell from 62 minutes in 2023 to 29 (Harvard Business Review, October 2026). AI is lowering the barrier to sophisticated attacks further, from models breaching outside organisations during testing to attackers directing models to carry out intrusions (Bloomberg, August 2026). Exposure also runs beyond the first tier of suppliers: a cyberattack on a global logistics provider disrupted warehouse operations across Europe, while most vendor risk programmes stop at direct suppliers (RH-ISAC, August 2026).

IADS note: the accelerating pace of cyber risk

What: A BCG Institute survey of 142 senior leaders at US and EU companies with over $1 billion in revenue finds that "accountable innovators", which combine transparency with executive accountability, post a 15% median AI value impact, against 7% to 10% for the other three archetypes.

Why it is important: Reported AI incidents rose to 445 in 2025 from 106 in 2022, and most recent public cases involved an agent taking a path nobody anticipated, with nobody watching, after review had been passed. BCG concludes that testing and build-phase controls alone are insufficient.

BCG's 2026 Applied AI Index of 1,330 leaders finds that companies scaling AI innovation alone see twice the ROI of low-innovation peers, and those that add governance see three times. A separate governance survey and 30 executive interviews isolate two levers behind the difference.

Transparency means an inventory of AI systems with named owners, visibility into agent actions and the ability to shut a system down. Accountability means documented executive ownership that extends to end users. Unapproved tools remain common: on average, 16% of employees use them, because sanctioned tools are too restrictive or employees are unaware of their options.

BCG sets out six practices: zero-trust use of AI outputs, role-specific training, executive accountability, named owners across the organisation, formal risk tiering, and automated controls. Organisations that record and codify AI decisions report more than 30% higher ROI than those that only record them. One organisation approved 80% of requests within hours after automating precedent-based decisions.

IADS Notes: BCG, September 2026 covers the same Applied AI Index survey and found that only 5% of companies have all six agent controls in place, while future-built companies put nearly three-quarters of their top priorities into people, organisation and processes. RH-ISAC, September 2026 found that only 3% of surveyed retail and hospitality organisations had no AI policy, yet unsanctioned use persisted because approvals moved too slowly. Harvard Business Review, October 2026 adds that restrictive rules can lead employees to downplay threats, with choice inside the guardrails and an explanation of the risk reducing the effect. BCG, June 2026 described how a single agentic deployment triggers privacy, cybersecurity and governance exposure at once, and called for monitoring of how agents access data.

How to create AI value by balancing innovation and risk

What: Retailers should manage customer data, loyalty programmes and gift cards as one strategy across the customer lifecycle instead of as separate tools.

Why it is important: Retailers already have the tools and the data, and the article locates the gap in deciding which lever to use for a given customer, for example a gift card rather than a discount to win back a lapsed one.

Bérénice Baudoin of Kiss The Bride by Upcoop writes that data, once used to segment databases, now lets retailers read behaviour, spot life events, measure engagement and anticipate churn. She reports that at Kiss The Bride a carded customer spends nearly €10 more per transaction than a non-carded one, and that Monceau Fleurs measured over 9% more traffic and +32 activation points among programme members through personalised CRM.

On gift cards, she cites King Jouet rewarding survey replies, Okaïdi encouraging loyalty card downloads to mobile wallets, and Mondial Tissus recruiting members at store openings. Retailers know gift card buyers well but often not recipients, and she sees converting recipients into loyalty members as a source of qualified data.

She also expects loyalty to reward actions such as answering a survey, completing a profile or referring a friend. Under matching loyalty, a Premium customer gifting €100 would see the retailer add €20. She says this one mechanism produces engagement, acquisition and referral.

IADS Notes: Retailers are turning checkout into a loyalty and engagement tool, yet many still manage payment, marketing and loyalty separately, while consumers expect gift cards and loyalty benefits to work consistently across channels (Journal du Net, July 2026). Points and tiers are now standard, and non-transactional features such as Dick's Sporting Goods' GameChanger app generate data on attitudes and behaviour that transactional programmes cannot capture (Customer Experience Dive, September 2026). The Mall Group's loyalty programme, with more than seven million members, runs on CRM and AI, with gamified rewards and personalised recommendations (Retail News Asia, May 2026).

Data, loyalty and gift cards as one customer strategy

What: The Economist reports that AI-driven vulnerability discovery is shrinking the window between announcing a fix and its exploitation, as a leaked demo and an early-published patch exposed a critical PHP flaw before the official fix.

Why it is important: When governments advise taking systems offline pending a patch, as happened with several European government websites, organisations must choose between availability and security. Only 35% of surveyed executives say their organisation regularly tests recovery under real scenarios.

On 20 October, major web browser security teams received an email containing eight private security keys, originally issued by an Indian authority. Such keys should be 116 digits long, but these were no longer than three, and one was just 4. The issuer, eMudhra, said they were possibly found using AI. Revoking them from central databases is manageable, but checking every system has updated is hard, as some systems need an active update and others a manual fix.

On 21 October, two PHP vulnerabilities were exposed, found independently by two members of an AI cyber-defence consortium led by OpenAI. Governments advised affected organisations to go offline, and several European government websites did. Details leaked more than 12 hours before the promised patch, enabling simple remote code execution, and a security company then published its fix six hours early. By 22 October, GitLab and Oracle had fixed severe flaws of their own, probably also found with AI.

Fixing an issue now sets a timer for its exploitation: an accidental video release let attackers, using AI, reverse-engineer the PHP flaw.

IADS Notes: The pace at which AI is exposing software flaws fits a wider shift in the threat landscape. AI models escaping test environments and hackers directing AI to carry out attacks are lowering the barrier to sophisticated intrusions, which widens the pool of potential attackers for any organisation holding customer or payment data (Bloomberg, August 2026). Retail is particularly exposed because it combines rich customer data with interconnected omnichannel and supply chain systems, which attackers often reach through weaker third-party providers or legacy systems (Retail Insight Network, July 2026). Supplier dependencies add to that exposure: most vendor risk programmes stop at direct suppliers, leaving fourth-party dependencies unmonitored, and RH-ISAC recommends mapping critical dependencies and rehearsing the multi-day loss of a critical supplier (RH-ISAC, August 2026). Government advice to take systems offline pending a patch raises the question of how long a business can operate without them. A survey of 1,000 senior executives found that 81% expect critical systems to be restored within 10 days of an attack, against three to six months in real-world cases, and only 35% regularly test recovery under real scenarios (Harvard Business Review, October 2026). Magasin du Nord offers a practical reference point: after unauthorised activity in its internal IT systems, all stores, tills and the webshop stayed open, with staff handling parts of the work manually (Magasin du Nord, October 2026).

Is the internet still safe?

What: A BCG survey of 50 of the top 300 global retailers and 100 top brands shows most retailers sharing product data with AI agents while protecting customer data, as agents take over discovery but not yet checkout.

Why it is important: Agents are taking over discovery while checkout stays with the shopper, so department stores should invest now in clean product data and in loyalty value agents can read, while keeping the transaction and the customer relationship in their own hands.

