What: Global trade tensions are forcing fashion retailers to balance sustainability commitments against rising tariff costs, reshaping industry practices and supply chains.

Why it is important: This dual pressure of trade tensions and sustainability requirements is catalysing fundamental changes in retail operations, from sourcing strategies to consumer pricing, potentially reshaping the industry's future.

The fashion industry faces a critical challenge as escalating trade tensions threaten to undermine sustainability commitments. With US President Trump wielding tariffs as a political weapon against both strategic rivals and traditional allies, fashion businesses are grappling with unprecedented uncertainty. Industry experts, including Michelle Gabriel from IE New York College, emphasise that effective strategic planning becomes nearly impossible under such volatile conditions. The impact extends beyond immediate operational concerns, potentially affecting long-term sustainability investments that often lack immediate returns. Environmental nonprofits warn against using tariffs as an excuse to retreat from climate goals, arguing that abandoning sustainability efforts would harm both supply chain workers and brand reputations. Industry leaders, including Colin Browne of Cascale, maintain that sustainability remains non-negotiable despite short-term trade concerns. The situation has prompted some companies to innovate, particularly in areas like artificial intelligence for material efficiency and circular business models, while others focus on practical approaches like factory-level improvements and supply chain optimisation.

IADS Notes: The retail landscape has undergone significant transformation since early 2025, with BCG projecting USD 640 billion in additional US import costs from tariffs. This economic pressure coincides with February 2025's EU regulations mandating retailer-funded textile waste management, while consumer data shows 60% of shoppers expressing increased climate concern despite price sensitivity. The industry's response has been innovative, as demonstrated by Peek & Cloppenburg's January 2025 launch of their sustainable store concept, showing how retailers can balance environmental responsibility with economic viability.

As tariffs cause chaos across fashion’s supply chain, what happens to sustainability?

What: AI-driven hyper-personalisation is transforming retail through advanced data analytics and machine learning, with the global market projected to grow at 23% annually as retailers leverage technology to enhance customer experiences and operational efficiency.

Why it is important: As consumer expectations evolve and technology becomes more accessible, retailers must embrace AI-driven personalisation to remain competitive, with industry leaders already demonstrating how this transformation can drive substantial revenue growth and operational efficiency.

The retail industry is witnessing a revolutionary transformation through AI-driven hyper-personalisation, with the global market for AI in retail valued at USD 11.61 billion in 2024 and projected to grow at 23% annually through 2030. This evolution is driven by strong consumer demand, with 67% of customers seeking more personalized interactions and real-time recommendations. Retailers are leveraging AI technologies to enable precision targeting, optimise content delivery, and create seamless omnichannel experiences. Key elements include enhanced data collection through loyalty schemes, AI-powered customer data platforms, and sophisticated machine learning algorithms that enable microtargeting and real-time engagement optimisation. The integration of physical and digital dimensions through augmented reality and virtual reality further enhances the customer experience, while agentic AI and generative AI enable more sophisticated customer interactions through chatbots and voice assistants. Success stories from major retailers demonstrate significant improvements in conversion rates and revenue growth, highlighting the transformative potential of these technologies.

IADS Notes: The retail industry's embrace of AI-driven hyper-personalisation has reached a critical inflection point, as evidenced by recent market developments. McKinsey's February 2025 report highlighting that 71% of consumers expect personalised interactions underscores the urgency of this transformation. This consumer demand aligns with BCG's November 2024 analysis revealing potential gains of USD 570 billion for industry leaders through personalisation. The operational impact is equally significant, with AI agents demonstrating 15-30% improvement in customer service efficiency as of January 2025. Walmart's successful implementation of AI-powered personalised homepages in October 2024 serves as a blueprint for large-scale deployment, showing how retailers can effectively combine data analytics, machine learning, and customer experience optimisation. These developments collectively demonstrate how AI-driven personalisation is evolving from a competitive advantage to an essential component of retail strategy.

How AI-driven hyper-personalisation is transforming retail

What: Trump's confrontational stance towards Europe catalyses a renewed focus on AI development and implementation in the retail sector, supported by substantial investment and balanced regulatory frameworks.

Why it is important: This pivotal moment in EU-US relations creates an opportunity for European retailers to establish technological independence and competitive advantage, as evidenced by the 87% of early AI adopters achieving significant revenue growth.

Europe's response to Trump's antagonistic stance marks a decisive shift in the continent's approach to AI development and implementation. Rather than retreating from the challenge, European leaders are seising this moment to foster innovation and technological independence. The EU's strategic investment of EUR 200 billion through the InvestAI initiative, coupled with France's EUR 109 billion commitment to AI infrastructure, demonstrates unprecedented commitment to technological advancement. This approach balances regulation with innovation, as the EU AI Act affects only 10-20% of enterprises while focusing on high-risk applications. The retail sector stands to benefit significantly, with European retailers already achieving 30% faster operations through AI implementation. However, challenges remain, as only 10% of retailers successfully scale their AI applications. The combination of political pressure and strategic investment creates an environment where European values and innovation can thrive together, potentially reshaping the global retail technology landscape.

IADS Notes: The retail industry's transformation through AI has gained significant momentum throughout 2024-2025. In February 2025, the EU launched its landmark EUR 200 billion InvestAI initiative, while European retailers demonstrated concrete results with 30% faster operations through AI implementation in March 2025. October 2024 data revealed that 87% of early AI adopters experienced revenue growth of 6% or higher, validating the strategic focus on technological advancement. However, January 2025 statistics showing only 10% of retailers successfully scaling their AI applications underscore the importance of the article's call for more aggressive development strategies. This data suggests that Europe's balanced approach to regulation and innovation could indeed provide a viable alternative to US and Chinese AI development models.

