What: Global economic profit has rebounded to record highs, led by technology giants, capital growth in North America and China, and a resurgence in value creation across key sectors.

Why it is important: This rebound demonstrates how technology, regional capital flows, and strategic innovation are reshaping global profit pools and driving uneven recovery across regions and industries.

After years of decline, global economic profit has surged to an all-time high, reaching $1.2 trillion per year between 2020 and 2024—50 percent above levels seen in the late 2000s. This resurgence is largely attributed to the extraordinary performance of the “Magnificent Seven” technology companies, which alone generated $247 billion in economic profit, as well as robust capital growth in North America and China. While technology and digital solutions have been central to this rebound, North American consumer goods, pharmaceuticals, and industrials also contributed significantly, and Chinese companies saw strong gains in consumer products and technology. However, the recovery is not uniform: Europe’s economic profit has remained flat, and 17 percent of European companies, especially in consumer and retail, are under transformation pressure or at risk of restructuring. The energy and materials sector saw mixed results, with declines in Asia, Europe, and North America offset by gains in Latin America and the Middle East. The data underscores the importance of creating value above the cost of capital and highlights the need for strategic adaptation in a rapidly evolving global landscape.

IADS Notes: The rebound in global economic profit to all-time highs between 2020 and 2024 reflects a profound shift in value creation, driven by technology giants, capital growth in North America and China, and the rapid transformation of Asia-Pacific’s retail and consumer sectors. As highlighted by BCG in June 2025, companies are navigating a landscape shaped by technological disruption, multipolarity, and the emergence of the Global South as a powerful economic force. Visa’s January 2025 outlook confirms that global economic growth is regaining momentum, with North America and China leading the recovery, while Sifted’s June 2025 report reveals that US founders are aggressively adopting AI and scaling businesses faster than their European peers. However, the recovery is uneven: BCG’s July 2025 analysis shows that 17% of European companies, particularly in consumer and retail, remain under transformation pressure, facing margin challenges and restructuring risks. Meanwhile, Asia-Pacific’s retail sector, according to BCG in April 2025, is leveraging digital innovation and strategic risk-taking to drive growth, underscoring the region’s increasing influence on global profit pools and investment flows.

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The IADS released the premiere edition of its Global Retail Risk Index in September 2025 with the aim of providing a strategic tool enabling regional comparisons to guide retail expansion and investment. With tariff and geopolitical shocks potentially creating new economic geographies, accurate and comparable data is the basis of cutting through the noise of new developments with unknown impacts.

Recent developments have exposed retailers to sudden tariffs, currency swings, regulatory shifts and store-level security threats. Trade wars and conflicts have increased freight costs, delayed shipments, and forced companies to reassess their sourcing strategies. Despite rising scepticism around economic judgments and forecasts in a world encountering significant structural change, reliable data forms the foundation of informed decision-making. Cross-disciplinary knowledge combined with ever-improving data and scenario tools enables decision-makers across sectors to contextualise relevant information for better decision-making. To this end, the Global Retail Risk Index uses open-source data from the World Bank for comparability and accuracy in indicator definitions.

This IADS Exclusive focuses on analysing each of the eight regions in the Global Retail Risk Index and contextualising key data, intra-region differences within aggregates and other developments not captured in hard figures. The complete Global Retail Risk Index Report can be found here.

  IADS Global Retail Risk Index: A quick overview   

The IADS Global Retail Risk Index collects data on risk factors affecting the retail sector globally. Providing a comparable overview of macroeconomic factors affecting the retail sector across eight regions and 31 indicators, this report aims to inform considerations for potential market expansion, safeguarding profitability and preserving supply-chain resilience.

A ranking methodology is used to compare regions with no absolute meaning for regional scores. Scores allow comparisons among regions, with lower scores signalling lower risk for the retail sector. A ‘risk acceptability’ assessment is created based on how comfortably a region can absorb additional risk for the retail sector. The key limitations are uneven data availability, a retail-specific subjective notion of ‘favourability’ and an inherently static nature given historical data in fast-moving political and economic conditions.

Findings

The report finds that based on this framework, the ranking of regions based on risk acceptability, from low to high risk, for the retail sector is as follows:

1. North America
2. East Asia and Pacific
3. European Union (including Switzerland and United Kingdom)
4. Latin America and the Caribbean
5. South Asia
6. Eastern Europe and Central Asia
7. Middle East and North Africa
8. Sub-Saharan Africa

Secure markets: from North America to Western Europe

North America: still the strongest

This region encompasses the US, Canada, and Bermuda and has the strongest performance across economic, business, logistics and infrastructure indicators.

The US and Canada are developed economies that face similar struggles of a high age-dependency ratio and potential labour force shortages. The dependency ratio, which reflects the number of dependents to the working age population, is high due to ageing societies combined with a decline in the working age population. Political developments around immigration reform affect an already strained workforce that could potentially lead to severe consequences in the long run.

The North American region has the lowest population density, reflecting key considerations around the number, size and distribution of stores, as well as digital connectivity and order fulfilment for retailers. Currently ranked last in renewable energy consumption, this is a clear growth opportunity across sectors. Early movers in the retail sector could benefit from subsidies on renewable energy adoption.

The global impact of US President Donald Trump can hardly be overstated. The imposition of tariffs and domestic policy changes has caused global ripples that are being contended with at every level. Major department stores such as Macy’s, Nordstrom and Dillard’s are already hiking prices across categories to combat tariff pressures. Despite sudden policy changes by Trump, long-term impacts will depend on other countries’ and the private sector's responses, and remain to be seen.

Overall, North American markets are still the most favourable for retail risk acceptance given developed economies, massive capital, and US political hegemony. In general, its performance on business, economic, infrastructure and logistics indicators is the best compared to other regions. However, incoming policy changes can further impact international retail expansion in the region. In an uncertain world, the hegemon is the safest choice.

East Asia and the Pacific: rebounding strong

The East Asia and Pacific region has the second-most favourable risk acceptability for the retail sector. Countries in this region can be divided into three categories: developed economies such as Japan, Singapore and South Korea, developing economies such as China, Thailand, and Cambodia, and several Small Island Developing States (SIDS).

Broadly, the region has top rankings in economic, business, and supply chain indicators with improvements possible in full literacy and electricity access, and female workforce participation. Most East Asian countries, known to be saving economies, also showed positive real interest rates encouraging consumer saving with the Chinese government injecting a 300 billion yuan consumption stimulus to boost consumer confidence. Performance in climate indicators overall can be improved, with climate change affecting tropical countries and SIDS worse than others.

The developed retail heavyweights in the region (Japan, Singapore, and Hong Kong) are experiencing varying performances. Japan saw record tourist arrivals but the strengthening yen has led to a drop in spending. Retail sales in Singapore fluctuated in the first half of 2025 but are beginning to see a rise. After over a year of consecutive months of decline in the retail sector, Hong Kong is finally recovering however with mixed effects from tourist spending and currency effects. These countries also performed well on economic, business, and supply chain indicators, as well as social and infrastructure indicators, which enable a developed retail sector.

The Chinese economy is struggling due to weak domestic demand, a sluggish real estate sector, and ongoing deflationary pressures that limit consumer and business growth. It is also reeling from a tariff war with the US and required policy intervention to stimulate domestic consumption so that Chinese retail sales began to rise again. Chinese tourists remain a key consumer group in neighbouring countries being specifically targeted by retailers to encourage spending in Hong Kong, South Korea and Thailand.

Developing Southeast Asian countries and SIDS performed worse on risk indicators. Full access to electricity and complete literacy, which form the basis of organised economic activity, still need to be achieved in several countries. Furthermore, Thailand was wracked by severe floods this year, and its tourism challenges have been compounded by its ongoing border conflict with Cambodia. SIDS face similar challenges as given its limited data availability, market capitalisation and domestic credit performance is suboptimal. They are also one of the worst affected by climate crises with over a third of Tuvaluans applying for a climate refuge visa to Australia, marking the world’s first climate refugees.

Despite this grouping including economies of extreme sizes, the East Asia and Pacific region is low risk relative to other regions. While large economies such as Japan, Australia, and Singapore are the nuclei of the region, smaller economies rely on them geographically and economically to differing extents.

European Union, Switzerland and the UK: stable fundamentals, volatile politics

The European Union, along with Switzerland and the UK, is the third-most risk-acceptable region. This region is one of the most cohesive, with indicator divergences being less pronounced than in other regions. This is due to euro, including uniform monetary policy among euro countries, and the basic requirements that must be met to join the European Union. While Switzerland and the UK are not part of the EU, they are similar to some EU countries in terms of size and GDP.

Favourable indicators for this region are economic indicators, including FDI, demographic indicators, such as female workforce participation and population density, and supply chain risks, like logistics performance index and container port traffic. Climate risk indicators are also favourable, ranking second in forest coverage and proportion of the population exposed to PM2.5 air pollution.

Like other developed economies, the European Union faces a high dependency ratio and an ageing workforce, with persistent concerns over inflation and unemployment in certain member states. Political instability, driven by US policy shifts and the war in Ukraine, is causing widespread disruptions. Recent turmoil in major countries like France has escalated uncertainty for both consumers and retailers, with Primark, for example, bracing for lower sales and potential tax hikes, further dampening confidence and spending. Overall, the EU, Switzerland and UK region sees high risk acceptability due to its favourable performance on relevant indicators despite current political shocks.

Cautious promise: Latin America and South Asia

Latin America and the Caribbean: smack-dab middle

Consisting of large developing states like Brazil, Mexico and Colombia, smaller developing countries like Peru and Ecuador, and several SIDS, Latin America and the Caribbean lies perfectly in the middle of the risk acceptability spectrum. While it is the best performer on climate indicators, the region also faces significant challenges. Demographic indicators in this region see mixed performance; while the age dependency ratio is favourable, gaps exist in literacy, female workforce participation and population density. There are also significant gaps in infrastructure and supply chain indicators.

The region is rife with income inequality, which in turn affects consumer spending and the mix of products demanded. High income inequality polarises consumer demand, benefiting luxury and discount retailers while squeezing the mid-market. This reduces overall spending power, heightens volatility, and requires retailers to adapt pricing and positioning to navigate a fractured market.

Turbulence across Latin America and the Caribbean, driven by economic instability, governance issues, and social unrest, pose hurdles for retailers. Former Brazilian president Jair Bolsonaro was recently convicted of a coup, which will have further consequences for the biggest economy of the region depending on Trump’s response beyond high tariffs and sanctions. Venezuela’s hyperinflation and supply chain breakdowns, alongside a dictatorship regime in El Salvador increases crime-related risks and policy uncertainty around the region and require retail supply chain resilience in these volatile markets.

South Asia: dense markets and diverse challenges

This regional classification consists of only eight countries but represents a huge percentage of population due to the inclusion of highly populated countries such as India, Bangladesh and Pakistan. The region tends towards low risk acceptability due to insufficient FDI flows, low female workforce participation, and vast unorganised economic sectors. Performance on supply chain and infrastructure indicators needs improvement as well.