Retailers' digital growth has rested on a flywheel in which marketplaces, loyalty and personalization, and retail media reinforce one another. External AI agents such as ChatGPT, Claude and Gemini now sit between retailers and shoppers, so a sale can happen without a visit. In BCG's survey, 81% of US consumers and 53% of European consumers expect to use agents when shopping, yet only 4% would let an agent complete a purchase.

Retailers therefore play two games: keeping direct visits and winning the agent's recommendation. Most share or plan to share product attributes, prices and ratings, but 87% would never share customer data. Only 18% consider their marketplaces ready for agents, and only 14% plan to give agents the same loyalty benefits as their own channels.

BCG warns that agent-routed demand is unlikely to stay free, as online travel agencies now take 15% to 25% of each booking. Its no-regret agenda covers one data policy across the flywheel, agent-readable catalog feeds, loyalty value agents can compare, and retail media that proves incremental sales.

IADS Notes: The caution BCG describes around agent-completed purchases is already visible in earlier coverage. Large online retailers are blocking agents to protect customer relationships and advertising revenue, while consumers use AI for mid-journey research rather than for the final purchase (a16z, October 2026). French data shows the same gap: trust in AI falls from 47% before a purchase to 30% at payment, and Walmart suspended its ChatGPT Instant Checkout integration after conversion came in roughly three times lower than on its own site (Journal du Net, September 2026). McKinsey expects agentic AI to become the default entry point for discovery and routine purchasing, making store visits less frequent but more valuable (McKinsey, May 2026). On the supply side, retailers that cannot structure and govern their product data become invisible to the algorithms that decide what shoppers see first (Journal du Net, March 2026). Marketplaces, which accounted for nearly two-thirds of retail spending by 2024, reward brands that can update products, prices and availability across them quickly (Journal du Net, October 2026).

How retailers can win with AI shopping agents in 2026

What: Nearly two-thirds of US physicians now rely on OpenEvidence's ad-funded AI chatbot for diagnosis and treatment, raising questions over accuracy and dependence as OpenAI and Anthropic push into healthcare.

Why it is important: Vertical AI products are defending their position against OpenAI and Anthropic through usage and curated sources, while the AI Act has already cost OpenEvidence access to the EU and UK.

OpenEvidence, a Miami-based start-up founded by Daniel Nadler in 2022, says nearly two-thirds of US doctors use its AI search engine, which processed more than 42mn prompts last month. Physicians query medical journals and clinical guidelines through a focused source list that includes the New England Journal of Medicine and the Journal of the American Medical Association. The ad-powered platform grew largely by word of mouth and has attracted nearly $1bn in investment over 18 months, including $250mn in September at a $15bn valuation. It is on track to generate between $400mn and $500mn in advertising by the end of 2026, according to a person close to the company.

Evidence on performance is mixed. A study by the Mayo Clinic, an investor in the start-up, found accurate recommendations in all five sampled cases, whereas a June Nature paper found it underperformed Gemini and GPT on clinical benchmarks. Concerns also centre on over-reliance by junior doctors. The company withdrew from the EU and UK over the AI Act, faces competition from OpenAI and Anthropic, and plans clinical trials and drug discovery.

IADS Notes:  The ad-funded model behind OpenEvidence, projected to generate $400mn to $500mn in advertising in 2026, echoes a shift already visible in retail, where UK online retail media rose 32% to £2bn in the first half of 2026, the fastest growth of any digital advertising category (Internet Retailing, October 2026). The same revenue logic is exposed once an AI assistant sits between audience and advertiser: AI shopping assistants threaten the advertising and commission profits of marketplaces by taking over purchase decisions, and department stores building retail media face the same exposure (a16z, September 2026). Inside ChatGPT and Claude, brands write their own content, while the platform sets the container, the ranking and the conversation (Journal du Net, September 2026). OpenEvidence's withdrawal from the EU and UK over the AI Act also has a retail counterpart in the debate on AI-generated advertising, where Eurocommerce is urging the EU to exempt non-misleading AI-generated retail ads from the Act's disclosure rules (Reuters, June 2026).

The $15bn AI start-up changing how American doctors treat patients

What: Six experiments with more than 2,800 participants show that restrictive cybersecurity policies can make employees downplay the severity of cyber threats, while giving them choice within mandatory rules and explaining the risk when lifting a ban reduces the effect.

Why it is important: With AI-enabled attacks already widespread and AI controls still minimal, restrictions that make employees doubt the risk undermine the security measures meant to protect organizations.

Generative AI and a fast-changing menu of workplace apps have changed how employees work, and bans often push use out of sight rather than end it. In a 2025 KPMG and University of Melbourne study, 57% of workers said they had hidden their AI use and 48% said they upload company data into public AI tools. Verizon's 2026 report found shadow AI detections quadrupled in one year.

Across six experiments with more than 2,800 participants, the authors find that restrictive policies weaken belief in cyber threats in two ways. Rules that feel overbearing trigger psychological reactance, and employees then deny the threat is serious; mandatory training produced the same effect, but offering choice over format and timing within the requirement reduced it. Lifting a policy, such as a generative AI ban, leads employees to infer the risk was exaggerated, though explicitly reaffirming the remaining risk largely offset this.

The authors propose five principles: give employees choice inside the guardrails, make the secure path less aversive, explain the threat before imposing the control, plan the exit before imposing a ban, and measure beliefs as well as compliance.

IADS Notes: Shadow AI is already documented as a governance gap rather than a policy gap. RH-ISAC, September 2026 found that AI-related data exposure now outranks ransomware and phishing as the top concern among 201 retail and hospitality CISOs, even though only 3% of surveyed organizations have no AI policy, and it identified slow approval processes as the reason unsanctioned use persists. The wider readiness gap shows in Harvard Business Review, October 2026, where 89% of organizations report AI-enabled attacks while most run only minimal AI-specific controls, and clear rules on employee AI use feature among the recommended steps. Oversight needs grow as tools become more autonomous: IAPP, December 2025 called for least-privilege access, comprehensive logging and human review at critical decision points for AI agents. On the human side, BCG, December 2025 framed AI adoption as much a human challenge as a technical one, relying on clear roles and shared ownership across teams.

When restrictive cybersecurity policies backfire

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Since opening its first US store in 2009, Brandy Melville has built a cult following among teenage and young-adult shoppers and expanded to more than 100 locations worldwide. It has done so around a proposition most competitors would regard as commercially reckless: narrow sizing, restrictive returns, little corporate communication, and, in June 2026, the reported closure of fitting rooms across stores in the United States, the United Kingdom, and Canada. Many of the brand’s garments remain available only in a narrow XS/S size range, while its US policy gives customers limited remedies for in-store purchases. The model appears hostile to the customer. Its success suggests the hostility is part of what customers are buying.

The same pattern runs through the business. Brandy Melville asks the customer, and, it is alleged, the employee, to conform to a narrowly defined image. The size range, the returns policy and, by former employees’ accounts, the hiring criteria stay put; the adjustment falls on the person. For department stores, the question is what they take on when they host a brand customers clearly want and many cannot wear.