Trump is a gift to European AI

What: Corporate boards face increasing burnout risks as they navigate multiple disruptions while providing enhanced strategic guidance to management.

Why it is important: As retail undergoes rapid transformation, maintaining effective board oversight and preventing director burnout is crucial for ensuring sound governance and successful business adaptation.

The current business landscape presents significant challenges for corporate board members, who are dealing with unprecedented levels of disruption while facing increased demands on their time and expertise. Directors are now spending nearly 90 hours annually in board meetings alone, up from 70-80 hours pre-pandemic, while simultaneously managing multiple board commitments. The pressure comes from various sources: guiding companies through economic uncertainty, monitoring geopolitical risks, adapting to new regulations, and addressing emerging issues like DEI and sustainability. To prevent burnout and maintain effective governance, boards are implementing strategic time management, leveraging technology for immediate problem-solving, and developing frameworks for future decision-making. The emphasis on director well-being and mutual support through regular check-ins reflects the recognition that board effectiveness directly impacts corporate success.

IADS Notes: According to our database, retail boards are experiencing significant transformation in their governance approaches. In January 2025, research showed that constructive board disagreements have become essential for effective corporate oversight, particularly evident in cases like Macy's board restructuring. The retail sector has seen notable leadership changes, with our database showing that by October 2024, several major retailers underwent significant board and CEO transitions. This trend continued into early 2025, as companies like John Lewis eliminated their CEO role to streamline decision-making, demonstrating how boards are adapting their structures to manage increasing complexities while maintaining effective oversight.

Board burnout is a major risk to all companies— Here’s how they can protect their top directors

What: Leading retailers achieve 4.5% annual productivity growth by redefining efficiency through AI integration, marking a departure from the industry's decade-long 0.3% growth rate.

Why it is important: This shift represents a fundamental reimagining of retail productivity, where technology serves as an enabler of human capability rather than just a cost-reduction tool.

The retail industry is experiencing a transformative shift in how productivity is measured and achieved, moving beyond traditional cost-cutting approaches that have yielded only 0.3% annual growth over the past decade. High-performing retailers are demonstrating remarkable success, achieving 4.5% annual productivity growth by fundamentally redefining their approach to efficiency. The integration of generative AI, with 84% of retail executives planning increased investment, represents a pivotal strategy in this transformation. Drawing lessons from Sears' journey from innovation leader to bankruptcy, the article emphasises that sustainable growth requires continuous adaptation and strategic technology deployment. Rather than replacing human workers, AI serves as an enabler that automates routine tasks while empowering employees to focus on creative, strategic work. This new paradigm suggests that long-term retail success depends on reinvesting in both technology and people, fostering a culture of continuous learning and innovation.

IADS Notes: The retail industry's approach to productivity is undergoing a fundamental transformation through AI adoption, as evidenced by recent market developments. According to Vogue Business , 87% of retailers implementing AI witnessed revenue increases of 6% or more, alongside 15-30% improvements in customer service efficiency, demonstrating the shift from cost-cutting to value creation. This evolution is exemplified by a Retail Dive report , where Walmart's AI technology processed 850 million product data points, significantly enhancing operational efficiency and customer experience. The impact extends to consumer behaviour, with The Robin Report  showing 38% of shoppers actively using AI tools and 80% reporting positive experiences. The transformation is particularly evident in operational processes, as WWD  highlights retailers' transition from traditional Excel-based planning to AI-driven systems, enabling more dynamic inventory management and improved decision-making. This convergence of technological capability and practical implementation suggests that retail productivity is being redefined, with successful companies leveraging AI not just for cost reduction but for comprehensive value creation across their operations.

Redefining productivity In retail

What: Leaders must implement five critical actions to ensure transformation benefits materialise in P&L results, addressing common sources of financial leakage.

Why it is important: The success of recent retail transformations demonstrates how proper financial oversight can help organisations navigate market challenges while delivering measurable results.

Corporate transformations face a critical challenge: ensuring their projected financial benefits materialise in the bottom line. This comprehensive analysis reveals that typically 10-20% of expected financial impact is lost before reaching P&L statements due to various forms of leakage, including price and wage increases, demand fluctuations, and operational underperformance. To address this challenge, leaders must implement disciplined financial oversight through five key actions: partnering with finance to set realistic targets, building robust tracking infrastructure, cascading awareness throughout the organization, aligning incentives with transformation objectives, and embedding a value-driven culture. The article emphasises how successful transformations require not just ambitious goals but also precise mechanisms to monitor and maximise their financial impact. This approach enables organisations to maintain credibility with investors while ensuring transformation efforts deliver tangible business outcomes. The framework presented provides a practical roadmap for leaders to bridge the gap between transformation initiatives and actual P&L results, ultimately driving sustainable financial performance.

IADS Notes: Recent retail transformations validate BCG's emphasis on disciplined financial oversight and cultural change. Macy's Q4 results in March demonstrated how precise tracking of transformation initiatives can yield tangible results, with their "First 50" pilot locations delivering consistent growth despite broader market challenges. This success was mirrored by BHV's remarkable turnaround in January, achieving €9.6 million EBITDA through strategic cost management and merchandise optimisation. Saks Global's revolutionary reorganisation in December exemplified BCG's recommendation for embedding value-driven culture, as they eliminated traditional roles in favor of technology-driven operations. Meanwhile, Breuninger's successful digital transformation in October, achieving over 50% online sales, showcased how systematic transformation can directly impact P&L outcomes when supported by robust financial tracking and accountability systems.