One of the key advantages of the region is high population density, which can be attractive for physical retail locations while acknowledging high urban digital penetration. For example, India’s fast-growing luxury market and high-spending consumer base make it a prime destination for retail expansion as evidenced by Galeries Lafayette launching its first Indian store in Mumbai later this year and a second one in New Delhi next year.

Geopolitically, the South Asian region faces tensions between nuclear powers India and Pakistan, border disputes with China, and internal instability in Afghanistan, Sri Lanka, and Myanmar. These dynamics can potentially create trade disruptions and impact consumer confidence, where careful market entry strategies must be balanced with growth opportunities.

High-stakes: Eastern Europe, MENA and Sub-Saharan Africa

Eastern Europe and Central Asia: adapting amid geopolitical shocks

This regional classification consists of several small and developing countries not part of the EU. The region is the worst performer on infrastructure and supply chain indicators. Performance in climate indicators, including forest coverage and renewable energy adoption, is towards the bottom as well. The key strengths of the region are high literacy, universal internet and electricity access and regulatory efficiency.

Geopolitical and economic instability has intensified in Eastern Europe and Central Asia as a result of the Russia-Ukraine crisis. Western sanctions against Russia and redirected trade flows have created labour shortages and forced many economies to adapt. Retail expansion in this region needs careful planning due to mixed performance across indicators and the prevalence of geopolitical crises.

Middle East and North Africa: oil-rich expansion vs. vulnerable markets

The Middle East and North African region include high-income countries like Qatar, Oman, and the UAE, as well as lower-income countries such as Morocco, Algeria and Lebanon, among others. The region ranks next-to-last in terms of risk acceptability due to mixed performance on indicators.

This region is characterised by extreme inequality between high-income Gulf countries where retail expansion is not just supported but encouraged, contrasting with poorer Northern African countries, where economic, infrastructure and supply chain performance is poor. Overall, the region is strong in inflation control, mobile connectivity and market capitalisation. However, gaps exist in full literacy, female labour participation and environmental resilience. Ongoing conflicts in Gaza, Syria, Yemen, and Lebanon have deepened instability and intensified humanitarian crises with regional repercussions.

Sub-Saharan Africa: high promise amid structural barriers

This regional classification includes several low-income countries, with regional powers being Nigeria and South Africa. The region exhibits the lowest risk acceptability as it faces significant gaps in development indicators, even given high regional inequalities.

Sub-Saharan Africa ranks the highest in renewable energy consumption and female workforce participation. It has a high dependency ratio due to a large chunk of its population being children, indicating incoming growth of its workforce. Retail, being a highly feminised sector, also benefits from high female labour participation. However, the region faces a dearth of FDI, market capitalisation and domestic credit. Infrastructure indicators and supply chain connectivity must be improved to encourage large-scale retail expansion.

Widespread violence and crises in sub-Saharan Africa, such as insurgencies in the Sahel, ethnic unrest in Nigeria, hyperinflation in Zimbabwe, and instability in Congo, further threaten supply chains, deter investment and dampen consumer confidence. This is perhaps the region with the most potential but with insufficient support structures at present.

Conclusion: resilience through data

The current global economic scenario is marked by slow growth, persistent inflation in some regions, and elevated geopolitical tensions that have disrupted trade flows and weighed on consumer sentiment. Retailers face ongoing headwinds from tariff escalations, volatile prices, and political uncertainty, requiring resilient supply chains, proactive risk management, and strategic market focus to defend margins and capture growth.

The debut edition of the IADS Global Retail Risk Index underscores the need for retailers to embrace data-driven decision-making amid a changing landscape. The Index reveals that risk acceptability varies sharply by region, with North America, East Asia, and Europe remaining the safest bets, while Latin America, Africa, and parts of Asia face volatility from inflation, social unrest, infrastructure gaps, and conflict. Across all markets, retailers must contend with supply chain fragility, fluctuating consumer demand, and new regulatory hurdles, but those leveraging reliable data, scenario analysis, and adaptive strategies are best positioned to pursue expansion and safeguard profitability amidst global uncertainty.

As digital adaptation and sustainability grow in importance, future success will depend on leveraging new scenario tools, tracking risk indicators, and remaining responsive to regulatory shifts and consumer trends. Retailers should prioritise continuous risk assessment, diversify sourcing strategies, and invest in regional intelligence to anticipate and mitigate disruptions before they escalate. Going forward, future editions of the IADS Global Retail Risk Index will allow multi-year comparisons, further empowering retail leaders to strengthen resilience, safeguard profitability, and identify new opportunities in an era defined by uncertainty and transformation.

For complete detailed data, interpretation and indicator rankings by region, please access the full IADS Global Retail Risk Index Report 2025 here.

Credits: IADS (Anchita Ranka)

What: Macy’s has returned to sales growth for the first time in years, driven by its turnaround strategy and strong performance from Bloomingdale’s and Bluemercury.

Why it is important: Macy’s turnaround demonstrates how legacy retailers can leverage portfolio optimisation and customer-centric strategies to regain relevance.

Macy’s recent quarterly earnings have marked a significant turning point, with the company achieving its first sales growth in years and sparking renewed investor confidence. This positive momentum is largely attributed to the “Bold New Chapter” strategy, which emphasises customer experience, data-driven store optimisation, and a sharpened focus on high-performing divisions like Bloomingdale’s and Bluemercury. The luxury and beauty segments have consistently outperformed, with Bloomingdale’s posting its fourth consecutive quarter of growth in September 2025, reinforcing the value of Macy’s differentiated portfolio approach. Meanwhile, activist investors continue to press for aggressive value creation through potential spinoffs, real estate monetisation, and capital expenditure cuts, highlighting the ongoing tension between immediate financial returns and sustainable transformation. The convergence of operational improvements, strategic asset management, and evolving investor expectations underscores the complex challenges and opportunities facing Macy’s as it seeks to redefine its role in the modern retail landscape.

IADS Notes: Macy’s transformation is unfolding against a backdrop of persistent activist investor pressure, as Financial Times and WWD reported in December 2024, with calls for spinoffs, real estate monetisation, and capital expenditure reductions. BoF’s December 2024 analysis underscores the tension between unlocking property value and ensuring long-term retail viability. Inside Retail’s January 2025 coverage of Macy’s “Bold New Chapter” strategy highlights the company’s focus on customer experience and data-driven store optimisation, which has begun to yield positive results. Meanwhile, WWD’s September 2025 report confirms Bloomingdale’s as a key growth driver, supporting Macy’s luxury and portfolio strategy amid ongoing transformation.

Has Macy’s finally turned the corner?

What: Severe tariff anxiety is fueling a short-term surge in US retail sales, as consumers rush to buy before anticipated price hikes.

Why it is important: Severe tariff-driven consumer behavior is temporarily boosting sales, but this trend is unsustainable and signals deeper volatility ahead.

The recent surge in US retail sales is less a sign of economic strength and more a reflection of consumer anxiety over impending tariff increases. As tariffs loom, shoppers are engaging in panic buying, driving up transaction sizes and accelerating purchases across the retail spectrum. Lower-end retailers such as Walmart and Dollar General are outperforming, benefiting from both increased market share and a shift of more affluent consumers trading down in anticipation of higher prices. Off-price giants like TJX, Ross, and Burlington are also thriving, as consumers perceive them as more resilient to tariff impacts, even if this perception does not fully align with reality. Meanwhile, struggling retailers like Macy’s and Kohl’s are experiencing temporary improvements, largely due to short-term consumer behavior and strategic adjustments, but these gains are likely to be fleeting. Industry experts warn that this period of elevated sales is the calm before the storm, with the true impact of tariffs expected to hit in the coming months, leading to more isolated winners and a longer list of losers as the sector faces heightened volatility and structural challenges.

IADS Notes: Recent analysis from April and July 2025 confirms that tariffs are fundamentally reshaping consumer behaviour, with panic buying and trading down driving unexpected sales growth. Major retailers like Walmart are leveraging their market power to maintain margins and attract new customer segments, while off-price and value channels benefit from shifting demand. However, March 2025 and May 2025 reports from Forbes and The Economist caution that these gains are temporary, as department stores like Macy’s face persistent structural headwinds and the broader sector braces for volatility once the full effects of tariffs materialise.

How to explain the recent surge in retail sales?

What: GenAI tools and decentralised experimentation are enabling employee-driven innovation in retail, but only a minority of companies have built the systems needed to scale these gains.

Why it is important: The gap between GenAI adoption and successful scaling underscores the need for investment in infrastructure, oversight, and employee engagement.

Retailers are increasingly turning to GenAI tools and decentralized experimentation to unlock employee-driven innovation, yet most organizations remain unable to scale these benefits across their workforce. While advanced AI agents and GenAI platforms are transforming decision-making, customer experience, and talent development, only about 10% of retailers have successfully implemented the robust systems required for widespread impact. Those that do achieve measurable results, such as 4.5% annual productivity growth and revenue increases of 6% or more, by moving beyond isolated pilots to comprehensive transformation and knowledge-sharing frameworks. The most successful companies treat GenAI as an “exoskeleton” that augments human capability, empowering employees to tackle previously unattainable tasks and fostering a culture of continuous adaptation. However, persistent challenges in oversight, transparency, and technical infrastructure prevent the majority from realising GenAI’s full potential. These findings confirm that sustainable innovation depends not just on deploying new technology, but on building the organizational systems, trust, and engagement necessary to amplify and scale employee contributions.

IADS Notes: By September 2025, advanced AI agents had begun transforming retail decision-making and talent development, but only 10% of companies had scaled these solutions due to oversight and transparency challenges. July 2025 research emphasised that scalable value from AI requires reimagining operations, while March 2025 findings showed GenAI’s “exoskeleton” effect on talent and productivity. Leading retailers achieved 4.5% annual productivity growth by integrating AI, and those investing in infrastructure and robust monitoring systems reported faster development and higher user satisfaction.

How every employee can become an innovator

What: AI agents are rapidly transforming commerce by automating shopping journeys, payments, and customer interactions, shifting power from retailers to digital intermediaries.

Why it is important: This shift marks a fundamental reconfiguration of retail, requiring brands to adapt to new power structures and data-driven engagement models.

The retail industry is undergoing a profound transformation as AI agents become central to the shopping experience, automating everything from product selection to payment and delivery. These autonomous systems are now mediating transactions, personalizing recommendations, and handling secure payments, making the customer journey faster, more intuitive, and highly tailored. As a result, the traditional dominance of retailers and e-commerce platforms is giving way to digital intermediaries—AI agents and tech giants—that control access to consumers and orchestrate purchasing decisions. Retailers must now focus on optimizing their data, APIs, and engagement strategies for machine readability, as conventional marketing tools like SEO and advertising lose their effectiveness. The integration of AI-driven payment solutions is further democratizing advanced commerce technologies, enabling even small merchants to offer seamless and secure experiences. However, this evolution also raises the stakes for transparency, data protection, and responsible AI use, as trust and accountability become critical to sustaining consumer confidence and regulatory compliance.