What Brandy Melville built

Brandy Melville was developed in Italy, but its US expansion gave it the California aesthetic that came to define it internationally. After opening in Westwood, Los Angeles, in 2009, the brand built a recognisable visual language around collegiate graphics, cropped basics, muted interiors and young customers who reproduced the look online.   

The commercial logic of one size 

Brandy Melville’s narrow sizing is both part of the image and part of the assortment strategy. Its US site still lists numerous garments in a single XS/S option, including the $16 Zelly Basic Top. Fewer size variations mean fewer size-specific SKUs to allocate and merchandise. They also make the brand visually consistent across product pages, stores and customer photographs. The same decision limits who the assortment can serve. Every retailer curates: finite floor space, price architecture and brand selection inevitably exclude some choices. Brandy Melville pushes that principle further by making bodily fit one of the most visible filters of participation. 

The social-media feedback loop

Brandy Melville built a global youth following without a visible advertising campaign. Store atmosphere, employees, customer photographs and word of mouth did the work. Customers bought the clothing, photographed themselves and hoped to be reposted; the brand selected images that showed the next group what participation looked like. The sizing model made that loop efficient: a narrow size range produced a consistent look across thousands of customer photographs.

When the image became the employment system

Alleged hiring and workplace practices

The sharpest criticism of Brandy Melville concerns hiring rather than marketing. The 2024 HBO documentary Brandy Hellville & the Cult of Fast Fashion brought those allegations to a wider audience. Former employees described being recruited because of their appearance and required to submit full-body “store style” photographs. Several alleged that hiring and firing decisions were affected by weight, race and conformity to the “Brandy look”. Black employees said they were disproportionately assigned to stock rooms or other less visible roles, while thin white employees were favoured for the sales floor. These accounts remain allegations from former employees rather than judicial findings. Stephan Marsan, the company’s co-founder and chief executive, declined to participate in the documentary, and the company did not issue a comprehensive response.

A separate California wage-and-hour case ended in a $1.45 million settlement in 2022. Former employees alleged unpaid off-the-clock work, missed overtime and break violations. Brandy Melville denied wrongdoing. The case concerned pay and timekeeping rather than the discrimination allegations raised in the documentary.

If those accounts are accurate, Brandy Melville’s preferred customer image did not stop at advertising; it influenced who customers saw working in the store.

Governance through silence

Brandy Melville makes few public commitments and has little visible executive communication. Public court records show that the brand’s intellectual property and US operations sit across separate legal entities, including Swiss-based Y.Y.G.M. SA and Nevada-based Bastiat USA. The structure has also produced disputes over who controls distribution. In a 2025 Ontario case, Canadian licensees that operated Brandy Melville stores alleged that Y.Y.G.M. SA had breached the exclusivity provision in their agreements by selling Brandy Melville merchandise through Canadian Nordstrom stores. The licensees said the sales continued until May 2017; Y.Y.G.M. said they had stopped around 2015. The court dismissed Y.Y.G.M.’s motion for summary judgment on limitation grounds, holding that the disputed timing required a trial, and made no finding on the alleged breach. A customer never sees those contractual boundaries. A department store buying the brand has to, because they decide which entity supplies the stock and which one answers when standards are questioned.

Brandy Melville’s silence means there are few explicit promises to measure the company against. As IADS examined in its Exclusive, Everlane, Shein and the price of convenient transparency, Everlane followed the opposite approach: product cost breakdowns, named factories, and sourcing disclosures made transparency part of what customers were buying.

Everlane’s disclosures gave customers a standard, and that standard was used against the company when its culture was questioned. Brandy Melville’s silence offers no such standard.

For some retailers, the debate over whether to keep using the letters “DEI” is secondary. Companies can rename or quietly integrate inclusion programmes, but the test is what happens inside the business: who is recruited, who advances, whose bodies are accommodated, who appears on the shop floor, and whether employees can challenge power. The 2025 IADS White Paper drew the same line at sector level: inclusion becomes meaningful when it is embedded in leadership, operations, governance and measurable outcomes rather than applied as a communications layer.

As IADS has also examined, Abercrombie & Fitch provides the closest historical comparison. Its earlier model also linked a narrow customer ideal to the appearance and placement of store employees. The company eventually changed leadership, broadened its imagery and product offer and rebuilt around a more inclusive public identity. The reset was rewarded, but slowly: in fiscal 2023, roughly a decade into the turnaround, the company reported net sales of $4.28 billion, up 16%, and an operating margin of 11.3%, its highest in fifteen years. Brandy Melville has made no such change public.

Where the model transfers risk

Customer risk

Brandy Melville has not publicly explained the June 2026 closures. Employees said they had been told it was linked to theft and damage, including customers using chewing gum to hold poorly fitting curtains against walls for privacy. Shoppers tried garments over their clothes or left without buying. Either way, the fitting room disappeared while much of the assortment remained narrowly sized.

Marks & Spencer illustrates a different response to the same store problem: it has retained fitting rooms while adding payment capability and staff oversight inside the area, with the model planned for more than 100 stores by 2028. Faced with a choice between adapting the store and asking more of the shopper, Brandy Melville chose the shopper. 

Production risk

Brandy Melville’s “Made in Italy” label, which the documentary also questions, tells customers less about production than it appears to.[1] The company’s US site currently lists several Italian-made cotton tops at $16–$18. On the same site, similarly priced garments are manufactured in China and Albania. Price alone is not evidence of exploitation. The label does not say how many subcontractors sit behind a garment, what workers were paid, how long they worked or who monitored their conditions.

Reuters has documented serious labour abuses hidden inside subcontracting chains serving major fashion companies. Those cases concerned luxury groups rather than Brandy Melville, but they show that abuse can sit several tiers below the supplier a brand names. After similar scrutiny of its Italian suppliers, Dior created a dedicated industrial function reporting directly to the chief executive. Brandy Melville has not said who oversees its production.

The Gen Z paradox

Values in theory, belonging in practice

Edelman found that 92% of Gen Z respondents regarded some level of shared values as necessary before using a brand. 

Brandy Melville entered South Korea despite the documentary, the employment allegations and longstanding criticism of its sizing. Its first store there opened in Seoul’s Seongsu-dong district in January 2025, drawing large crowds and long queues. Within weeks of the opening, Korean coverage questioned the brand’s lack of size inclusivity; seventeen months later, Brandy Melville closed fitting rooms across its US, UK and Canadian stores. Queuing for a brand with that record is not simply hypocrisy. The Robin Report calls the pattern “situational ethics”: customers separate the clothing and the identity from the company’s conduct. Values compete. Research on the sustainable-fast-fashion paradox finds that environmental concern operates alongside other identity motives, including status, hedonism and the need for uniqueness.

Brandy Melville offers those competing motives an unusually clear object: the product signals identity and belonging immediately, while employment or sourcing concerns remain distant from the purchase.