Making transformation count where it matters —the bottom line

What: EU's revised sustainability directives CSRD, CSDDD, and ESPR mandate comprehensive environmental reporting and due diligence from retailers by 2028, fundamentally transforming business practices and supply chain management.

Why it is important: This regulatory framework represents the EU's most comprehensive attempt to address retail's environmental impact, requiring significant investment in new technologies and processes while reshaping industry standards globally.

The European Union's sustainability regulations are undergoing significant revisions, with the implementation deadline for CSRD extended to 2028 and its scope adjusted to focus on larger businesses. The updated criteria now apply to companies with over 1,000 employees and EUR 50m in turnover if based in the EU, or EUR 450m if not EU-based. These directives demand comprehensive environmental reporting and supply chain due diligence, while the ESPR introduces specific requirements for waste reduction, durability, and product repairability. Digital product passports will become mandatory, tracking products from origin through their lifecycle. The regulations' impact extends beyond EU borders, affecting UK businesses trading with the bloc. While some retailers, like Passenger and Baukjen, are proactively preparing for compliance, others face challenges in securing resources and expertise. The directives also raise concerns about unintended consequences, particularly for smaller suppliers and factories lacking resources for comprehensive reporting and auditing. Despite implementation challenges, these regulations are reshaping the retail landscape, pushing the industry toward greater transparency and sustainability.

IADS Notes: The evolution of EU sustainability regulations marks a critical turning point for retail operations. As noted in February 2025, the extension of CSRD compliance deadlines to 2028 provides crucial adaptation time, though industry experts warn that up to 75% of fashion businesses could disappear within five years due to non-compliance. The industry's initial unpreparedness for these changes has led to collaborative initiatives for standardised reporting. This transformation aligns with shifting consumer preferences, as evidenced by the growing preference for repairs over replacement, suggesting that successful regulatory adaptation could become a key competitive advantage.

CSRD, CSDDD and ESPR: do you know the new letters of sustainability law?

What: Circular economy strategies are transforming retail through consumer-driven sustainability initiatives, creating new revenue streams while reducing environmental impact.

Why it is important: The convergence of consumer demand, regulatory pressure, and proven business success cases demonstrates how circular economy practices are becoming essential for retail survival and growth, as evidenced by recent industry-wide adoption of sustainable initiatives.

The retail industry is experiencing a fundamental transformation driven by sustainability and circular economy principles. Nearly one-third of shoppers now rank eco-friendliness as their primary consideration when making purchases, prompting retailers to adopt comprehensive circular strategies. These initiatives encompass product take-back programs, resale platforms, and sustainable packaging solutions, creating multiple benefits: increased customer loyalty, new revenue streams, and reduced environmental impact. The shift from traditional 'take, make, dispose' models to sustainable cycles is particularly evident in consumer behaviour, where environmental consciousness drives purchasing decisions. Retailers implementing circular practices not only satisfy customer demands but also secure their future in an evolving marketplace. This transformation extends beyond mere environmental considerations, offering significant business advantages through optimised resource use, emerging income from resale strategies, and strengthened brand reputation. The integration of these practices represents a strategic imperative for retailers, balancing profitability with environmental responsibility while meeting increasingly stringent regulatory requirements.

IADS Notes: Recent developments in retail sustainability demonstrate how circular economy strategies have moved from theoretical concepts to practical implementations. As reported in June 2024, the NRF's comprehensive guide revealed that successful retailers are adopting multiple circular approaches simultaneously, from product design to reverse logistics . This trend gained momentum when the EU introduced groundbreaking regulations in February 2025, requiring retailers to fund textile waste management and meet specific reduction targets . The commercial viability of sustainable retail was proven by Peek & Cloppenburg in January 2025, with their 32,000-square-foot green retail concept successfully combining eco-conscious merchandise with repair services . The resale market's strong performance, documented in January 2025, showed how traditional retailers are successfully integrating circular business models into their operations . These initiatives align with shifting consumer preferences, as December 2024 data revealed that 41% of consumers now choose repairs over replacement, while 24% actively purchase secondhand items . This convergence of regulatory pressure, business innovation, and consumer demand is transforming retail sustainability from a niche concern into a mainstream business imperative.

The benefits of a circular economy strategy in retail

What: Southeast Asian Ramadan retail sales surge 16% year-over-year, with Malaysia leading at 21% growth, driven by evolving digital shopping patterns and personalised retail strategies.

Why it is important: The significant growth in Ramadan retail sales demonstrates Southeast Asia's emerging role as a digital retail powerhouse, with consumers embracing sophisticated shopping patterns that combine traditional festivities with modern commerce.

Ramadan continues to strengthen its position as a crucial shopping period across Southeast Asia, with retail sales demonstrating remarkable year-over-year growth. From 2023 to 2024, sales surged by 16%, building on the previous year's 8% increase. Malaysia's predominantly Muslim market led the growth with a 21% increase in retail transactions, while Singapore posted a 7% rise. However, Indonesia experienced an 11% decline in online sales, highlighting the complexity of regional market dynamics. The shopping patterns during Ramadan have evolved significantly, with sales peaking during the final two weeks of the holy month. Consumer activity shows distinct temporal shifts, with online sales spiking during late-night and early-morning hours, particularly between Sehri and Iftar. Religious and ceremonial items dominated the growth categories with a 63% increase, followed by clothing at 23%. The transformation extends beyond retail, with the travel sector experiencing a 29% year-over-year increase in bookings. Retailers are adapting to these changing patterns by implementing sophisticated strategies, including targeted retail media placements and personalized product recommendations. The success of these approaches demonstrates the increasing sophistication of Southeast Asian consumers and the importance of combining cultural understanding with digital innovation.