IADS Notes: Recent developments in September 2025 confirm that agentic commerce is rapidly shifting power structures in retail, with AI agents automating transactions and redefining consumer relationships. Visa’s AI-powered payment solutions, launched in May 2025, exemplify how seamless, secure, and personalized shopping is becoming accessible to all merchants. At the same time, industry analysis highlights the urgent need for robust standards of trust and transparency as AI agents gain autonomy, compelling retailers to balance innovation with ethical and operational rigor.

How AI agents are reinventing the future of commerce

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CLICK HERE TO SEE THE PHOTOS OF ETAM

Omnichannel strategies have become essential for brands seeking to enhance customer experience while driving sales. From that perspective, few brands have demonstrated the resilience and adaptability of French lingerie brand Etam. From its inception in 1916 to becoming a multinational underwear powerhouse with over 1,300 stores across 57 countries, Etam has orchestrated an omnichannel transformation that breaks down the traditional physical and digital silos. Through their clienteling application, fundamentally shifting how the brand approaches customer relationships, inventory management, and in-store operations, Etam offers department stores interesting insights into how heritage brands can embrace technological innovation without sacrificing the human touch that defines exceptional retail experiences.The IADS visited their Paris flagship store in front of Galeries Lafayette’s Haussmann department store for a private presentation of their clienteling tool, largely developed in-house.

The Etam lingerie empire: from product innovation to omnichannel revolution

Paradoxically, for a now iconic French brand, Etam was created in 1916 by Max Lindemann in Berlin, Germany. The true foundations of Etam's lingerie legacy were established in 1924 with the launch of their first "indémaillable" (run-resistant) lingerie collection, marking a significant innovation in women's underwear garments at the time. In 1928, Etam expanded into France, opening a boutique on Rue Saint-Honoré in Paris and a first French factory in 1936. In the 1960s, Etam revolutionised lingerie again by introducing ultra-comfortable cotton materials.

However, the company's transformative journey began when Martin Milchior and his family acquired the brand in 1963, establishing what would become the Etam Group. While the company expanded into ready-to-wear in 1963, lingerie remained its core identity and strength. In 1965, it created just-in-time automatic restocking. The 1970s saw a transformation in retail presentation, with underwear and clothing displayed on hangers for self-service. In 1983, Etam started its international expansion. In 1995, they formed a partnership in China, where they operated over 3,400 points of sale. In 2017, the company sold its Chinese operations.
Etam has evolved from a hosiery manufacturer into one of Europe's leading lingerie retailers with a significant global presence. One hundred years old, still family-owned and independent, the Etam Group operates 1,336 stores across 57 countries and employs approximately 5,656 people worldwide. The company's turnover reached €880 million in 2023. The group has diversified its portfolio to include several distinct brands: Etam (lingerie and ready-to-wear), Undiz (younger, trendier lingerie and loungewear), Maison 123 (premium women's ready-to-wear), Ysé (B Corp-certified mid- to high-end lingerie), and Livy (high-end, luxury swimwear and lingerie). This multi-brand strategy has allowed Etam to target different market segments while maintaining its expertise in intimate apparel. Etam has maintained its competitive edge, primarily through its annual runway show during Paris Fashion Week, which has become a significant event in the lingerie industry since its inception in 2017. Finally, the company supports innovation through the WeDareLab acceleration programme, assisting lingerie and fashion brands and innovative tech startups looking for expert support in the acceleration phase.
Under the leadership of the returning CEO Marie Schott,  who has been instrumental in revitalising the brand's image and marketing strategies, the then-traditional retail company embraced an omnichannel approach. With digital sales now representing 15% of the revenue, the brand faced the challenge of connecting brick-and-mortar with online. As Etam's Global E-commerce, Marketplaces & Omnichannel Director Romain Sabatier explained to the IADS, "for a long time, there wasn't an omnichannel role. There were digital teams and retail teams." This siloed approach needed to change.
Connecting physical stores with the digital ecosystem meant digitalising the in-store experience through three main projects: a comprehensive clienteling app for sales associates, a ship-from-store initiative to maximise inventory potential and connected fitting rooms to enhance customer service. Along with other key stores, the boulevard Haussmann flagship store is a one-of-a-kind store for the brand and a testing ground for innovative solutions. In November 2019, Etam inaugurated this new flagship store in front of the Galeries Lafayette store. Located in a striking building with a 10-meter-high rotunda, the 500 sqm three-level store emphasises the building’s original volumes while offering a contemporary, apartment-like experience through a mix of raw stone, light wood, glass, and vintage furniture. Strategically located, it attracts a diverse clientele, predominantly tourists, contrasting with the loyal customer base typical of other locations. This unique customer mix provides interesting use cases for experimentation.

Etam’s clienteling app key features: customer identification, personalisation and additional sales

Developed internally, two objectives were assigned to the Etam clienteling master app. Regrouping other scattered existing systems and designed to empower sales associates, it aims to:

-    Create mobility by removing sales associates from their cash registers. Historically, sales associates were confined to their cash registers. Supplying them with Android smartphones equipped with the app has revolutionised their role, created mobility across the store, and developed a more customer-centric business approach.

-  Ensure sales associates are as knowledgeable as customers who often research products online before visiting the store. The app consolidates all necessary tools, enabling associates to offer informed and personalised service.

The clienteling app development started from the traditional customer journey fundamental issue: customer identification typically occurs during the checkout phase, when the shopping journey ends and when it’s too late to propose other items or personalise the relationship. The app transformed this approach by enabling earlier customer identification through natural service touchpoints. Etam develops the app to match customer scenarios coming from actual field experiences. Here are a few examples:/nbsp]

-    One signature scenario involves Etam's bra fitting service. One of Etam's signatures is bra measurement, with all sales associates having a measuring tape around their neck. Many customers don’t know their size, which can vary from one product to another and over time. This service creates a natural opportunity to connect with customers, guiding them to the correct size. This data is then stored in the customer's account.

-    Another scenario is click-and-collect, an opportunity for customer interaction and additional sales. There is no click-and-collect dedicated counter in-store. Instead, customers ask the staff for their order, which is retrieved thanks to the app and fetched by the sales associate. The app transforms pickup visits into sales opportunities by giving associates immediate access to customer information, including loyalty points, wish lists, abandoned carts and cross-sell suggestions. For example, suppose a customer picks up a swimsuit. In that case, the app will suggest the matching pareo or tell the sales associate that the customer has enough points to benefit from a €10 immediate discount.

-   The app supports efficient returns processing. With 80% of Etam's online returns processed in-store, the app allows the store to benefit from this significant number of customer interactions. With RFID-equipped products, sales associates can scan the unique QR code on returned items and instantly retrieve the original purchase information and customer profile (85% of customers are identified). This efficient, hassle-free process allows them to focus on understanding return reasons and offering size or colour alternatives rather than only processing the return.

-    The app also supports CRM development by enabling personalised communication. Sales associates can send product recommendations via SMS, signed with their names, fostering a personal connection with customers. This approach, usually attributed to luxury brands, is democratised by Etam. It can also serve smaller stores which cannot carry the extensive product range. In that case, sales associates can order items for the customer to be delivered at home or in-store. Finally, the app is equipped with a phoning module. Sales associates typically call customers when they have just a few days left to redeem points or use a voucher.

The clienteling app is complemented by a tap-to-pay functionality, reducing lines at the cash desks and eliminating the need for separate payment terminals.

Inventory optimisation and connected fitting rooms

The ship-from-store initiative represents another pillar of Etam's digital strategy. By making store inventory available online, the brand improved stock rotation and delivery times. This required a significant mindset shift for store teams, who needed to embrace order preparation as a new part of their role. The key to this change was to help teams understand that online customers have the same needs as in-store customers, simply accessing products through a different channel.

In select flagship stores, connected fitting rooms with screens allow customers to request different sizes, colours, and complementary items by scanning the product QR code or simply asking for a sales associate's advice. This digital feature is highly relevant in the lingerie business as it prevents customers from dressing and undressing if they want to try other options. Customers’ requests appear on associates' apps. While the customer is informed about who will help them, the sales associate handling the request is identified and visible to other users. Developing these connected fitting rooms requires a delicate balance between offering enough relevant services to customers and avoiding offering them too many, which would slow down the fitting room rotation. For that reason, high-traffic stores are not equipped with connected fitting rooms. They also offer customers the option to request mobile payment for their purchase.

Technology adoption and change management

Before wider deployment, new features are extensively tested in pilot stores across all the group's brands. Being built internally, the app is optimised regularly thanks to a robust internal development team, allowing for rapid iteration and adaptation (2 to 4 weeks) based on real-world feedback, facilitating the adoption. Sales associate feedback is quickly considered, representing a great argument in case of reluctant people. Also, contrary to the cash desk system, only an hour or so is necessary to feel comfortable using the app, making sales, processing payments and managing loyalty. Additionally, consolidating previously scattered tools into a single master app significantly reduced complexity for store teams.

Despite potential resistance to new technology, Etam reports minimal challenges in driving adoption thanks to the leadership playing a pivotal role. The digital transformation initiatives are spearheaded by a team that combines technical expertise with a deep understanding of retail operations. This synergy has been key in understanding the true nature of customer interactions, overcoming challenges and ensuring the successful implementation of new technologies. Training and adaptation have also been crucial. Regular updates and training sessions ensure sales associates are ready to use new features effectively. Finally, the company organises annual meetings to showcase new functionalities and address misunderstandings, fostering a culture of continuous improvement.

Finally, as they work with a store rotating zoning system, sales associates are not individually rewarded for their physical or omnichannel sales. However, 100% of the digital turnover is allocated to the stores according to click-and-collect and catchment areas, making e-commerce adoption easier.

By investing in technology that enhances rather than replaces human interaction, Etam has created a seamless omnichannel experience that bridges the digital-physical divide. The clienteling app, ship-from-store capabilities, and connected fitting rooms represent more than technological innovations; they place customer experience at the centre of the business. The company ensures that technology serves genuine customer and associate needs by developing solutions internally, testing extensively in flagship locations, and rapidly iterating based on real-world feedback. The Etam example is particularly relevant for IADS members as it demonstrates how a century-old, family-owned brand can drive a successful omnichannel transformation. Etam’s clienteling app shows how digital tools can empower store staff, enabling more personalised customer service, early identification of shoppers, and increased cross-selling, concerns widely shared by department stores. Etam's reallocation of online turnover to stores based on click-and-collect and catchment area, combined with the dismantling of silos between digital and retail teams, provides a possible answer to department stores omnichannel tensions.

Credits: IADS (Christine Montard)

What: Economic uncertainty, rising costs, and policy shifts are fundamentally contracting discretionary spending and reshaping the US retail landscape.

Why it is important: The convergence of tariffs, inflation, and labour market shifts is forcing retailers to adopt new strategies for resilience, reflecting trends identified in the past year.