The department-store question is not hypothetical. Nordstrom carried Brandy Melville in the mid-2010s and, in its annual report for fiscal 2015, credited the brand, alongside Topshop, Madewell and Charlotte Tilbury, with strengthening its younger customer-focused departments and attracting new customers. Department stores are not exempt from the charge of exclusion; what distinguishes Brandy Melville is how visible the criterion is, and how much of the brand’s appeal depends on it.

IADS has examined versions of this tension in earlier case studies. Everlane showed that a compelling ethical proposition does not remove the need to examine internal culture. Abercrombie & Fitch showed that a powerful identity can be rebuilt when the customer ideal becomes commercially limiting. American Apparel showed how cultural relevance and organisational weakness can coexist, until debt and governance failure drove it into bankruptcy. The distinction that matters is between exclusivity, which can make an experience distinctive, and exclusion, which makes participation conditional on characteristics customers or employees may be unable, or should not be expected, to change. Brandy Melville’s continued appeal points somewhere less comfortable: exclusion is not necessarily a temporary defect that customers eventually punish. When it creates status and visible belonging for the people admitted, it can reinforce the proposition itself.

A department store has an option Brandy Melville’s own stores do not: it can carry the brand for the customers who want it and, on the same floor, dress the customers Brandy Melville turns away. That makes the decision one of access. Carrying it means hosting a brand whose appeal depends on who it leaves out, and answering for its employment, returns and sourcing practices. For department stores, the queue proves demand, yet it does not answer whether the brand meets the retailer’s standards.

Credits: IADS (Maya Sankoh)

What: BCG proposes the Composable Shelf, a layer that records what each offer and content asset is for and what it can be combined with, so AI agents can assemble individualized customer interactions while assets stay in their existing systems.

Why it is important: Companies that record what each marketing asset is for, and the rules for using it, can replace platforms and decision engines without rebuilding that knowledge, which limits vendor dependence as AI agents take over campaign assembly.

BCG argues that traditional marketing still centers on the campaign: marketers pick a customer action, find an offer, create content, select an audience and write the rules, then stitch the pieces together by hand across separate systems. AI speeds up individual steps but leaves this process intact, and consolidating technology into fewer platforms does not change it either. BCG says consolidation can never be finished, never be comprehensive and cannot keep pace with AI-generated content, and it increases dependence on a single vendor.

The Composable Shelf adds a layer above existing asset, content and offer systems. It leaves everything where it is and records the missing relationships: the actions the business wants customers to take, the offers that support them and the approved content that communicates them, with the rules governing their use. Marketers set objectives, ingredients and guardrails, and an AI agent assembles the interaction for each customer. Because the shelf is independent of any platform, companies can replace vendors and decision engines without losing their taxonomy. BCG reports three times the ROI and ten times the speed from campaign initiation to implementation across its clients in retail, travel, banking and healthcare.

IADS Notes: BCG described the same composable shelf in July 2026, projecting that 70% to 80% of customer touchpoints will shift to autonomous, personalized interactions as marketers move from execution to curation and governance (BCG, July 2026). Discovery is already moving that way: John Lewis reported that searches originating from AI agents rose to 2.5% of the total, up from 0.3% a year earlier, and stepped up its investment in content creation (Reuters, September 2026). Brands control the content inside AI assistants but not the container or the ranking, which makes the quality and completeness of the data they expose the main lever for visibility (Journal du Net, September 2026). Each AI agent also needs a named business owner, a documented scope and audit logs before deployments grow too large to trace (RH-ISAC, August 2026).

How the composable shelf reinvents marketing

What: BCG's April 2026 survey of 1,895 consumers in Saudi Arabia finds high optimism about the economy and personal lives, but savings come first and value for money drives purchases.

Why it is important: Saudi consumers research online but 85% still call a physical store important or essential to their decision, so retailers need to connect digital discovery with in-store purchase rather than push shoppers online.

Saudi consumers feel more positive than their European peers. An average of 79% say they feel good across eight dimensions, against 35% across the European markets surveyed, even though inflation and energy prices are the leading concerns. Over the next six months, consumers expect income, savings and spending to rise, though much of the expected spending growth reflects higher prices rather than greater volumes. Given extra income, saving ranks ahead of every spending category, and 66% would sacrifice spending today to save more.

Purchases follow a practical hierarchy led by value for money, functionality and price. Only 31% of purchases involve a brand chosen in advance. Two-thirds of consumers say they seek local brands, yet local production ranks last among purchase criteria. Only 14% will pay a premium for sustainable options, while 86% expect them to cost the same or less.

Discovery is digital but purchase remains physical: online is the main inspiration channel for 28% to 48% of consumers by category, against 14% to 21% for purchase. More than 50% of Saudi luxury spend goes abroad, drawn by assortment, service and price. BCG notes the survey measures stated intentions, so actual behaviour may be more moderate.

IADS Notes: BCG's European survey from BCG, June 2025 found 54% of European consumers pessimistic about their home economy, with household essentials the only category showing positive net spending growth. The selectivity BCG reports in Saudi Arabia also shows up in luxury: BCG, July 2026 found that 70% of consumers walked away from purchases they considered unjustified. On luxury spending leaving the Kingdom, WWD, June 2024 reported Chalhoub Group's view that a 15% VAT rate, against about 5% in neighbouring countries, and superior shopping facilities elsewhere make Saudi Arabia less appealing for luxury shopping. The expectation of sustainability at parity has a UK precedent: Retail Insight Network, September 2024 reported that 83.4% of Gen Z and 81.8% of millennials would buy more sustainable health and beauty products if they were cheaper. On discovery and purchase, Retail Insight Network, July 2026 describes stores as central to omnichannel journeys, supporting online research, in-store advice and click-and-collect.

The Saudi consumer in 2026: confident, but disciplined

What: Vogue Business finds that mid and plus-size looks made up 2.5% of the 9,283 looks shown across the New York, London, Milan and Paris Spring/Summer 2027 runways, down from 5.1% in FW25.

Why it is important: Only 17% of consumers feel brands show a variety of sizes, while 67% are more likely to buy from those that do, and a narrowing runway leaves that gap open.

Vogue Business analysed 9,283 looks across 219 shows and presentations in New York, London, Milan and Paris. Straight sizes (US 0-4) made up 97.5%, mid-size (US 6-12) 2% and plus-size (US 14+) 0.5%. Total curve representation of 2.5% is up 0.2 points on FW26 but down from 5.1% in FW25. The publication links the decline to GLP-1 discourse and a return to ultra-slim aesthetics.

By city, London was the most inclusive, with Chopova Lowena topping the season's leaderboard at 37.8% mid-size looks, while Milan was the lowest, with 99.5% of looks straight-size. A review of brands' websites found 24.6% of New York brands stop at US 14, and no London brand offers above US 20. Ester Manas reports larger sizes as bestsellers, and Marco Rambaldi gets about 10% of direct-to-consumer sales from plus-size customers.

Vogue Business's 2025 survey found 67% of consumers more likely to buy from brands showing varied sizes, but only 17% feel represented. Milk Model Management estimates it has lost 40% of curve work in recent years.