IADS Notes: The strong Ramadan retail performance aligns with broader regional trends identified throughout early 2025. As noted in January 2025, Singapore's achievement of 13.3% online sales penetration demonstrates the region's growing digital maturity, while March 2025 reports showed most Southeast Asian countries achieving over 5% growth rates. February 2025 research revealed 90% of Asian consumers value AI-driven recommendations, supporting the success of personalised retail strategies during Ramadan. These developments reflect the sophisticated evolution of Southeast Asian retail, where cultural events are increasingly driving digital innovation and market adaptation.

Ramadan shopping trends unpacked: What retailers need to know

What: Four persistent organisational dynamics prevent sustainable cost reduction in retail, requiring fundamental changes in accountability, overhead management, resource allocation, and productivity investment capture.

Why it is important: The analysis demonstrates why traditional cost-cutting measures fail without addressing fundamental organisational dynamics, helping retailers avoid repeated unsuccessful programs.

Cost reduction programs in retail consistently fall short of their goals, with only 25% described as "very successful" according to a global survey of 2,100 business leaders. The research identifies four fundamental organisational dynamics that undermine sustainable cost management: insufficient P&L accountability among leaders, self-perpetuating overhead growth, tendency to create new positions rather than redeploy resources, and failure to capture promised savings from productivity investments. These challenges persist because companies often implement superficial measures without addressing the underlying organisational causes. The solution requires a comprehensive reset of the operating model, including clear P&L accountability, aggressive reduction of bureaucracy, flexible resource reallocation, and concrete plans to capture productivity gains. Companies that successfully address these four drivers can improve their odds of building long-term cost capability by two to three times, with a significant multiplier effect when tackled simultaneously. This approach enables organizations to emerge with streamlined operations, fewer management layers, and greater agility to meet future demands.

IADS Notes: Recent retail industry developments strongly validate the article's key findings about organisational cost challenges. As seen in March 2024, Macy's ambitious "Bold New Chapter" strategy directly addresses the issue of P&L accountability and overhead reduction, targeting $235 million in annual savings through supply chain optimisation . The broader industry trend is exemplified by Coresight Research's March 2024 findings, which revealed that 90% of retailers face operational inefficiencies leading to significant revenue losses . This aligns with the article's emphasis on sustainable cost reduction through organisational redesign. The transformation trend continued in October 2024, with major U.S. department stores implementing varied turnaround strategies , while Saks Global's December 2024 revolutionary organisational restructuring, eliminating traditional roles in favor of technology-driven approaches , demonstrates how retailers are actively addressing the article's identified challenges of resource redeployment and productivity investment returns.

The four biggest organisational cost challenges—and how to solve them

What: Generative AI serves as a productivity-enhancing tool that both augments existing capabilities and enables workers to tackle previously unattainable tasks.

Why it is important: As retail undergoes digital transformation, understanding GenAI as an 'exoskeleton' rather than a replacement technology helps organisations better implement and leverage its potential while maintaining essential human elements.

Generative AI is emerging as a transformative force in retail, functioning as an 'exoskeleton' that enhances worker capabilities rather than replacing human input. Early implementations show that GenAI not only increases productivity by enabling employees to work faster and more efficiently but also empowers them to tackle tasks previously beyond their scope. While the technology may reduce the need for certain roles, its most significant impact lies in creating new opportunities and enhancing existing positions. The human element remains crucial, particularly in areas requiring empathy, ethical judgment, and relationship building. This evolution suggests a future where GenAI serves as a powerful tool that amplifies human capabilities while preserving the essential interpersonal aspects of retail operations.

IADS Notes: According to our database, retail's experience with GenAI confirms this 'exoskeleton' concept. In February 2025, research showed that 87% of retailers implementing AI witnessed revenue increases of 6% or more, while achieving 15-30% improvements in customer service efficiency. However, January 2025 data revealed that only 10% of companies successfully scale their AI applications, highlighting the importance of proper implementation. IKEA's April 2024 initiative to train 3,000 workers in AI literacy demonstrates how retailers are preparing their workforce to leverage this technology effectively, while maintaining a human-centric approach to adoption.

Gen AI's “Exoskeleton ” will spark a new era of productivity and talent growth

What: Vietnam's retail market is set to reach USD 350 billion in 2025, driven by a young demographic, expanding middle class, and significant infrastructure development across traditional and digital retail channels.

Why it is important: Vietnam's retail evolution demonstrates the increasing importance of Southeast Asian markets in global retail strategy, particularly as young populations and rising middle classes drive demand for modern retail experiences.

Vietnam's retail sector is experiencing remarkable growth, with retail sales increasing by 9.3% year-on-year in Q4 2023. The country's demographic advantage, featuring a median age of 32 and a population of nearly 100 million, is driving this expansion. Shopping malls dominate the retail landscape, accounting for 63% of total retail space supply, with significant developments underway including Aeon Xuan Thuy and Thiso Mall Hanoi. Major global brands such as Flying Tiger Copenhagen, Genki Sushi, Franck Muller, and Victoria's Secret are either entering or expanding their presence in the market. The luxury retail segment is gaining momentum in key shopping districts of Hanoi and Ho Chi Minh City, with brands opting for standalone flagship stores to create immersive experiences. Additionally, Vietnam's digital economy is among Southeast Asia's fastest-growing, with e-commerce platforms like Shopee, Lazada, and Tiki expanding their operations. However, the sector faces challenges including legal complexities, workforce shortages, and the need for improved recruitment and retention strategies.