The US retail industry faces a period of profound disruption as persistent tariffs, aggressive government interventions, and mounting macroeconomic pressures converge to reshape consumer behavior and business operations. The implementation of sweeping tariffs has driven up import costs by hundreds of billions of dollars, with annual household expenses rising and consumer confidence plummeting to multi-year lows. Retailers are being forced to overhaul their supply chains, embrace AI-powered analytics, and develop new pricing strategies to navigate these challenges. Meanwhile, inflation and rising costs for essentials such as housing, energy, and healthcare are eroding disposable income, particularly for lower-income households and working parents, whose participation in the labor force is declining. The contraction in discretionary spending is now evident across multiple retail sectors, with department stores and discretionary categories experiencing notable declines. In response, leading retailers are prioritising scenario planning and systems thinking, investing in resilience and adaptability to weather this volatile environment. These shifts are not only altering the competitive landscape but also setting new standards for operational agility and strategic foresight in the industry.

IADS Notes: Throughout 2025, sources from March to July confirm that tariff-driven cost increases and policy changes have led to a sharp decline in consumer confidence and spending, with 62% of Americans concerned about rising prices and 63% believing retailers are exploiting the situation. Retailers are restructuring supply chains, leveraging AI, and adopting new pricing strategies, while lower-income households face a disproportionate drop in disposable income. The adoption of geopolitical nerve centers and supply chain reinvention reflects the industry’s urgent shift toward scenario planning and resilience.

Contingency planning for tariffs

What: The sudden shutdown of key service providers exposes retailers to immediate disruptions in customer experience, sales, and brand trust.

Why it is important: The challenge of managing third-party dependencies is increasingly critical, as highlighted by recent high-profile outages and cyber incidents in the sector.

Retailers’ increasing dependence on third-party service providers for essential functions such as shipping, marketing, and customer service has introduced significant vulnerabilities into their operations. Recent abrupt shutdowns and service suspensions, like those involving Australia Post and Cashrewards, have demonstrated how quickly these dependencies can disrupt customer experience and erode brand trust. Experts stress that when a provider fails, customers hold the retailer accountable, regardless of the underlying cause. Immediate, transparent communication and rapid implementation of interim solutions are crucial to maintaining customer confidence and operational continuity. However, the complexity of today’s tech ecosystem makes it difficult for retailers to diversify or duplicate integrations, often leaving them exposed. Strategic, ongoing reviews of vendor relationships and tech stacks are now essential, as what was once considered non-core can quickly become mission-critical. Ultimately, retailers must strike a careful balance between outsourcing for efficiency and building in-house capabilities for resilience, revisiting these decisions regularly to avoid becoming hollow organizations vulnerable to external shocks.

IADS Notes: The risks highlighted by recent third-party provider failures echo the March 2025 Crowdstrike Falcon incident, which caused $5.4 billion in losses and exposed the dangers of deep third-party integration. RH-ISAC’s April 2025 report found that 41% of retail cyber incidents stem from third-party breaches, while coordinated attacks in May 2025 showed how quickly trust and value can evaporate. By June 2025, resilience and agile tech management were recognized as key competitive advantages, and BCG’s May 2025 research confirmed that only a minority of retailers have successfully adapted their tech strategies to this evolving risk landscape.

How retailers can mitigate the fallout when service providers shut down

What: AI-driven transformation is rapidly reshaping retail workforce structures, skills, and talent strategies.

Why it is important: These changes highlight the need for systematic upskilling and balanced AI-human integration, as confirmed by recent industry research.

The retail industry is experiencing a rapid transformation as AI integration accelerates, fundamentally reshaping workforce structures, required skills, and talent strategies. Recent research from September 2025 highlights that only 36% of retail workers feel prepared for AI-driven change, underscoring the urgent need for foundational skills such as adaptability and collaboration. At the same time, generative AI is altering the employment landscape, particularly for entry-level roles, with leading retailers focusing on augmenting rather than replacing human talent to achieve sustainable productivity gains. Despite widespread adoption, only 10% of retailers successfully scale their AI initiatives, but those who do outperform peers significantly, as shown by a seven-percentage-point advantage in five-year total shareholder returns. The shift toward skills-based organisations is evident, with 72% of retail workers now using AI tools, yet systematic upskilling remains a critical gap. The competition for AI-native talent is intensifying, with specialists seeking autonomy, growth, and meaningful projects over traditional benefits. These developments signal that the future of retail will be defined by organisations that can effectively blend technological innovation with human capability, ensuring both operational excellence and workforce resilience.

IADS Notes: In September 2025, research confirmed that foundational skills are now central to retail workforce adaptability, with only 36% of workers feeling prepared for AI-driven change. The same month, data from the Stanford Digital Economy Lab revealed that generative AI is most disruptive for entry-level roles, emphasising the importance of augmentation over replacement. July 2025 findings from BCG showed that only 10% of retailers successfully scale AI, but those that do achieve a seven-percentage-point lead in five-year TSR. Also in July, BCG reported that 72% of retail workers use AI, yet systematic upskilling is urgently needed. In June 2025, Forbes highlighted the growing competition for AI talent, with preferences shifting toward autonomy and meaningful work.

AI is moving faster than your workforce strategy. Are you ready?

What: Tesla’s former DEI lead, Kristen Kavanaugh, shares strategies for advancing inclusion and courage in the workplace amid political and organisational challenges.

Why it is important: The shift toward frameworks like FAIR demonstrates how retailers can balance inclusion with business performance, protecting both employee engagement and shareholder value.

Kristen Kavanaugh, Tesla’s former DEI leader, offers a candid perspective on championing diversity and inclusion during a period of heightened political scrutiny and organisational uncertainty. Drawing from her experience building Tesla’s DEI function, Kavanaugh emphasises the importance of compassion, courage, and practical action at the team level, even when broader support is lacking. Her advice—such as being diligent about pronouns and fostering a sense of belonging—reflects a growing industry trend: as legal and political pressures mount, many retailers are shifting from explicit DEI language to frameworks like FAIR (Fairness, Access, Inclusion, and Representation), focusing on measurable outcomes and business alignment. While some companies have faced backlash and financial loss from high-profile DEI initiatives, others have successfully maintained inclusion by adapting their approach and terminology. Kavanaugh’s story underscores that, despite external resistance, courageous leadership and thoughtful, outcome-driven strategies remain vital for building inclusive, resilient workplaces.

IADS Notes: The retail industry’s approach to DEI has shifted dramatically since late 2024, with leading companies like Walmart and Amazon adapting their strategies to balance inclusion with business performance. The emergence of the FAIR framework and the contrasting experiences of Target and Costco illustrate how practical, outcome-focused inclusion efforts can protect both employee engagement and shareholder value in a complex environment.

Tesla’s former DEI lead has some advice about fear in the workplace

What: Foundational and soft skills are now critical for long-term retail workforce adaptability and business success.

Why it is important: The focus on foundational skills aligns with evidence that successful retailers combine technological innovation with human capability development.

As technology rapidly transforms the workplace, foundational skills such as collaboration, adaptability, and communication have become essential for both individuals and organisations in the retail sector. Recent research analysing millions of job transitions demonstrates that employees with strong basic skills not only earn higher wages and advance more quickly but also adapt more effectively to industry changes. These foundational abilities, including social and critical thinking skills, are increasingly valued by employers who recognise their role in long-term performance and resilience. In contrast, specialised technical skills are subject to rapid obsolescence, making adaptability and problem-solving crucial for navigating ongoing disruption. Companies that prioritise foundational skills in hiring, development, and leadership practices are better positioned to build agile, future-ready teams. Investing in early-career development and embedding soft skills into management culture ensures that retail organisations can respond to evolving market demands, maintain operational continuity, and foster innovation. Ultimately, the ability to blend human strengths with technological advancements is now a defining factor for sustainable success in retail.

IADS Notes: Recent industry analysis confirms that foundational skills are central to retail transformation. In July 2025, only 36% of retail workers felt prepared for AI-driven change, highlighting the need for systematic upskilling. June 2025 reports emphasise early-career development and skills-based hiring as key to talent retention, while luxury brands are adopting AI-enabled management to address acute recruitment challenges. Leadership development now focuses on daily reinforcement of collaborative behaviours, and leading retailers are achieving productivity gains by integrating AI with a strong emphasis on human capabilities, as seen in March and April 2025.

Soft skills matter now more than ever, according to new research

What: Retail’s adoption of advanced AI agents is transforming decision-making, customer experience, and talent development, while raising challenges in trust and accountability.

Why it is important: As AI agents become more autonomous, retailers must rethink standards for accuracy, transparency, and employee engagement to maintain competitive advantage.

Retail is entering a new era as advanced AI agents take on increasingly autonomous roles, fundamentally altering how decisions are made, customer experiences are delivered, and talent is developed. While these technologies promise significant gains in efficiency and personalisation, they also introduce new complexities around trust, oversight, and risk management. Many retailers are finding that the opacity of AI-driven processes makes it difficult to verify outcomes and ensure quality, underscoring the need for robust digital literacy and structured evaluation frameworks. Despite widespread adoption—72% of retail employees now use AI—only a minority feel fully prepared to interpret and act on AI-generated outputs. The industry is responding by blending technological innovation with human expertise, emphasising responsible AI practices such as privacy and auditability to build trust and accountability. Ultimately, the ability to balance the speed and scale of AI with ethical standards and human judgment will define which retailers thrive in this rapidly evolving landscape.

IADS Notes: Recent industry analysis confirms that autonomous AI agents are reshaping retail, with 32% of consumer goods companies implementing generative AI for end-to-end automation as of February 2025. However, only 10% of retailers successfully scale these solutions due to oversight and transparency challenges. By June 2025, just 36% of employees felt prepared to evaluate AI outputs, prompting a renewed focus on digital literacy and responsible implementation. July 2025 findings highlight the importance of combining AI with human expertise for customer satisfaction, while March 2025 research shows responsible AI practices can increase product adoption rates by up to 63%.

On working with wizards

What: Leading innovators in retail achieve superior financial performance by scaling transformative ideas, leveraging AI, and expanding beyond their core markets.

Why it is important: This approach reflects a growing divide between digital leaders and laggards, as confirmed by recent industry analyses.

The Bain Innovation Report 2025 reveals that the world’s most innovative companies are not simply outspending their peers on R&D but are instead investing differently, focusing on transformative innovation and separating bold bets from everyday improvements. These top innovators consistently outperform their sector peers in total shareholder return, demonstrating that a disciplined, strategic approach to innovation correlates with superior financial results. Artificial intelligence is central to their success, not as a replacement for creativity but as a tool to amplify imagination and deepen customer understanding. The report highlights that almost all leading innovators are committed to expanding beyond their core markets, using AI to unlock new growth opportunities and personalize customer experiences at scale. This combination of capital discipline, strategic risk-taking, and advanced technology integration is enabling these companies to redefine industry standards, drive sustainable growth, and create a widening gap between digital leaders and those slow to adapt.

IADS Notes: The Bain report’s insights are echoed in recent industry developments. BCG’s June 2025 analysis shows that leading retailers integrating data-driven platforms and new revenue streams are outperforming peers, while Inside Retail’s March 2025 report highlights the essential role of AI-driven personalization in meeting rising consumer expectations. Retail Dive’s January 2025 coverage of Dillard’s and Macy’s underscores the importance of disciplined capital allocation, and Central Retail’s multi-billion-dollar expansion plans, reported by Forbes and Inside Retail in June and March 2025, illustrate how international growth and omnichannel strategies are sustaining competitive advantage in a rapidly evolving market.