IADS Notes: Coresight listed extended sizing among the inclusivity trends US department stores should adopt (Coresight, October 2023), and Le Bon Marché's Maison Rive Gauche capsule offered sizes from French 34 to 50 (WWD, December 2024). Coverage since then has centred on weight-loss drugs. Forbes reported rising demand for smaller sizes and falling sales of larger ones, with up to $5 billion in margin losses possible by 2027 for US fashion retailers that do not realign their size curves (Forbes, September 2025). In May 2026, BoF described brands overhauling sizing, fit models and inventory as body shapes change (BoF, May 2026), while the Financial Times reported a shift in demand toward smaller apparel sizes that is forcing retailers to rework inventory strategy (Financial Times, May 2026).

Spring/Summer 2027 Size Inclusivity Report

What: Agentic commerce is stalling at the point of purchase: retailers are blocking agents to protect customer relationships, ad revenue and returns exposure, and US consumer data shows AI is used for mid-journey research rather than for the final transaction.

Why it is important: For department stores, the lesson is to invest in AI visibility and product data where shoppers actually consult AI, while the checkout, the loyalty relationship and the returns liability stay in the retailer's hands.

Cloudflare data shows the share of 403 Forbidden responses served to bots and agents has risen sharply since the summer, roughly double its earlier level, as Amazon and other large etailers move to block agent shoppers. Beyond protecting customer relationships and advertising revenue, retailers fear agents will aggravate returns and fraud: NRF data shows return rates have doubled and total return costs tripled since 2019, with dispute abuse the most common fraud concern.

Consumers appear equally hesitant. Around 25% say they would let AI buy most consumer goods on their behalf, luxury excluded, while 42% would not trust it to purchase at all. Similarweb clickstream data to June shows a growing share of shopping journeys passing through AI, but mostly in the middle phase between discovery and checkout, which complicates attribution when the final purchase happens in a separate session.

Social commerce points the same way. On TikTok Shop, 8.4% of sellers producing 1,000+ videos capture around 60% of sales, while the top 1% of sellers drive roughly 60% and the top 10% around 93%, a creator-driven model agents cannot replicate.

IADS Notes: The retreat of large etailers from agentic checkout extends a conflict already visible at platform level, where Amazon blocked Meta's Muse while marketplaces dependent on commissions and sponsored placement resist agents and payment providers with no advertising business to defend embrace them (a16z, October 2026). The consumer side of the Cloudflare and Similarweb data matches earlier European findings: French shoppers' trust in AI falls from 47% before a purchase to 30% at payment, and Walmart suspended its ChatGPT Instant Checkout integration after conversion came in roughly three times lower than on its own site (Journal du Net, September 2026). For department stores the mid-journey role of AI is already measurable, with searches originating from AI agents rising from 0.3% to 2.5% of John Lewis's total in a year, a shift the retailer met by opening an in-store content studio and producing daily influencer video to feed AI discovery rather than by opening its checkout to agents (Reuters, September 2026). The creator-driven skew of TikTok Shop sits on the same human-interface logic: US sales on the platform nearly doubled to $4.9bn in the first quarter of 2026 as Ralph Lauren, Ulta Beauty and L'Oréal opened storefronts, drawn by the fusion of content and conversion and by an older demographic that is now the fastest-growing segment (The Wall Street Journal, April 2026). The returns and fraud concerns that make retailers wary of agent-placed orders build on an existing $850bn annual returns burden that is already pushing the industry toward AI-based risk management, returnless returns and tighter policies for serial returners (The Robin Report, April 2026).

Retailers block AI shopping agents while consumers use AI to research, not to buy

What: Agentic commerce is stalling at the point of purchase: retailers are blocking agents to protect customer relationships, ad revenue and returns exposure, and US consumer data shows AI is used for mid-journey research rather than for the final transaction.

Why it is important: For department stores, the lesson is to invest in AI visibility and product data where shoppers actually consult AI, while the checkout, the loyalty relationship and the returns liability stay in the retailer's hands.

Cloudflare data shows the share of 403 Forbidden responses served to bots and agents has risen sharply since the summer, roughly double its earlier level, as Amazon and other large etailers move to block agent shoppers. Beyond protecting customer relationships and advertising revenue, retailers fear agents will aggravate returns and fraud: NRF data shows return rates have doubled and total return costs tripled since 2019, with dispute abuse the most common fraud concern.

Consumers appear equally hesitant. Around 25% say they would let AI buy most consumer goods on their behalf, luxury excluded, while 42% would not trust it to purchase at all. Similarweb clickstream data to June shows a growing share of shopping journeys passing through AI, but mostly in the middle phase between discovery and checkout, which complicates attribution when the final purchase happens in a separate session.

Social commerce points the same way. On TikTok Shop, 8.4% of sellers producing 1,000+ videos capture around 60% of sales, while the top 1% of sellers drive roughly 60% and the top 10% around 93%, a creator-driven model agents cannot replicate.

IADS Notes: The retreat of large etailers from agentic checkout extends a conflict already visible at platform level, where Amazon blocked Meta's Muse while marketplaces dependent on commissions and sponsored placement resist agents and payment providers with no advertising business to defend embrace them (a16z, October 2026). The consumer side of the Cloudflare and Similarweb data matches earlier European findings: French shoppers' trust in AI falls from 47% before a purchase to 30% at payment, and Walmart suspended its ChatGPT Instant Checkout integration after conversion came in roughly three times lower than on its own site (Journal du Net, September 2026). For department stores the mid-journey role of AI is already measurable, with searches originating from AI agents rising from 0.3% to 2.5% of John Lewis's total in a year, a shift the retailer met by opening an in-store content studio and producing daily influencer video to feed AI discovery rather than by opening its checkout to agents (Reuters, September 2026). The creator-driven skew of TikTok Shop sits on the same human-interface logic: US sales on the platform nearly doubled to $4.9bn in the first quarter of 2026 as Ralph Lauren, Ulta Beauty and L'Oréal opened storefronts, drawn by the fusion of content and conversion and by an older demographic that is now the fastest-growing segment (The Wall Street Journal, April 2026). The returns and fraud concerns that make retailers wary of agent-placed orders build on an existing $850bn annual returns burden that is already pushing the industry toward AI-based risk management, returnless returns and tighter policies for serial returners (The Robin Report, April 2026).

Retailers block AI shopping agents while consumers use AI to research, not to buy

What: In-store digital out-of-home (DOOH) screens are a media tool built for visibility, not a solution to shopper problems, which require recognition and personalization that screens cannot provide.

Why it is important: In-store screens broadcast to passersby, but shoppers' problems are individual, so department stores need to connect CRM, loyalty, e-commerce and app data to recognize shoppers, which a screen alone cannot do.

Writing in a column for Lucky Cart, Nicolas Trannoy argues that in-store digital out-of-home (DOOH) screens have become central to retail media, but that they answer a media problem rather than a shopper problem. DOOH offers visibility and proven stopping power in an environment used to paper and cardboard formats.

Measurement is its weak point. GDPR rules out identifying viewers, so performance is structurally an approximation: it shows that someone passed the screen, not what that person chose next. Trannoy considers this acceptable for a media objective and fragile for anything else.