IADS Notes: Vietnam's retail landscape is undergoing a significant transformation, as evidenced by recent market developments. In November 2024, MM Mega Market's USD 20 million investment in Danang demonstrated international retailers' confidence in the market's potential. This move aligns with broader regional trends identified in January 2025, showing Vietnam's emergence as a key player in Asian retail growth. The market's attractiveness is further highlighted by February 2025's expansion of Korean retail giants Lotte and Shinsegae, who are implementing multi-format strategies to capture market share. However, the sector faces regulatory challenges, as shown by December 2024's suspension of Temu and Shein operations, indicating Vietnam's careful balance between digital trade growth and local market protection. Despite these challenges, retailers like Central Retail continue to adapt their strategies, focusing on tourism-centric locations and innovative retail concepts, reflecting the market's evolution toward a more sophisticated retail ecosystem.

What retailers need to know about Vietnam’s potential and challenges for 2025

What: RMS, an agency specializing in consulting, training, and recruitment in the retail, luxury, fashion, and hospitality sectors, has been measuring the satisfaction of its retail teams every two years for 15 years using its tool, the RMS Social Retail Barometer.

Why it is important: This study highlights the need to build team loyalty through levers other than compensation, such as proximity to management, career prospects within the company, or simply recognition of their commitment and flexibility.

RMS publishes the 2024 edition of the Social Retail Barometer 

What: FTSE 350 retailers achieve 42% female board representation but struggle to reach the 40% women in leadership target, with only half of major retailers meeting this goal.

Why it is important: The data highlights a critical challenge in translating boardroom diversity into executive-level representation, affecting how retail organisations make strategic decisions and understand their customer base.

The latest FTSE Women Leaders Review reveals a complex picture of gender diversity in UK retail leadership. While companies have made significant progress in board representation, with women occupying 42% of positions across major retailers, the transition to executive leadership remains challenging. Only half of the 30 major retailers examined are meeting the target, despite a voluntary goal set in 2022 for 40% representation by year-end 2025. The private sector shows promising signs, with women making up 36.8% of leadership roles, slightly outperforming FTSE 350 companies at 35.3%. Notably, the Co-operative Group stands alone with women in all four top positions - chair, senior independent director, chief executive, and finance director. However, the volatility in year-to-year figures, influenced by small team sizes and individual departures, underscores the fragility of progress. The sector's 70% achievement in having women in key leadership roles, while significant, still lags behind the FTSE 350 average of 77%, indicating room for improvement in retail's journey toward gender parity.

IADS Notes: The retail industry's approach to gender diversity has undergone significant transformation since late 2024. Walmart pioneered a strategic pivot by maintaining inclusion practices while removing explicit DEI language, achieving strong market performance. This contrasts with Target's experience, which faced a USD 10 billion valuation loss following controversies in February 2025. The emergence of the FAIR framework (Fairness, Access, Inclusion, and Representation) has offered retailers a new way to balance inclusive practices with business performance. The luxury sector notably diverges from mass-market trends, with brands like Prada and Gucci maintaining explicit DEI commitments despite market pressures, demonstrating how different retail segments approach diversity initiatives according to their specific market dynamics and customer expectations.

With controversy around DEI swirling, how gender-diverse are retail executive teams?

What: Trump administration's 25% tariff implementation signals major disruption to North American retail supply chains and pricing structures.

Why it is important: This policy shift represents the largest coordinated tariff action affecting retail supply chains in recent history.

The implementation of 25% tariffs on Mexican and Canadian imports marks a significant shift in retail economics, with projected annual costs of USD 1,200 per US household. The National Retail Federation's analysis suggesting a USD 46-78 billion reduction in consumer spending power highlights the broad economic implications. Different retail sectors face varying impacts, with food & beverage and general merchandise expected to see price increases of 0.81% to 1.63%. The tariffs are particularly significant for cross-border retail dynamics, affecting common imports ranging from food products to manufactured goods. Consumer behavior is already shifting, as evidenced by Canadian consumers' response to strip American alcohol brands from shelves. This development, combined with existing inflation concerns, suggests a fundamental restructuring of retail pricing strategies and supply chains across North America.

IADS Notes: Recent data from March 2025 shows 62% of consumers expressing concern about rising retail prices due to new trade policies. This anxiety is supported by BCG's January 2025 analysis projecting USD 640 billion in additional import costs from expanded tariffs. The impact is already visible in specific sectors, as demonstrated by Mexico's December 2024 implementation of 35% textile import tariffs. February 2025 saw consumer confidence recording its sharpest decline since August 2021, while April 2024's changes to de minimis thresholds highlighted the broader transformation in international trade regulations affecting retail operations.

How tariffs will impact retail prices

What: February's retail sales data in the US presents a mixed and confusing picture, with conflicting trends depending on the measurement method used.

Why it is important: The contradictory data highlights the challenges in accurately assessing the retail landscape, which is crucial for understanding consumer behaviour and economic health.

February's retail performance presents a perplexing array of statistics, showing a slight increase of 0.2% on a seasonally adjusted basis from January and a rise of 3.1% compared to February 2024. Conversely, year-over-year figures indicate a decline of 0.9% and a month-to-month decrease of 4% when unadjusted, as reported by the Census Bureau. This highlights the challenge of accurately assessing the retail landscape.

On a seasonally-adjusted basis, February 2025 retail sales reached $722.7 billion compared with $700.9 billion last year. However, unadjusted figures show that the retail and food services sector generated $639.1 billion in February 2025, a drop from $644.8 billion in the same month last year

IADS Notes: The discrepancy between seasonally adjusted and unadjusted data has led to criticism from industry experts. Paula Rosenblum, co-founder and managing partner at RSR Research, expressed frustration over the reliance on seasonally adjusted month-over-month data, questioning the rationale behind the Census Bureau's and National Retail Federation's use of such figures. It's worth noting that 2024 was a Leap Year, adding an extra day to February. On average, the retail and food services sector generated $22.2 billion daily in February 2024, compared to $22.8 billion in February 2025, indicating that consumer spending increased by nearly 3% daily this year compared to last, which aligns with inflation trends.