Bain Innovation Report 2025

What: Revolut is expanding into the UAE after receiving regulatory clearance, aiming to offer cards, accounts, and cross-border payment services to a digitally savvy market.

Why it is important: Revolut’s move highlights the Gulf’s emergence as a key growth market for digital banking, driven by regulatory openness and rapid consumer adoption.

Revolut’s planned launch in the UAE marks a significant step in its global expansion strategy, targeting one of the world’s most digitally advanced and affluent markets. With initial regulatory approval from the UAE Central Bank, Revolut is poised to offer a suite of digital banking services, including cards, accounts, and international transfers, to a population that is both highly metropolitan and predominantly expatriate. The UAE’s fintech market is set to nearly double in size by 2029, reflecting strong consumer demand for innovative financial solutions and a regulatory environment that encourages experimentation and digital adoption. While Revolut faces competition from established local players, its focus on expatriate needs and remittance services positions it well for rapid growth. The company’s success in the UAE could serve as a blueprint for further expansion into the Gulf, particularly Saudi Arabia, as global fintechs increasingly look to the region for new opportunities in retail finance.

IADS Notes: Revolut’s UAE entry comes as the Gulf accelerates digital transformation and regulatory support for fintech, with 72% revenue growth and £1 trillion in processed transactions reported in May 2025. The region’s e-commerce and luxury markets are also expanding, and Revolut’s integrated financial services model is now seen as a template for further Gulf growth.

Can Revolut take on the Gulf region?

What: Despite ongoing labor market softness, US consumer spending and business investment remain resilient, supporting stable GDP growth forecasts of around 2% through 2027.

Why it is important: This resilience in consumer spending and investment provides a stable foundation for retail planning, even as labor market and policy uncertainties persist.

The US economy continues to demonstrate resilience in the face of ongoing uncertainty. While job gains have slowed to an average of just 29,000 per month over the past quarter and labor force growth remains nearly flat, consumer spending has expanded at a solid pace, buoyed by continued wage growth. Business investment and inventory restocking are also contributing to economic momentum, helping offset the effects of softer hiring. Inflationary pressures from tariffs have not materialized to the extent anticipated, and recent purchasing manager surveys show improvements in both manufacturing and services. As a result, the economy is projected to grow at a 2.6% annualized pace this quarter, with GDP growth expected to stabilize around 2% per quarter through 2027. Although some negative effects from trade policy uncertainty are still anticipated, the outlook for core GDP growth—driven by consumer, business, and government spending—remains steady, providing a measure of predictability for the retail sector.

IADS Notes:

The current US economic outlook is shaped by a complex mix of resilience and uncertainty. As Forbes reported in July 2025, retail sales have outperformed expectations, with a 3.7% annual increase in June, reflecting continued consumer spending strength despite tariff concerns and labor market softness . Visa’s March 2025 and BCG’s April 2025 analyses noted that while consumer confidence hit a three-year low and inflation expectations rose to 6%, wage growth and stable income have helped sustain spending even as job gains slow . The Financial Times in February 2025 and Vogue Business in March 2025 highlighted that consumer anxiety about tariffs has grown, but the anticipated inflationary impact has not fully materialized, as retailers adapt pricing and supply chain strategies . Alix Partners in May 2025 and Inside Retail in April 2025 described how business investment and inventory restocking are supporting economic growth, even as consumer sentiment remains cautious . Visa in October 2024 and WWD in April 2025 observed that, despite nearly flat labor force growth and slow job gains, ongoing wage growth and moderate GDP expansion are expected to keep the economy stable, with GDP growth projected at 2% through 2027 .

US Consumers: Resilience in light of ongoing uncertainty

What: AI adoption in retail is progressing gradually, transforming operations, jobs, and compliance requirements through incremental integration and practical safeguards.

Why it is important: This trend demonstrates that AI’s impact in retail is evolutionary, not revolutionary, aligning with recent findings that emphasise gradual integration, workforce adaptation, and the need for robust compliance.

The discussion around artificial intelligence often swings between utopian and dystopian extremes, but a more grounded perspective is gaining traction: AI as a “normal” technology whose adoption mirrors past technological revolutions. In retail, this means that while innovation in AI is rapid, actual adoption remains measured, as companies and employees adapt to new workflows and operational structures. The transformation is not about wholesale job losses but rather a shift in job content, with more roles focused on supervising, configuring, and controlling AI systems. This gradual integration is shaped by organisational challenges, such as the need for retraining, data readiness, and regulatory compliance, all of which slow the pace of change. Risks associated with AI, including misuse and cybersecurity threats, are best managed through practical, context-driven safeguards and robust incident reporting, rather than relying solely on technical “alignment.” Regulatory measures, such as compulsory disclosure and transparency requirements, are emerging as critical elements of responsible AI deployment. The retail industry’s experience underscores that sustainable progress depends on balancing technological innovation with human oversight and compliance, ensuring that AI enhances rather than disrupts business operations.

IADS Notes: Recent developments in retail confirm that the adoption of artificial intelligence is following a measured, evolutionary path rather than a disruptive leap, echoing the argument that AI is a “normal” technology. While 87% of retailers report revenue increases and operational gains from AI, only a small fraction have successfully scaled these solutions, underscoring the slow integration process noted in March and April 2025. This gradual adoption is mirrored in workforce trends, where AI is transforming roles rather than eliminating them, with a focus on upskilling and human oversight, as highlighted in January and May 2025. Organizational adaptation remains a significant challenge, with only 10% of retailers achieving effective workflow redesign and employee engagement, as seen in June and April 2025. The sector’s experience with AI risks further validates the need for practical, context-driven safeguards and robust cybersecurity, as outlined in July 2024 and June 2025, rather than relying solely on technical alignment. Finally, the growing regulatory focus on transparency and responsible AI, including compulsory disclosure and privacy measures, is shaping compliance strategies, as demonstrated by legislative developments and consumer expectations in March and July 2025.

What if artificial intelligence is just a “normal” technology?

PRINTABLE VERSION HERE

The integration of sustainable practices is no longer an option for retailers across the planet, due to impending national and international regulations, combined with consumers’ growing preference to buy sustainable products and engage with responsible brands. However, if the intention is the same, the execution might significantly differ from one continent to another.It starts with the way national companies handle global guidelines. For instance, the 17 UN Sustainable Development Goals (SDGs) provide a framework for sustainability priorities, but retailers in each country prioritise different SDGs according to their national strategies and culture. For example, Chinese enterprises have focused on “Good Health and Well-being” (SDG 3), “Quality Education” (SDG 4), “Responsible Consumption and Production” (SDG 12), and “Decent Work and Economic Growth” (SDG 8)i . In the meantime, in the US, the private sector has an increased focus on “Clean Energy” (SDG 7) and “Industry, Innovation and Infrastructure” (SDG 9)ii . This difference in sustainability priorities must be reflected in the undertakings of the retail sector attempting to engage and expand in new markets.

Even within regional blocs, differences arise. One of the key takeaways of Bain & Company’s report on sustainability for Asia-Pacific consumers is that fast-growth markets such as India, China, Indonesia and Vietnam care more about sustainability than mature markets like Japan, South Korea and Singapore. A possible explanation cited is that witnessing first-hand the impact of environmental issues in emerging markets makes these threats real and tangible. The average pollution in fast-growing markets is two and a half times that of mature markets, with the highest levels being in India and China.Today, we are seeing an increasing number of retailers and department stores commence or enhance their operations in growing markets such as India and China. India saw the entrance of 27 international retail brands in 2024, including Saks Fifth Avenue, which announced its interest for the market a few years after Galeries Lafayette announced they would open a store in 2026. In China, despite a luxury slowdown, retailers such as Metro AG and the retail conglomerate SM Investments have expanded their Chinese footprint in Tier 1 and Tier 2 cities. Across both countries, the majority of the population is concerned about the environment. But do consumers in these emerging markets have the same definition of sustainability as the West? And to what extent does the notion of sustainability differ from a consumer and retailer’s perspective, in each country, compared to the West?

Consumer sentiment on sustainability in the West: The responsibility lies on brands

According to the European Commission’s Eurobarometer, 78% of Europeans agreed that environmental issues directly affect their daily life and health and over 80% agreed that EU legislation is needed to protect the environment in their countries.

This reflects the fact that, in the West, the onus of creating and maintaining sustainable practices is divided more evenly between the government and the private sector. For 92% of Europeans, companies should pay for the costs of cleaning up their pollution, while 74% agree that public authorities should pay for the costsiii.

Almost 60% of European respondents demonstrated a willingness to pay more for sustainable products that are easier to repair, recyclable and/or produced in an environmentally sustainable way. However, these results differ over research reports with BCG’s 2024 European Consumer Sentiment Report finding that while Europeans consider sustainability while they shop, only 20% declare that they would pay more for green products. Repair has become one of the newer features of sustainability in the West where 77% of European citizens would rather fix a product than substitute it, as of a 2022 survey by the EU. This sentiment has been capitalised on by retailers such as Decathlon, providing bike repair services in-store and online support for customers to self-repair products, as well as Uniqlo’s Repair Studio for repairing and upcycling products.

In the US, 78% of consumers say a sustainable lifestyle is important. Products making ESG-related claims averaged 28% cumulative growth over the past five-year period, versus 20% for products that made no such claimsiv . According to EY’s US Future Consumer Index, sustainable products command a 39% price premium compared with conventional products. Research by OnePoll also showed that 55% of Americans would cease using a brand upon discovering its lack of commitment to environmental sustainability. 42% of respondents said they can tell when a company is trying to greenwash their activities.

Overall, in the US and Europe, sustainability is an important issue to consumers. However, they place the responsibility for sustainable production and consumption more on the private sector than on the government. This may be a feature of already having advanced regulatory standards, especially in the EU. Despite this, consumers in Western countries are only willing to pay between 8 and 10% extra for sustainable products which is lesser than consumers in India and China. The sustainability say-do gap, which reflects the difference between expressed intention and action, looms large in Western countries.

Consumer sentiment in India: Sustainability as an efficiency operation

In India, as in many other developing countries, sustainable actions take the form of operational efficiency. An ingrained reflex for most Indians, reusing, recycling, and repair are foremost cost and effort savers, which now also translate into conscious consumption of sustainable goods. As a saving economy, Indians are prone to avoiding the wastage of goods and services, including money and food. Indian consumers are also cautious regarding greenwashing and paying premiums for sustainable products.

Several sources make it clear that sustainability is an important issue for Indians. 92% of Indians are concerned for the environment, while 66% feel it is at riskv . Two in three urban Indian consumers prioritised environmentally responsible actions taken by businessesvi . Indians also have a dual focus on wellness and sustainability, with 33% stating that they opt for natural products for health benefitsvii . Finally, according to PwC India’s Voice of the Consumer Survey, 46% of Indian consumers view climate change as a significant threat, driving 60% of them to change their behaviour and move toward sustainable products. They are even willing to pay a premium of 13.1% (vs price base lines) for sustainably sourced goods.