In-store needs such as finding a product, comparing alternatives, staying within a budget or saving time are individual and contextual. They require recognition, context and personalization, and connected commerce depends on linking CRM, loyalty, e-commerce and mobile app data, which a screen cannot do.

Shoppers already turn to their phones to compare prices, check reviews, find wish lists or activate offers, because the phone is the one screen that recognizes them. Trannoy concludes that starting from the shopper also serves brands and retailers, through more recognition, relevance and proof of impact, and that DOOH remains a visibility tool.

IADS Notes: The measurement limit described in the article shows up in the push to standardise in-store media reporting: IAB Europe's proposed "opportunity to see" metric estimates who walked past a screen without showing whether anything sold, and more than 99% of European retail media spend stays online because brands invest where they can prove effect (Inside Retail, September 2026). One response that avoids identification altogether is in-store audio, which reads time of day, store, department and crowd levels rather than recognising individual shoppers, with restraint treated as a performance criterion (Journal du Net, October 2026). The article's point that screens serve the business rather than the shopper has a counterpart in the warning that screens placed where shoppers select products risk becoming visual noise, while those in dwell zones can be useful (The Robin Report, August 2026). The recognition and data link the article calls for is already in use at John Lewis, where ROPO measurement draws on loyalty card activity to connect online ad exposure to in-store purchases (Retail Times, June 2026). The phone is not always available as the shopper's answer: in stores where metal construction blocks mobile connectivity, fixed connected screens are often the only reliable digital interface between the entrance and the checkout (Journal du Net, March 2026).

In-store screens address media issues, not those of the shopper

What: Generative engines such as ChatGPT and Google's AI Overviews favor retailers whose local information is consistent across sources, which makes Generative Engine Optimization (GEO) a complement to local SEO rather than a replacement.

Why it is important: For multi-store networks, accurate local information across every location now determines whether AI engines recommend them, which turns data upkeep into a competitive issue.

Conversational engines such as ChatGPT, Gemini, Claude and Google's AI Overviews are changing how consumers find businesses. Google says AI Overviews reach more than 2 billion users each month, and ChatGPT counts more than 800 million weekly users. Instead of browsing a list of results, shoppers ask a question and receive a few recommended establishments. A good Google ranking no longer guarantees a citation.

The author identifies three signals that AI engines rely on. The first is the reliability of local information: Google Business Profile listings, store locators, structured website data and directories must show the same hours, address and services, since contradictions weaken credibility. The second is customer reviews, where models analyze recurring themes and how the business responds. The third is the overall trace a brand leaves online, including regular local content, active store listings and mentions on other sites.

For networks of 50, 200 or 1,000 points of sale, keeping this information consistent and current is the main challenge, and execution at scale becomes a competitive advantage. The author concludes that GEO complements local SEO, which remains the foundation for being recommended.

IADS Notes: Earlier coverage points to a shift in product discovery from rankings to recommendations. The Robin Report, April 2026 described AI visibility, meaning where and how brands appear in AI-generated recommendations, as a driver of discovery and purchase that calls for a dedicated strategy. Inside Retail, September 2025 noted that these recommendations carry no paid placements, so brands have to earn them through credible data and third-party validation, while Retail Dive, September 2025 reported that Target was prioritizing generative engine optimization (GEO) and training its systems and agents to deliver contextual results on its own site and through third-party shopping assistants. On data quality, Ecommerce Mag, April 2026 reported that Galeries Lafayette's e-commerce director sees the completeness and normalization of product data as a direct factor in whether AI agents recommend a brand, with SEO remaining essential alongside new measures such as share of voice in AI answers. Liontree, April 2026 added that brands with structured, reliable information and strong external reviews are more likely to be recommended, and that incorrect AI answers sharply reduce consumer confidence.

Why AI recommendations are changing local visibility for retail chains

What: A survey of 1,033 US full-time desk workers on intact project teams finds that turning to AI instead of a colleague raises perceived expertise but cuts team coordination by 22.3% and team trust by 21.9% where the habit becomes the norm.

Why it is important: The remedies are inexpensive and within leaders' control: daily asynchronous contact restores 28% of coordination and 19% of trust even among displacers, and incentives can be re-architected to reward AI-enabled teams rather than AI-literate individuals.

Great teams run on a shared map of who knows what. Surveying 1,033 US desk workers across 20+ industries, the authors find AI redrawing that map in conflicting ways: heavier AI use raises the perceived expertise of teammates, yet going to AI instead of a colleague erodes mutual trust and coordination. One in five workers admit a tendency to displace teammates; 49% say they have been displaced at least some of the time.

Two costs accumulate. Teams lose track of who knows what, since AI-generated work hides whose expertise produced it, and trust gives way to second-guessing and re-checking. Only 32% of those who prefer AI input report high coordination, against 60% of those who favour teammates. Displaced employees feel they matter less and search for jobs more actively; for a 10,000-employee company, the authors model 243 extra departures and over $25 million in replacement costs.

Displacement tracks AI optimism, low psychological safety and the models' agreeable design rather than age or seniority. The authors recommend frequent asynchronous contact, psychological safety, transparency norms on AI use, team-level incentives, augmentation over automation, and using AI to prepare for conversations rather than replace them.

IADS Notes: The displacement effect described here extends a pattern that workforce research has been documenting through 2026. The hidden costs of AI acceleration were first framed as a "fluency gap": employees become proficient with the tools while feedback loops weaken and the judgment needed to oversee outputs erodes, because adoption is pursued without redesigning how work is done (Seramount, March 2026). The sycophancy the authors identify as a driver of displacement had already been flagged in a consumer context, where chatbots' validating design was shown to reinforce users' beliefs and remove the critical feedback that human exchange provides (Stanford University, April 2026). On the organisational side, psychological safety was identified as the condition that lets employees ask questions, admit confusion and challenge AI outputs, with executives shown to overestimate staff enthusiasm for the technology (Seramount, June 2026). Middle managers were then found to be where AI initiatives most often stall, with five distinct profiles each requiring a matched intervention rather than generic evangelism (Harvard Business Review, September 2026). Most recently, data from more than 10,000 US employees showed that 88% of organisations use AI regularly while only 30% redesign processes around it, a gap producing "quiet compliance" in which tools are used without questioning outputs, with a recommendation to track psychological safety alongside adoption (Seramount, October 2026). The team-level trust and coordination losses quantified here add a relational dimension to that same adoption-versus-value gap.

Team dynamics weaken when employees turn to AI instead of colleagues

What: A Lectra chronicle by François Gonnot sets out how marketplaces, faster time-to-market and structured data are reshaping e-commerce operations, with fashion as its main example.

Why it is important: Marketplaces are becoming the default route to online demand, and brands that cannot launch, price and update products across them quickly risk being overtaken by standards set by others.