US February retail sales decline 0.9% year-over-year, but that’s just part of the story

What: EPA's sweeping environmental deregulation threatens fashion industry's sustainability progress by weakening emissions, air quality, and water pollution standards while potentially discouraging innovation in cleaner production technologies.

Why it is important: This development highlights the growing tension between regional environmental policies, as the US moves toward deregulation while the EU strengthens sustainability requirements, creating complex challenges for global fashion supply chains.

The EPA's latest deregulatory initiatives under the Trump administration signal a significant shift in environmental oversight that could profoundly impact the fashion industry's sustainability efforts. The sweeping rollbacks across emissions, air quality, and water pollution regulations present fashion companies with a complex dilemma: potential short-term cost savings versus long-term environmental commitments. Industry experts, including Dr Sheng Lu from the University of Delaware, warn that these changes could stifle innovation in sustainable production technologies, particularly in areas like waterless dyeing and digital printing. The deregulation's scope extends to greenhouse gas reporting requirements and mercury standards, affecting textile mills and apparel factories that rely on coal-fired power. Rachel Van Metre Kibbe of Circular Services Group emphasizes that deregulation doesn't address fundamental sustainability challenges, while the American Apparel and Footwear Association raises concerns about the impact on companies already investing in environmental compliance.

IADS Notes: The EPA's deregulation contrasts sharply with global trends in retail sustainability regulation. In March 2025, the EU implemented comprehensive sustainability reporting requirements through CSRD, CSDDD, and ESPR, while February 2025 saw the introduction of mandatory textile waste management funding for retailers. The industry's vulnerability to regulatory changes was highlighted by the January 2025 Kantamanto Market fire, demonstrating the fragility of global waste management systems. This regulatory divergence occurs as October 2024 reports revealed the limitations of market-driven environmental initiatives, while May 2024 saw the introduction of significant legislative changes promoting sustainability across fashion supply chains.

How EPA deregulation could undermine fashion’s sustainability goals

What: Retail visionary Burt Tansky pioneered the modern luxury department store model by focusing on affluent customers and strategic expansion.

Why it is important: His strategic focus on affluent customers and careful market expansion created a blueprint for luxury retail success that remains relevant as department stores navigate digital transformation and market consolidation.

Burt Tansky, who passed away at 87, left an indelible mark on luxury retail through his transformative leadership at Neiman Marcus Group. Rising from humble beginnings in Pittsburgh, he shaped the modern luxury department store landscape through roles at I. Magnin, Saks Fifth Avenue, and ultimately as CEO of Bergdorf Goodman and Neiman Marcus Group. His unwavering focus on the highest-end luxury market and rejection of "bridge" brands elevated Neiman Marcus to industry-leading productivity rates exceeding USD 500 in sales per square foot. Under his leadership, the company grew from 24 to 41 stores through careful market selection, while also pioneering luxury e-commerce through neimanmarcus.com. Tansky's customer-centric approach, including personally knowing his top 250 customers, set new standards for luxury retail service. His tenure culminated in the successful USD 5.1 billion sale of the business in 2005, having transformed the company's stock value from USD 10 to USD 100 per share. Beyond his business acumen, Tansky was known for mentoring executives, maintaining strong vendor relationships, and bringing wit and warmth to the industry.

IADS Notes: Burt Tansky's legacy of luxury retail leadership continues to influence today's market transformations. As seen in February 2025, Nordstrom's appointment of a Director of Luxury Styling and creation of dedicated service spaces echoes Tansky's belief in personalised customer relationships, demonstrating how his high-touch approach remains relevant in modern retail. His strategic approach to store network development finds new expression in Saks Global's February 2025 decision to invest USD 100 million in the NorthPark Center location while closing less viable stores, showing how careful market selection remains crucial. The creation of a USD 10 billion luxury powerhouse through the Saks-Neiman Marcus merger in January 2025 validates Tansky's unwavering focus on the highest end of the market, though now enhanced by technology partnerships that he helped pioneer through early e-commerce initiatives.

How legendary Burt Tansky catapulted the Neiman Marcus Group

What: BIPOC beauty brands face market access challenges as major retailers abandon diversity initiatives, prompting a strategic shift towards specialty retail partnerships.

Why it is important: The retail industry's DEI rollback threatens to destabilise USD 370 million in annual Black beauty consumer spending, reshaping market access for minority-owned brands.

Major US retailers including Walmart, Amazon, and Target are retreating from their diversity, equity and inclusion commitments, creating significant challenges for BIPOC beauty brand founders. These retailers previously championed DEI initiatives through enhanced shelf space and support programmes, particularly following the racial reckoning of 2020. However, the current rollback threatens to destabilise the momentum gained by diverse beauty brands in mainstream retail. The impact extends beyond mere shelf space, affecting critical resources like accelerators and funding programmes essential for emerging players. In response, brands are exploring alternative channels, with specialty retailers like Ulta Beauty and Sephora maintaining their DEI commitments. BIPOC-priority retailers and those participating in the 15 Percent Pledge are emerging as crucial allies, while brands strengthen their direct-to-consumer strategies and explore innovative retail formats like pop-ups and hospitality partnerships. Despite these challenges, experts remain optimistic about diversity in beauty finding new paths to growth.