However, only 30% of Indians perceive sustainability as the responsibility of private companies with the majority believing it is the government’s responsibility to address sustainability issuesviii .  Despite re-use and repair as engrained practices, there is a sustainability say-do gap in India, which is explained by high prices and limited product information and availability. As a collectivist society with a recently booming economy, Indians tend to place their expectations for responsible actions on the community and institutions. Brands and corporations taking the lead on sustainability can hence build brand value and equity by engaging with the community. Though facing the right direction, the average Indian can be better nudged to invest in sustainable initiatives. A growing number of consumers, especially younger generations, are more conscious about their consumption and which brands they engage with.

The repair culture in India is very developed resulting from a combination of high price sensitivity and low labour cost to repair products. Technicians are available for a low cost to repair almost every product ranging from apparel and shoes to washing machines and microwaves. For example, Decathlon’s bike repair initiative will not make as many gains in India as it does in France due to the existence of cheap and convenient bike repair shops. While Decathlon does run this initiative in India, it has been outsourced to a third-party provider that runs digital workshops with little advertising. Given that most retailers such as Decathlon exclusively repair purchases made in their store or of their brand (i.e. Decathlon repairs only Decathlon brand bikes or other bikes bought at a Decathlon store), it prompts questions on the relevance and perception of such initiatives for Indian consumers with access to cheaper, more convenient, and non-exclusive alternatives.

On the other hand, enhancing value as part of a repair or recycling scheme can resonate with customers who prioritise value. For example, Yves Saint Laurent’s repair services for perfume bottles and refills that can be attached to existing containers can be framed as a value-added service that is also sustainable especially for luxury products. Retailers aiming to enter emerging markets will do well to understand the nuance of repair, where an approach like that in the West could lead to public backlash and accusations of greenwashing.

Consumer sentiment on sustainability in China: Not at the cost of convenience

The government drives the sustainable transition in China; consumers and the private sector are involved but not to comparable levels in the West. Most consumers prefer convenience over sustainability and are still in “consumption catch-up mode”. Large Chinese conglomerates are increasingly publishing ESG reports and pushing sustainability initiatives to keep pace with their Western counterparts.

A feature of sustainability in China is that it revolves mainly around environmental concerns and does not include social issues and human rights concerns as much as in the West. PwC’s June 2022 are willing to switch to brands that emphasise sustainability and corporate responsibility. As an emerging economy focused on savings, China also has a strong availability of low-cost labour for repair. This has also been characterised by a developed used goods market where all kinds of used products are refurbished and prepared to be resold. For example,

Centergate Como in Zhongguancun, Beijing’s IT neighbourhood, is a gigantic six floor shopping mall filled with small electronics shops selling all kinds of used gadgets.

UNDP’s Survey Report on Business and Sustainability in China found that while 89% of Chinese companies surveyed know the SDGs, 42% do not yet know how to measure their contributions towards them. Chinese enterprises have also prioritised SDGs concentrating on health and well-being, education, responsible production and consumption and decent work and economic growth. Enterprises are undertaking sustainable development projects based on their branding and image-building needs. Chinese enterprises have also prioritised SDGs concentrating on health and well-being, education, responsible production and consumption and decent work and economic growth. Enterprises are undertaking sustainable development projects based on their needs of branding and image-building.

According to Ipsos, air pollution was the leading environmental concern for Chinese consumers with 45%. Many families visit play areas in shopping malls because it is deemed safer than playing outdoors. The Credit Suisse Research Institute also reported that more than 50% of Chinese consumers were distrustful of corporate sustainability claims: greenwashing is obvious to most consumers. As a result, luxury groups are more likely to foster higher engagement if there is a greater focus on local green issues. For example, Prada hosted a Re-Nylon pop-up store to engage shoppers at SKP-S in Beijing in late 2020.

While data on the sustainability say-do gap in China is minimal, research shows that consumers are willing to pay greater premiums for sustainable products in emerging markets with high levels of environmental concern. More so than in India, the burden of tackling sustainability is on the Chinese government with private enterprises keeping themselves competitive by increasing ESG monitoring and publishing reports. For consumers, air pollution and other environmental issues top the list of concerns with a significant focus on health but not at the cost of convenience.

L'Oréal: A case analysis of contextualised sustainability by brands

L'Oréal Groupe is one of the global frontrunners in sustainability engagements helmed by the private sector. It has been recognised as a United Nations Global Compact LEAD company for over seven years. As part of its commitment to the Ten Principles for responsible business and for placing the United Nation’s SDGs, L'Oréal launched its second sustainability programme, L’Oréal for the Future, in June 2020.  With a variety of environmental and social commitments, the analysis for this article focuses on three aspects:

• Comparative analysis on the kind of environmental initiatives L’Oréal undertakes in India, China and the US.
• Local adaptations of their global ‘Stand Up’ initiative that aims at combatting street harassment. L’Oréal has also operated in both India and China for nearly three decades through wholly owned subsidiaries.
• The leveraging of local sustainability issues to build value. .

On environmental initiatives, the overarching 2030 objective is to reduce its greenhouse gas emissions of all scopes by 50% per finished product. As a member of the ‘Business Ambition for 1.5°C’ initiative, the Group has also committed to net zero emissions by 2050.

The Chinese teams continue advancing the L’Oréal for the Future programme, from eco-design to plastics recycling. One example is L’Oréal Paris Extraordinary Oil shampoo, an innovation developed by teams in China whereby every part of the packaging, including the pump, is recyclable – a first for the Group.

In India, L’Oréal’s operated sites including factories, distribution centres, research and innovation centres and administrative offices have achieved 100% renewable energy usage. Furthermore, their Green Pathways project focuses on ecological restoration in the drought-prone and water-scarce Yavatmal district in Maharashtra, India. Since its inception in 2021, over 4,500 hectares of degraded land has been restored, enhancing water storage capacity in the region by 150 million litres, benefiting over 1,800 vulnerable farmer families with a 20% increase in income. By 2030, they aim to restore 10,000 hectares of land through this initiative.

L’Oréal USA joined the US Plastics pact, which brings together over 850 organisations over common definitions and concrete targets to accelerate progress toward the US circular economy for plastic. L’Oréal’s commitment to land restoration in India corresponds to Indian consumers’ focus on environmental pollution while in the US, collaborative action for a circular economy is prioritised where the discussion around sustainability revolves around the circular economy.

L’Oréal’s ‘Stand Up’ initiative aims to promote self-defence training to combat street harassment. However, in China, the brand delved deeper into understanding its consumer profile and the social concerns of its target audience. This led to a shift in focus towards addressing sexual harassment in the workplace, making it more relevant to the local context. In India, this programme has trained over 850,000 individuals to effectively address street harassment. While their global initiative is partnered with Right to Be, in India L’Oréal has partnered with Breakthrough, an Indian NGO working against gender-based violence and discrimination. In France, on the other hand, the ‘Stand Up’ programme has online courses and statistics on street harassment with a call to include victims and witnesses of this crime. This manner of responding to their consumers in each country – workplace harassment in China, partnering with local NGOs on gender-based violence in India and directly addressing women in France through their website, reflects a localised approach for their global programmes to enhance the impact of these initiatives.

Not only cascading group level initiatives, L’Oréal’s country subsidiaries also create and run their own sustainability initiatives to leverage locally relevant topics. For example, diversity and inclusion is a priority for L’Oréal USA with the Inclusive Beauty Fund and civil society partnerships with onePULSE Foundation for its scholarship programme. This reflects the ongoing cultural conversation in the US where diversity, equity and inclusion (DEI) is forefront for consumers. L’Oréal USA’s website has statistics on gender, sexuality, disability, Black Indigenous People of Colour, veteran and working parents’ representation in the organisation. While this caters to the US’ approach of affirmative action and upliftment, this kind of representation is unachievable and to some degree, unnecessary, in markets like France where the perspective is based on equal rather than equitable treatment of minorities.

L’Oréal Groupe’s brands showcase a high degree of autonomy when it comes to their approach to sustainability topics. For example, in 2014, Garnier faced backlash as their personal care products were distributed in care packages to female Israeli soldiers by its Israeli subsidiary. Garnier USA then released a statement saying that they do not condone this initiative managed strictly at a local level. This contrarian navigation by both Garnier Israel and Garnier USA shows how brands manage local adaptations including dealing with controversial topics.

L’Oréal’s brands and strategies provide a clear perspective on the mix of group-level initiatives, that align with larger goals and strategies, and country-level initiatives, that correspond to local consumer sentiment and values. The right balance of autonomy and leadership in sustainability related areas is key to build brand value for retailers.

Conclusion: The collectivist vs. individualist approach to sustainability

Consumers have distinct regional variations in sustainability implementation and consumer attitudes that have an impact on the retail sector. In Western markets, environmental responsibility is shared between government and private sectors, with a strong focus on social and environmental issues both. In contrast, emerging markets like India and China approach sustainability through the lens of operational efficiency and cost savings. Despite showing higher environmental concerns than mature markets, Indian consumers expect governmental leadership in sustainability initiatives while remaining cautious about greenwashing. China presents a unique case where sustainability is predominantly government-driven, focusing primarily on environmental rather than social concerns, with consumers showing increasing scepticism towards corporate sustainability claims.This is due to the cheap availability of labour combined with cultures where saving is prioritised. According to Bain & Company, consumers in fast-growing markets, where environmental concerns tend to be highest - such as India, Indonesia, Brazil, and China - are willing to pay between 15 and 20%, a greater premium than in the West. Additionally, consumers cited the lack of availability of a variety of sustainable products as a challenge. Overall, the Indian consumer is highly price-sensitive and hence focuses on sustainability efficiently. Extremely averse to greenwashing, this group focuses on sustainable products for health and wellness benefits to counter the impact of environmental pollution. An analysis of the repair economy in these three zones shows that while Western countries approach it as a sustainable method with retailers starting to incorporate it into their offerings, emerging markets such as India and China have advanced economies for repair due to operational efficiencies.The sustainability say-do gap reflects the difference between expressed intention and action. While data from the US and Europe shows that consumers will not pay significant premiums for sustainable products, there is a lack of information regarding emerging markets like India and China. Ipsos Behavioural Science White Paper on the sustainability say-do gap details that focusing on enabling actions that people are already inclined to take can facilitate the adoption of sustainable behaviours. This provides a concrete action plan for retailers and brands where they can build brand value by engaging with consumers on sustainable actions that they are leaning towards taking. For example, consumers in the Asia-Pacific region tend far more towards health-conscious decision-making compared to their Western counterparts. They consider making healthier choices for themselves and their families, often evaluating sustainable products to improve health. By adapting their sustainable initiatives and communication around this focus on health and wellness, retailers can build a connection with their customers.L'Oréal's case study demonstrates the value of having a strategic global vision with local execution for sustainability topics. From land restoration initiatives in India, gender equality programmes in China, and diversity and inclusion programmes in the US, L’Oreal has provided guiding principles for retailers on successful market-specific adaptation of sustainability initiatives. It has provided a clear framework on how group-level initiatives like Stand Up can be implemented at a local level to ensure impact and brand relevance. Striking the strategic balance between global vision and local execution has proven increasingly crucial for brands and retailers alike.