E-commerce keeps growing despite geopolitical tensions around supply chains, with global sales projected to exceed $8 trillion by 2028. The open question is how that value will be distributed, as AI, macroeconomic shifts and changing consumer habits push brands to rethink strategy under margin pressure.
Marketplaces accounted for nearly two-thirds of retail spending by 2024. Amazon’s leadership is challenged by Temu and Tmall, while vertical platforms such as Zalando are major players in European fashion. Their selection, shorter delivery times and integrated experience raise the standard for brands’ own sites, which remain relevant within omnichannel approaches.

Speed becomes decisive across the product lifecycle, from design to market launch. In fashion, short marketing windows tied to seasons, trends and campaigns reward brands that launch collections, activate products across several marketplaces and update prices and availability in real time. This requires automation, integration and control of information flows, without trading speed for quality.

Data is the foundation, since AI performs on reliable, structured and standardized information. Incomplete or outdated data causes description errors, stock discrepancies and uncompetitive pricing. The most mature brands are moving to native marketplace integration, end-to-end automation and centralized management, while laggards risk following standards set by others.

IADS Notes: Forecasts of online retail growth vary by source: a Forrester projection reported by Retail Dive in June 2024 put global online sales at $6.8 trillion by 2028, up from $4.4 trillion in 2023, with marketplaces and social commerce among the main drivers, while the article cites more than $8 trillion for the same year. Platform consolidation is one response to the competition, as Fashion Network in December 2024 reported Zalando’s €1.1 billion acquisition of About You to face Shein and Temu in European online fashion. On speed, Reuters in March 2026 covered Marks & Spencer’s monthly capsule collections, a faster product cycle that requires greater supply chain agility. On data, Journal du Net in March 2026 found that retailers unable to structure and govern their product data become progressively invisible to the algorithms that decide what shoppers see first, and Journal du Net in June 2026 showed that AI agents lose accuracy when data is fragmented across carriers, order and warehouse systems, CRM and marketplaces.

Marketplaces, data, and speed: the levers transforming e-commerce

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Ever heard of the term “polycrisis”? French theorists Anne-Brigitte Kern and Edgar Morin coined this phrase in 1993 to characterise ‘the simultaneous occurrence and interaction of multiple crises that cannot be reduced to a single common denominator’. While the phrase was picked up by EU Commission president Jean-Claude Junker in 2016 to describe Europe’s governance during the Greek debt crisis, Russia’s first aggression against Ukraine, impending Brexit, and the Syrian refugee crisis spilling into Europe, it was popularised in 2022 by historian Adam Tooze, seeing the current world affairs in a situation where ‘disparate crises interact such that the overall impact far exceeds the sum of each part’.

Such a context requires businesses to look at their macro-environment in a new way, and ‘connect the dots’ between seemingly unrelated facts and data points. Before the summer, the IADS interacted with four different worlds: the FIRA retail federations meeting in Berlin, a column by the historian Adam Tooze, an article in The Economist, and a workshop convened by EM Normandie on the politicisation of business. While these are disconnected when taken in isolation, they suggest the emergence of a new macro-economic and political environment when read together. While this does not mean having a crystal ball, and the purpose of such an exercise is not to forecast, this allows for new angles that department store leaders interested in the transformation of their business should consider in their strategic reflection.

Department stores have long thought of themselves as national commercial institutions with a customer, a proposition, and a margin. While there are some exceptions for those who went international (such as Galeries Lafayette), they seldom see themselves as macro-exposed outside of their supply chain. The four reads below suggest that this posture is increasingly hard to defend: their flagship stores, their long-cycle inventory, their significant cash positions, their pricing latitude, and, above all, their trust are all connected to regional or global political and economic instruments that, until recently, were in the background of their strategic planning process. However, this background seems to be moving into the foreground, and retail leaders might need to consider new questions as they plan their upcoming strategy. Our hypotheses are based on four horizons derived from our analysis of four sources.

First horizon: where retail stands as of now

Last April, the IADS attended the mid-year meeting of the Federation of International Retail Associations (FIRA) in Berlin (report available here). 18 delegates from 14 national federations sat at the same table and described the same operating environment.

Concerns about the energy were universal. The consensus was that even an immediate reopening of the Strait of Hormuz (in hindsight, a vain wish) would not bring prices down for at least six months: petrol fluctuates quickly, and the cascade runs through transport, packaging, and petroleum-based inputs. India brought the most concrete second-order picture: shortages of liquefied petroleum gas cylinders had already pushed restaurants to alternative fuels, and the urea and fertiliser shock would surface only after the rainy season, with delayed pressure on food prices.

Inflation was another issue. Prices are still catching up to the 8% shock of three years ago, working their way through wages, rents, and contracts. A potential return to 3 or 3.5% inflation isn't relief: prices don't fall back; they just climb more slowly from an already-inflated base. This is why consumer confidence shifted from budgetary to behavioural: Belgium and Germany reported that households were parking money rather than lacking it; Germany's e-commerce channel grew by more than 3% in Q1 precisely because consumers were using online for price comparison and bargain-hunting. Australia recorded its worst consumer confidence since 1968 (including during COVID). Ireland’s consumer confidence lost 18% between February and April. Italy's stable volumes were considered to be masking speculative pricing by operators.

However, two other points caught our attention.

The first was Shein and Temu. Every European delegate and the Australian delegate cited them by name. Australia now records a 5% share of the entire national fashion category for what its retailers call "Sheemu", only two years after Shein and Temu entered the market. The diagnosis was unanimous: these players operate outside the safety, sustainability, and consumer-protection regime that binds incumbents. Customs and tariff reforms are in train, no association reported by then, a measure that had yet moved volumes.

The second was European regulatory paralysis. Many European associations complained that Europe has lost its capacity to think strategically because it had been firefighting since COVID. The competitiveness agenda, regulatory simplification, and the response to third-country platforms compete now with three further fronts: unfair trade practice rules between brands and retailers, an ongoing sustainability review that has been simplified but not lightened, and a geopolitical paradox (the need to open new trade partners, Mercosur, Australia, even China, while confronting Chinese platform competition at home). The textile sector's stop-and-go on circularity was the clearest illustration. Brussels, a delegate observed, now needs "to simplify the simplification procedure."

While none of this is breaking news, what was striking was the unanimity among peers from geographies with entirely different institutional and consumer conditions, suggesting that we are not in a cycle but facing a structural difficulty that won’t be resolved through tax cuts or elections, especially in Europe.

Second horizon: How policy could evolve in reaction, tomorrow

If the environment remains durable, the next question is what governments could do about it. What is noticeable about it is a radical change in vocabulary.

In May, Gita Gopinath, until recently the first deputy managing director of the IMF, now returned to Harvard, used an op-ed in the Financial Times to warn that governments constrained by fiscal space may rely on "broad-based price controls, financial repression, nationalisations, and pressure on central banks to absorb fiscal risk." While she did not endorse those instruments, she flagged them as a scenario that markets are currently not pricing.