IADS Notes:The retail industry's approach to DEI has undergone significant transformation since late 2024. Walmart's November 2024 strategic pivot to maintain inclusion practices while removing explicit DEI language achieved strong market performance , contrasting sharply with Target's February 2025 experience of a $10 billion valuation loss . The emergence of the FAIR framework in January 2025 offered retailers a new way to balance inclusive practices with business performance, while specialty retailers like Sephora reinforced their commitments through innovative initiatives.

BIPOC-owned beauty brands face a new reality in the post-DEI era

What: India's consumer landscape is undergoing a fundamental shift as affluent households are projected to reach 30% by 2035, while digital infrastructure, Gen Z preferences, and women's increasing economic influence reshape retail dynamics.

Why it is important: As traditional retail markets mature, India's evolving consumer landscape offers a blueprint for future growth, with its unique combination of digital innovation, demographic dividends, and infrastructure development creating new paradigms for global retail.

India's transformation into a global consumer powerhouse is reshaping retail paradigms, with affluent households projected to increase from 19% to 30% by 2035. This shift is characterized by a dramatic evolution in consumer behavior, moving beyond basic necessities to discretionary spending in education, travel, health, and leisure. India's Gen Z, surpassing the entire US population in size, is emerging as a powerful force that prioritizes immersive experiences and authentic engagement. The rising influence of educated women, whose literacy rates have doubled over four decades, is driving growth in sectors like packaged food, appliances, and online shopping. This transformation is supported by robust digital public infrastructure enabling seamless connectivity and personalized experiences, while massive infrastructure investments exceeding a trillion dollars are upgrading roads, bridges, and ports, fundamentally transforming logistics and connectivity.

IADS Notes: Recent market developments validate BCG's projections, with 27 new international brands entering India in early 2025 and the country ranking as the most attractive emerging market for retail expansion. The digital transformation is evident in Coresight's identification of GenAI-driven personalization as a key trend, while Euromonitor reports 48% of brands incorporating experiential rewards. This evolution is supported by substantial infrastructure development, with plans to add over 2 million square feet of retail space and a 46% increase in retail space leasing across major cities, creating new opportunities for retail expansion beyond Tier 3 cities.

When Indian consumers shape global trends

What: Capri Holdings' vice president of global analytics has transformed the company's data culture through a comprehensive consumer feedback system that predicts sales performance and shapes creative decisions.

Why it is important: The transformation reflects a crucial evolution in luxury retail, where consumer insights directly influence product development and marketing, potentially reducing the risk of unsuccessful launches and improving inventory efficiency.

Capri Holdings has revolutionised its approach to luxury retail by establishing an extensive consumer research programme encompassing 75,000 global participants. Under the leadership of Manuel Neto, vice president of global analytics, the company has developed a sophisticated system that surveys three distinct customer segments: existing purchasers, potential customers, and those planning future purchases. This innovative approach enables the company to test campaigns before launch, gathering vital feedback on brand heat and affinity. The research lab's influence extends beyond marketing, informing inventory management and regional distribution strategies. Initially met with resistance during budget planning, the programme now shapes nearly every aspect of the brands' output, from campaign shoots to influencer collaborations. The integration of data analytics with creative processes has required careful cultural transformation, with Neto developing specialised approaches to communicate with different teams. The success of this strategy is validated by the correlation between consumer intent data and actual transaction outcomes, demonstrating the effectiveness of this data-driven approach to luxury retail.

IADS Notes: Capri Holdings' innovative consumer research strategy aligns with broader industry transformations observed throughout 2024-2025. As seen in March 2025, when Michael Kors launched its Amazon storefront, luxury retailers are increasingly embracing data-driven decision-making to enhance digital distribution. This trend parallels the January 2025 Bain-Altagamma findings emphasising the need for stronger customer connections in luxury retail. The success of such approaches is evident in Mytheresa's December 2024 acquisition of YNAP, which demonstrated how data-driven operations can transform luxury retail. The integration of digital tools and physical experiences, as highlighted in October 2024, has become crucial for customer engagement, while Saks Fifth Avenue's July 2024 expansion of its personalised shopping services underscores the industry's shift towards data-informed experiential retail.

How Capri Holdings uses a 75,000-strong consumer ‘lab’ to shape luxury retail

What: Gartner study reveals modest AI productivity gains with only 37% of traditional AI users and 34% of GenAI users reporting high improvements, challenging widespread optimism about immediate impact.

Why it is important: This reality check on AI productivity gains helps business leaders make more informed decisions about AI investments and implementation strategies, particularly crucial for the retail sector where technology spending must demonstrate clear returns.

Gartner's comprehensive survey of 724 business professionals reveals a sobering reality about AI's impact on productivity, with only 37% of traditional AI users and 34% of GenAI users reporting significant gains. This finding challenges the prevalent optimism surrounding AI implementation and points to what some experts call the "AI productivity paradox." While AI shows promise in specific segments like call centers, broader organizational benefits remain elusive. The research highlights several factors contributing to limited productivity gains, including inflated expectations, implementation delays, and measurement challenges. Marketing teams demonstrate the highest success rates, while legal and HR functions lag behind, indicating the importance of context-specific applications. The study suggests that successful teams approach AI with a learning mindset rather than focusing solely on job displacement concerns. For CFOs and business leaders, this indicates the need to reset expectations and focus on creating internal conditions that enable AI to deliver its full potential.