What: Brands are shifting from mass-market strategies to community-driven engagement, using cultural fluency and exclusivity to build loyalty and belonging.

Why it is important: The move toward exclusivity and authentic engagement is reshaping retail economics, with brands that maintain cultural relevance achieving greater resilience and profitability.

Retail is experiencing a decisive shift away from broad, broadcast-style marketing toward strategies that prioritise community, cultural fluency, and exclusivity. Brands like Gentle Monster are leading this transformation by curating experiences that reward cultural literacy and foster a sense of belonging, rather than simply targeting mass demographics. This approach is mirrored across the industry, with luxury retailers and cult brands leveraging experiential loyalty programs, controlled scarcity, and authentic storytelling to deepen customer relationships and drive higher lifetime value. The economic benefits are clear: community-driven brands consistently outperform traditional competitors, achieving greater customer retention and more efficient acquisition. However, the risks of abandoning core values for broader appeal are significant, as brands that dilute their identity often face backlash and eroded loyalty. As retail spaces evolve into social and cultural hubs, brands are increasingly responsible for facilitating identity formation and meaningful connections, making cultural capital and belonging the new benchmarks of retail success.

IADS Notes: From December 2024 to May 2025, leading retailers have reimagined loyalty through experiential programs and personalised service, while brands like Hermès and Brunello Cucinelli have demonstrated the power of controlled scarcity and authentic philosophy. Community-driven brands have seen measurable gains in purchase frequency and customer lifetime value, while brands that stray from their core communities have suffered backlash. The evolution of retail spaces into social hubs further underscores the sector’s new role in fostering identity and belonging, confirming the rise of “tribal commerce” as a defining trend.

Why the future of retail belongs to brands that build private jokes

What: Fortune 500 companies are embedding sustainability into core business strategy, shifting from siloed CSR functions to integrated, executive-led initiatives.

Why it is important: The integration of sustainability across business functions and leadership is now essential for regulatory compliance, operational efficiency, and long-term competitive advantage, as recent Notion reports confirm.

Sustainability has evolved from a peripheral CSR concern to a central pillar of business strategy, with its position and leadership structure varying according to organisational maturity and regulatory context. While early approaches often relied on separate sustainability teams or Chief Sustainability Officers, the current trend is toward embedding sustainability across all functions, ensuring it is championed by influential leaders with operational credibility. This shift is driven by the need to align sustainability with business priorities, navigate complex reporting requirements, and respond to tightening regulations such as the EU’s CSRD and CSDDD. Executive sponsorship is increasingly recognised as critical, with leading companies integrating sustainability into supply chain, finance, and product development, and leveraging it for innovation and risk management. As regulatory and consumer pressures mount, the most effective sustainability leaders are those who combine strategic clarity with a deep understanding of business operations, ensuring that ESG goals are not sidelined but drive meaningful, measurable progress throughout the organisation.

IADS Notes: Recent industry research underscores this transformation, with Bain & Company (September 2024) and Harvard Business Review (May 2025) both highlighting the strategic integration of sustainability as a source of innovation and competitive advantage. New EU regulations are accelerating this trend, requiring comprehensive reporting and operational integration, while executive sponsorship and harmonised standards are increasingly seen as vital for compliance and business value. These developments confirm that sustainability’s influence now depends less on hierarchy and more on strategic leadership and cross-functional collaboration.

Where does sustainability sit?

What: Retailers face mounting pressure from stalled job creation, new tariffs, and inflation, leading to cautious forecasts and leaner inventory strategies.

Why it is important: The convergence of weak job growth, inflation, and tariffs is accelerating changes in consumer behavior and forcing retailers to rethink pricing and supply chain strategies, as seen in recent market analyses.

Retailers are navigating a period of heightened economic uncertainty as job creation slows and unemployment rises, eroding consumer confidence and dampening spending. The introduction of new tariffs has sharply increased import costs, with retailers unable to fully absorb these expenses, resulting in price hikes that directly impact consumers. This inflationary pressure, combined with the Federal Reserve’s limited ability to stimulate employment without exacerbating inflation, has created a challenging environment reminiscent of stagflation risks. Holiday sales forecasts are now notably cautious, with projected growth rates failing to outpace inflation, signaling little to no real growth for the sector. Retailers have responded by placing conservative orders and adopting leaner inventory strategies to avoid the pitfalls of unsold stock, further reflecting their wariness about the economic outlook. As a result, the retail industry is being forced to adapt rapidly, balancing the need for operational efficiency with the imperative to maintain consumer engagement in a volatile market.

IADS Notes: Throughout 2025, retail sales have shown marked declines, with June reporting the largest drop in four months and layoffs surging to levels seven times higher than the previous year. Tariffs have driven up household costs and forced department stores to implement strategic price increases, while consumer confidence has plummeted to a three-year low. The Federal Reserve’s policy actions have had mixed results, as inflation and tariff concerns persist. Retailers are responding with advanced inventory management and operational restructuring, as evidenced by leaner holiday forecasts and a shift toward supply chain optimization. These trends collectively underscore the sector’s urgent need for agility and strategic adaptation in the face of ongoing economic headwinds.

The economy is starting to weigh heavily on retail forecasts

What: Generative AI adoption is driving significant changes in retail employment, particularly impacting entry-level roles and prompting a shift toward workforce augmentation rather than replacement.

Why it is important: This shift reflects a broader industry trend where sustainable productivity gains depend on augmenting, not replacing, human talent, as confirmed by recent retail data.

The widespread adoption of generative AI is fundamentally altering the landscape of retail employment, with early-career and entry-level roles experiencing the most pronounced effects. High-frequency data reveal that since late 2022, young workers in AI-exposed positions, such as customer service and sales, have faced notable declines in employment, while more experienced employees and those in less-exposed roles have remained stable or even grown. This trend is particularly acute in occupations where AI is used to automate rather than augment human labor, underscoring the importance of strategic implementation. The evidence suggests that the most successful retailers are those who leverage AI to enhance, rather than replace, their workforce—enabling employees to focus on higher-value tasks and supporting long-term talent development. The distinction between employment and compensation effects is also critical, as workforce adjustments are more visible in job numbers than in wages. Ultimately, the retail sector’s ability to balance technological advancement with human capital investment will determine its resilience and adaptability in an increasingly AI-driven environment.

IADS Notes: Recent industry data from March and June 2025 confirm that leading retailers are achieving 4.5% annual productivity growth through strategic AI integration focused on augmentation, not replacement. This aligns with findings from February and July 2025, which show that only 10% of retailers successfully scale AI applications, and that comprehensive training and human-centric strategies are essential for sustainable transformation. The elimination of entry-level roles threatens talent pipelines and succession planning, while the distinction between automation and augmentation remains central to workforce stability. These trends are evident across both remote and in-person retail roles, reinforcing the need for structured implementation and ongoing investment in human capital.

Canaries in the coal mine? Six facts about the recent employment effects of artificial intelligence

What: Macy’s targeted investments in select stores and luxury divisions are delivering incremental gains, yet the company faces persistent structural and competitive challenges.

Why it is important: Macy’s experience underscores the ongoing challenge of achieving sustainable growth in a rapidly evolving retail landscape, despite early successes in pilot locations.

Macy’s recent quarterly results reveal a company in the midst of a complex transformation, with its Bold New Chapter strategy producing modest but notable improvements in certain areas. Enhanced investment in select “Reimagine 125” and “First 50” stores has led to record customer satisfaction scores and better sales performance compared to the broader chain, while luxury divisions like Bloomingdale’s continue to outperform. However, these incremental gains are tempered by persistent challenges, including underwhelming sales growth relative to competitors such as TJX and Ulta, ongoing margin pressures, and the burden of an oversized, outdated store portfolio. Macy’s efforts to optimise its store network and modernise operations are prudent, yet the pace of change is constrained by deep-rooted structural issues and the need to balance short-term financial demands with long-term viability. The company’s future hinges on whether its current strategy is bold enough to win back customers and secure its place in a contracting and highly competitive sector.

IADS Notes: Macy’s transformation reflects a broader industry shift, as department stores pursue targeted investment, store optimisation, and digital integration to address declining market share and changing consumer behavior. The company’s pilot store initiatives and luxury expansion have shown early promise, yet ongoing activist investor pressure and comparisons to more operationally disciplined peers like Dillard’s highlight the sector’s struggle to balance financial demands with sustainable evolution. These dynamics, documented from November 2024 through March 2025, underscore the complexity of department store reinvention in today’s retail environment.

Is Macy’s turnaround gaining traction?

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CHECK OUT THE PHOTOS OF FORTNUM & MASON

Fortnum & Mason is the only department store whose core economic engine is food and drink, generating nearly two-thirds of revenue. Located on London’s Piccadilly, the store is 6,000 square metres and employs around 1,000 staff. It currently holds two royal warrants granted by King Charles III and Queen Camilla.i

As for other department stores, such as Galeries Lafayette, Fortnum & Mason is privately owned. Positioned as a heritage luxury department store with a single cultural landmark flagship widely regarded as a tourist attraction, Fortnum & Mason is characterised by a predominance of full-price luxury merchandise and great international brand awareness, attracting affluent travellers.

Over three centuries, the grocer-turned-icon, still trading under the same turquoise colour, has converted from supplying the Crown into profitable retail ventures. Fortnum & Mason offers a blueprint of how heritage meets innovation, how experience can protect against footfall volatility and how operational efficiency enhances brand storytelling.

The origins of a retail institution

The genesis of a brand: from household waste to high-end retail

Fortnum & Mason started in 1707, when William Fortnum, then a Queen Anne’s footman, joined forces with his landlord, the St James’s shopkeeper Hugh Mason. Fortnum’s habit of reselling the royal household’s half-burned candles provided initial funding, and the two partners opened a grocery store in St James’s Market. From this first venture, Fortnum & Mason positioned itself at the intersection of refined taste and commercial flair. By the middle of the seventeenth century, the store had become an unofficial provisioner to royal and aristocratic customers as well as London’s growing mercantile class.

By 1761, Charles Fortnum, grandson of William, entered Queen Charlotte’s service, reinforcing the family’s court connection. Besides bringing cachet, the link to the Crown guaranteed steady and early success. Then, three pillars would remain at the core of the store's business success for centuries: proximity to political power, mastery of import logistics through Britain’s expanding empire, and relentless product novelty, which turned necessities (such as tea, candles, and preserves) into desirable luxuries.

The nineteenth century was an era of growth. During the Napoleonic Wars, the store supplied British officers with dried fruit, spices, and preserves, establishing a reputation for reliability. Queen Victoria famously ordered bottled beef tea for Florence Nightingale’s War hospitals, reinforcing the brand in the national imagination as purveyor of comfort in adversity. These high-profile adventures generated press coverage that no advertising budget could match.