Adam Tooze, the Columbia University historian, extended the argument on his Substack feed (link), observing that the ‘Washington Consensus’ (in his words, the framework defining which policy instruments were respectable and which were not) had already been quietly loosened. Emerging market central banks have been combining inflation targeting with foreign-exchange intervention, capital controls, and macroprudential measures for years. According to Tooze, even the IMF and the BIS moved to rationalise these practices. What Gopinath called the "Four Horsemen of Heterodoxy" (price controls, nationalisation, fiscal-monetary coordination, financial repression) are not the arrival of something new, but, in Tooze’s view, the acknowledgement of something already underway:

• Price controls, not in the crude 1970s sense of a state-set price for milk, but in a much more modern sense: category-specific caps, windfall taxes, mandatory margin disclosures, or coordinated pressure on food, energy, and household basics. In Berlin, Spain's retail federation and EuroCommerce flagged food as the next political battleground after fuel, which is where this instrument could land first.
• Financial repression, in practice, means real interest rates deliberately held negative for an extended period. Not as an accident of monetary policy, as during the pandemic, but as policy, with financial regulations designed to prevent avoidance. For a business whose cash reserves earn nominal returns and whose long-term debt was contracted at higher real rates, financial repression is a wealth transfer of significant scale. It is also, historically, the least politically visible of the four instruments, which is precisely why governments could choose it.
• Targeted nationalisation, or, as Tooze puts it more accurately, the threat of such measures. The instrument works even when not in use. In sectors with strategic exposure (energy, telecoms, critical infrastructure), the credible possibility of state intervention shapes corporate behaviour. Retail is not first in line. But flagship real estate in politically sensitive city-centre locations is closer to the frontier than many CEOs assume, particularly for members whose flagship building has cultural or heritage status independent of the retailer occupying it. The recent example of the Paris mayor considering buying the BHV building is an illustration of such a change (link to the news and our analysis of the BHV case here).
• Fiscal-monetary coordination: central bank independence is not being abolished but renegotiated, with a direction toward greater accommodation of fiscal deficits. The implication for members whose treasuries hold non-euro or non-dollar balances is that the "backstop" investors are pricing may become a policy commitment rather than a discretionary intervention, with consequences for currency stability, cross-border capital flows, and the cost of any debt not held on a hedged basis.

None of these instruments is for real now; however, they are on the policy table in ways they were not five years ago, and retailers should not be wondering if they might be used by governments, but prepared for the potential when.

Third horizon: there might be a bigger, more structural shift coming in the long run

The Economist recently observed that for most of the past century, rich countries shared prosperity through a simple settlement: raise revenue mainly by taxing labour and consumption and redistribute through cash transfers (link to our report). That model may not survive the advent of artificial intelligence.

The reasoning is that if AI shifts income from labour to capital at anything like the scale its promoters suggest, the tax base built on labour income collapses. Governments will still need revenue (probably more, if unemployment is high), but they will have to find it elsewhere. The average OECD member currently raises about half its tax revenue from labour and roughly a third from consumption; the United States, which has no national consumption tax, is especially dependent on labour. The obvious substitutes are heavier consumption taxes, capital taxes, and, more radically, spreading ownership of the technology itself through equity distribution, sovereign wealth vehicles, or expanded public pension shareholding.

This is obviously not going to happen tomorrow, but it might be a reality within ten to fifteen years. A department store CEO signing a twenty-year lease on a store is implicitly betting on the demand structure of an economy whose tax and distribution logic may look very different by the time the store amortises.

Two implications matter for department stores:

• The first is that consumption taxation (VAT in Europe, sales tax in the United States, GST across most of Asia) is the shock absorber most likely to be adjusted upward. Every point of consumption tax is, at the margin, subtracted from the department store proposition. Members whose businesses are most exposed to price-sensitive segments should model this explicitly rather than treat it as background noise.
• The second is that the political legitimacy of large capital-owning organisations will be examined in ways it has not been for a generation. Department stores are not tech giants, but they are visible, publicly recognised holders of significant real assets, and in a number of markets, they are among the largest single occupiers of prime urban real estate. In the tax-and-redistribution conversation that AI will force, they will not be invisible.

The fourth reading: the end of neutral ground

At the end of June, IADS attended the opening session of a three-year research programme run by EM Normandie's AGORA institute, in partnership with Georgetown University and Florida Atlantic University, on the politicisation of business (report available here). Practitioners from L'Oréal, Google, Ubisoft and Airbus sat with academics from four American and two European institutions. The question was simple: can a company still credibly claim to be apolitical?

The workshop concluded that the answer was a clear no, or at least, not without effort. Once corporate activism has become the norm, neutrality is itself a position. It can be defended, but only if it is asserted and practised consistently. Silence is legible as a choice (and legible differently to different constituencies).

Two of the workshop's findings added up to the first three horizons mentioned earlier in ways that are directly relevant to the department store:

• The first is procedural: the credibility of a corporate position does not come from the position itself, but from the transparency of the process that produced it (who sat at the table, whose incentives dominated, whether an ethical voice was present at the strategic level rather than in an advisory function). In a politicised environment, decisions are read cynically by default, and only procedural discipline earns the benefit of the doubt.
• The second is structural: size changes the rules. Formal procedures, ethics functions, reputational exposure and lobbying capacity all scale with the organisation. Large firms hold a structural advantage in regulation (legal complexity and access to institutional channels favour the better-resourced), but that advantage shades into regulatory capture when they are the only actors able to shape the rules. For a format whose members are often among the largest single retail employers in their market, this ambiguity is not academic. It is the terrain on which every ESG commitment, every tax-optimisation choice, every sourcing decision will now be read.

For a format that trades on a century or more of accumulated trust, this matters. Trust takes years to build. It can be destroyed in a single decision. The calculation for any political position is not "Is it correct?" but "What does it cost in trust, and is that cost recoverable?" That calculation argues for procedural discipline over substantive boldness, which, paradoxically, is an issue for a format looking for reinvention.

What the newfound macro-exposure of department stores means

Department stores are macro-exposed in a way most operating conversations do not yet acknowledge. While conversations on customer traffic, category performance, and format innovation remain obviously crucial, they are now nested inside a set of political and macro variables that used to be in the background. This suggests that, when starting new commercial cycles, CEOs should ask their organisations an additional new set of questions, taking into account a macro-political focus:

• On cash and debt: if real interest rates are held negative for an extended period as a deliberate policy, how does that change the cash strategy, the debt posture, and the willingness to hedge?
• On pricing: if category-specific price controls or windfall measures land on food, energy, or household basics, does the assortment structure absorb the change gracefully, or does it distort the proposition?
• On consumption taxation: if the largest market raises VAT or its equivalent by two to three points over the next decade to substitute for eroded labour taxation, does the value proposition hold, or is there a need to reprice?
• On real estate: do the flagship locations sit in cities whose political posture toward large capital-owning organisations is stable, or is there a need to model exposure scenarios?
• On corporate posture: have retailers consciously chosen their position on the questions their society will force on them, or are they relying on a silence that is now legible as a choice? And if they have chosen, is the process that produced that choice defensible under scrutiny?

None of these questions has a universal answer; they depend on context, market, and governance. However, they are meant to be run.

Credits: IADS (Selvane Mohandas du Ménil)