At that time, Fortnum & Mason also invented, or at least popularised, the luxury hamper, an elegant wicker basket packed with provisions for railway journeys and country-house weekends. Hampers became both a revenue stream and a portable marketing billboard for the store. The Victorian decades saw the shop rebuilt on a grand Neo-Georgian scale, with large windows and gas lighting, transforming displays and inviting shoppers to linger.

Modern times: wars, prosperity and change in ownership

In the twentieth century, the two world wars forced Fortnum & Mason to adapt. During World War I, the company provided comfort parcels for officers, and in World War II, it produced Service Chocolate, a calorie-dense bar in a bright pink wrapper which was requisitioned by the Ministry of Food. The emphasis on quality within constraint reinforced, yet again, Fortnum & Mason’s as a purveyor of comfort in adversity.

Post-war austerity gave way to renewed prosperity. In 1951, Canadian businessman W. Garfield Weston acquired Fortnum & Mason, bringing capital for modernisation while retaining the store’s private company agility. Installed in 1964 over the Piccadilly entrance, the iconic four-ton clock has become a tourist landmark. Each hour, automated figures of Fortnum and Mason characters bow to one another, accompanied by chimes. During the 1960s and 1980s, Fortnum & Mason cautiously expanded into other categories, such as fragrances and fine jewellery. Yet food and beverage remained the most significant source of revenue, helping the business weather the department store’s downturn of the past decades.

Now, Fortnum & Mason operates under Wittington Investments, which is controlled by the Weston family. Besides Fortnum & Mason, the company is famous for owning Selfridges until 2021. They now own Heal’s (upmarket furniture chain), real estate, various private equity and property holdings. Additionally, Wittington Investments holds a majority stake in Associated British Foods (ABF), a FTSE 100 conglomerate that owns Primark, Twinings, and British Sugar.

A snapshot of the business: profitability rooted in purpose

Appointed by Wittington Investments in 2020, CEO Tom Athron, who spent six years as Waitrose’s CFO, developed a storytelling, hospitality, and sustainability strategy. Financial resilience has been notable. FY2022 declared turnover was £187 million, returning to a £6,1 million profitability post-Covid. In FY2023, declared revenue was up 11.9 % to £208.6 million, and gross margin improved to 44.4 %. Pre-tax profit rose to £9.3 million in FY 2024 on declared sales of £228 million. Also, the company saw a 20% increase in its wholesale business. Finally, with shipment available in over 120 countries, online sales are now accounting for 36 % of turnover by FY2024.

More specifically, 63% of the turnover is generated from food and drink, including teas, biscuits, preserves, speciality groceries, spirits and wines. The home, beauty and lifestyle categories account for 18%, encompassing tableware, candles, fragrance, accessories and leather goods. Hospitality and experiences generate 9 % of the turnover and include restaurants, masterclasses and events. Last but not least, the famous hampers represent approximately 10 % of sales, with a 10 % YoY volume growth at Christmas 2024. The latter decades saw Fortnum & Mason’s hampers go global, boosted by the rise of air travel and corporate gifting. International luxury ingredients, such as Iranian caviar and Jamaican Blue Mountain coffee, were added to British heritage products, while foie gras was discontinued due to animal welfare concerns. Same-day London delivery and temperature-controlled shipping are available to the 200+ hamper SKUs.

With entry prices such as £5.95 for preserves and £6.95 for tea bags, driving conversion and souvenir appeal, Fortnum & Mason sits at the intersection of everyday luxury and British heritage, mainly attracting three types of customers: affluent international tourists, who represented 40 % of Piccadilly footfall in peak Summer 2024, domestic treat seekers, who are primarily Millennials and GenX Londoners, and finally corporate clients leveraging hampers for softpower gifting.

Fortnum & Mason’s current era: a modern luxury model rooted in legacy

Store organisation: the experiential pivot

To mark its 300th anniversary, the Piccadilly flagship underwent a £24 million refurbishment, reopening in 2007 with expanded hospitality spaces and restored Georgian facades. The investment accelerated a strategic pivot from retail-only to a combination of retail and experiences with restaurants, cookery masterclasses, and immersive window theatre becoming key traffic drivers at a time when footfall on traditional high streets was declining.

With F&B options on four floors out of six, the -1 floor is home to the food hall and the wine cellar. It also features a rather dark wine bar and click-and-collect service. Food-to-go options and the Lower Ground coffee-to-go kiosk are available on this floor to capture a greater share of the local weekday trade. The ground floor, the ‘pièce de résistance’ of the store, is bustling and offers Fortnum & Mason's core products (tea, marmalades, coffee, chocolates, sweets, biscuits and patisserie). Cash desks are positioned on this floor, with entry-price items displayed along the queuing journey. Finally, the 45 Jermyn St. fancy restaurant opens from breakfast to dinner.  The first floor is dedicated to teaware, stationery, accessories, and picnic equipment. The busy The Parlour restaurant is specialised in ice cream. Gift wrapping is available on this floor. The second floor seems to be designed for the female clientele. It offers a large beauty section and a significant niche fragrances section. Unlike the other floors, which primarily sell Fortnum’s own brand products, this floor offers a selection of luxury international brands. The space is complemented by women’s hats and scarves, loungewear and jewellery. Personal shopping services and a beauty room are positioned on this floor. The famous hampers are available on the third floor, offering a service that allows customers to design their own hampers. The Food & Drink Studio occupies a significant section of the floor. When there are no cooking classes, chefs are preparing pastries or pasta, offering a food spectacle to shoppers. A cook shop and a book shop complete the floor, which feels somewhat empty. The 3’6 bar is an intimate, speakeasy-like cocktail bar. Finally, the fourth floor is home to The Diamond Jubilee Tea Salon, an homage to the British tradition of afternoon tea. Queen Elizabeth II formally opened the room in 2012, renewing the special bond between the store and the Crown.

Floors are accessible through elevators and two different staircases, including a double-helix one. While the ground floor is packed with merchandise and customers filling their baskets with tea boxes and sweets, the other floors are airy and sometimes feel empty. During a weekday visit, the upper floors were relatively empty, with only a few customers shopping. Only the ground floor and the restaurants were busy. Some parts of the upper floors could be enhanced with additional products to recreate the ground floor’s product abundance, clearly inviting a food shopping spree.

Retail expansion with intention: scarcity as an asset

Additionally, Fortnum & Mason has developed an international presence over the years, always controlling scarcity. Similarly to Harrods, they demonstrate deliberate resistance to overextension, preserving the brand mystique and ethos. As a result, in addition to dozens of wholesale stockists, they are adopting a selective retail presence:

• A store at St Pancras International rail station opened in 2013, with click-and-collect services.
• A bar and a store at Heathrow International Airport opened in 2014, targeting premium international travellers.
• A store, bar and restaurant at the London’s Royal Exchange boutique opened in 2018.
• A store and restaurant launched in 2019 at K11 Musea in Hong Kong as the first overseas venture, designed as a brand embassy for Asian luxury consumers.

In June 2025, the company announced a regional UK expansion project beyond London, aimed at addressing the surge in demand for its luxury teas, biscuits and jam. While more than one additional store could open, they are currently exploring sites with iconic architecture, continuing to resist a mass rollout.

From legacy to leadership: Fortnum & Mason’s innovation agenda

Tech upgrades and operational efficiency

With a 7% decline in online sales during Christmas 2024 due to issues with hamper deliveries, e-commerce has been a challenge at Fortnum & Mason. The retailer has optimised its supply chain by consolidating its four distribution centres into one, increasing its e-commerce capabilities. While the situation is improving, demand still exceeds their delivery slot capabilities. This is why the company deliberately limits the number of orders, making sure they can fulfil them while maintaining excellent service.

Fortnum & Mason shows great dynamism in optimising operations to improve productivity. From 2024, the company began rolling out an AI-powered forecasting and merchandising system, developed by Relex, across its category buying teams, which were previously using spreadsheets. In-store, they successfully reduced the number of steps in the checkout process, resulting in a five-second decrease in transaction time per customer.

In parallel, in March 2025, Fortnum & Mason entered the on-demand delivery market. They partner with premium groceries delivery platform Zapp to offer 24/7 60-minute delivery across London. No longer seen as a Christmas-focused business, this initiative marks a significant milestone in terms of customer centricity and service for Fortnum & Mason as they claim to be the first of London's high-end stores to partner with an on-demand delivery service.

Subscription service: repositioning the brand beyond Christmas through convenience

Increasingly focused on customer centricity and convenience, Fortnum & Mason unveiled a three-tier subscription delivery service in 2024:

• At £100 annually, the Tea Post subscription offers customers a year’s supply of monthly refills of a choice of Fortnum’s tea blends. Subscribers also receive a personalised china mug, tin and strainer.
• The Biscuit Post, which costs £20 a month, offers refills of the Toffolossus, Chocolossus or Gingerlossus biscuits, available on either three-month, six-month or 12-month subscriptions.
• The third subscription, called the Teatime Dispatch, offers a selection of tea and biscuits, as well as a choice of jams, for £75 a month.

From customer to member: building a brand-led community

In 2025, Fortnum & Mason took another step toward emphasising customer relationships. They launched Friends of Fortnum’s paid membership programme offering exclusive events and early access to product drops. The scheme costs £100 per year. Members will receive a curated welcome gift, seasonal gifts and free next-day UK delivery on all orders over £25. Subscribers will also be able to access tickets for exclusive events, along with other small extras, when shopping in-store or dining at its restaurants. The department store developed the programme in direct response to customer feedback seeking a closer connection to the Fortnum & Mason brand. Despite discreet in-store advertising, the early stages of the launch are said to be very positive. Their re-platformed CRM, powered by SAP Emarsys, enables behavioural segmentation and provides first-party data capture.

Finally, marketing activations have been launched through noteworthy partnerships. They have recently partnered with actor and cooking expert Stanley Tucci for a cookware range and with multi-layered cake brand Get Baked, which has drawn younger crowds to the store thanks to its success on TikTok.

With food and beverage at its core, Fortnum & Mason stands apart as a department store. Turning its historic specialisation into a competitive advantage, the company’s food-centric heritage and royal cachet sustain its cultural relevance. Its deliberate emphasis on experience over expansion, high-margin own-label assortments, and curated internationalisation reflects a relevant approach to luxury retail. Additionally, the company demonstrates that category focus, rather than scale, can define global luxury success.

The future of Fortnum & Mason holds uncertainties, though. Achieving less than £250 million annually, the centuries-old business is real but narrow. Concentration in one flagship, UK tourist tax policy, and high exposure to raw material inflation are threats to the company.

Finally, the consequences of climate change may reveal a more fragile business than the brand aura suggests. Driven by heatwaves and floods, Darjeeling tea output fell to a 170-year low of less than 6 million kg in 2024, and Assam tea production dropped 7.8%, two key products at Fortnum & Mason. While food and drink have always been its core business and a success enabler, this shows how Fortnum & Mason's heavy dependence on certain products could transform into a threat to its future—a cautionary tale to keep in mind.

Credits: IADS (Christine Montard)