IADS Notes: Recent market research reveals a complex landscape of AI implementation in retail, with significant gaps between investment and actual productivity gains. According to BCG's "From potential to profit" in January 2025 , only 25% of companies report meaningful value from their AI initiatives, despite high investment levels, with successful companies focusing on fewer, more strategic use cases. A Salesforce study published in Retail Dive in March 2024  highlights a critical challenge: while 93% of retailers use AI, nearly half struggle with data integration and accessibility, potentially explaining the modest productivity gains. Bain & Company's research, reported in WWD in November 2024 , adds another dimension, revealing that consumer awareness and trust remain significant hurdles, with many shoppers unaware they're using AI-powered features. This aligns with AlixPartners' findings published in April 2024 , emphasizing that successful AI implementation requires focusing on practical applications with clear business benefits rather than following technological hype. These insights collectively suggest that achieving meaningful productivity gains requires a more measured, strategic approach to AI implementation, with particular attention to data integration, consumer trust, and clear business outcomes.

CFOs should reset expectations about AI’s impact on workforce productivity and headcount

access the full CFO report here

What: Lower-tier Chinese cities are emerging as new luxury retail powerhouses, driven by stronger purchasing power and cultural adaptation.

Why it is important: This evolution signals a new era in luxury retail where brands must balance expansion with local cultural integration to succeed in the Chinese market.

China's luxury retail landscape is undergoing a significant transformation, with lower-tier cities emerging as key growth drivers for international brands. Cities like Chengdu, despite their second-tier status, have become luxury capitals due to lower living costs and stronger consumer purchasing power. This shift is exemplified by Ralph Lauren's success in these markets and Lemaire's strategic entry into Chengdu, where the brand created a culturally integrated store design incorporating local elements like Cizhu bamboo and Tanzi pots. The evolution marks a departure from previous mass expansion strategies, with brands now adopting a more nuanced, culturally sensitive approach to growth. Industry experts emphasise the importance of understanding regional differences and creating resonant cultural connections, moving away from the standardised global marketing campaigns of the past. This transformation reflects broader changes in Chinese consumer behaviour, where local cultural elements and thoughtful brand positioning have become crucial factors in retail success. The trend has prompted luxury brands to reconsider their expansion strategies, focusing on creating unique, locally relevant experiences rather than rapid store proliferation.

IADS Notes: Recent market data validates this strategic shift in China's luxury retail landscape. As reported in January 2025, while Tier-1 cities experienced a 4% decline in luxury spending, Tier-2 and Tier-3 cities saw remarkable growth of 9% and 22% respectively. This trend is further supported by March 2024 findings showing increased purchasing power in lower-tier cities. The success of this approach is evidenced by SKP's August 2024 expansion into Wuhan, generating significant opening day sales. Meanwhile, July 2024 reports highlight how luxury brands are deepening their investment in local cultural integration, demonstrating the industry's commitment to this new strategic direction.

Succeeding in China’s new reality

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Annual Department store results

The IADS Global Department Store Monitor was originally launched in May 2021 by Dr. Christopher Knee as the ‘IADS 100 Report’ after realising that comparable department store data was either unavailable, poorly understood, or not exploited by analysts. This was characteristic of an ever-evolving industry, making it difficult for outsiders to understand, including events such as privatisation, mergers, change in ownership, or simply not categorising numbers by business uniti.

Since then, the report has been renamed and rebuilt into a new format to enable dynamic comparison among department stores over a specific period and a series of years. To track and compare sales and profits from companies worldwide while accounting for fluctuations in exchange rates, the renewed version of the monitor includes current (as of today) and fixed exchange rates (as of 2021) to isolate the impact of sales growth from the effect of exchange rate changes.

Also, given that accounting standards across countries are not uniform, the fiscal year is referred to as FY 2023-2024 throughout the monitor to compare results across the occurrence of the same world events. This uniformity helps maintain a baseline in the events that have occurred throughout the year to draw fair conclusions. The conception of this monitor was driven by the need to juxtapose pre- and post-COVID-19 results. The 2025 edition of the IADS Global Department Store Monitor reviews 59 department stores with publicly available information to create a benchmark for global department store stakeholders regarding the 2023-2024 period.

This report attempts to capture the global economic retail scenario post-COVID-19 and whether pre-COVID-19 numbers have been regained or are faltering.

Fiscal Year 2023-2024 : Slow and steady resilience

The global outlook during this period was characterised by uncertainty amid turmoil in the financial sector, high inflation, the impact of Russia’s invasion of Ukraine (which started in February 2022) and marking three years of the COVID pandemic, which was finally declared over as a health emergency in May 2023. Recovery was slow but steady due to widening divergences among economic sectors and regions. 2024 also saw a changing political landscape with over 70 elections globally. However, despite fears of a hard economic landing, the global economy was surprisingly resilient despite significant central bank interest rate hikes. Inflation also began to decline across emerging and advanced economies.

During FY 2023-2024, major retail industry transformations were afoot:

• From a regional perspective, US department stores saw their market share decline, dropping from 14% in 1993 to less than 3% in June 2024. This prompted strategic consolidations such as Saks Fifth Avenue’s USD 3 billion offer for Neiman Marcus Group that was turned down (eventually closing the deal at USD 2.7 billion in December 2024). Macy’s received a USD 5.8 billion offer from private equity firms Arkhouse and Brigade Capital Management however ended takeover talks in July 2024. The department store also announced its plan to shutter 150 stores while shifting its focus to attracting younger customers in February 2024.
• In Asia, India solidified its position as a growing luxury market with an expansion of around 3.4% in 2023 and attracted 27 new international retail brands in 2024. Not just domestically, Indian brands such as SABYASACHI arrived at Bergdorf Goodman in November 2024. On the other hand, China faced a retail slowdown commencing in July 2024 due to economic challenges such as rising local government debt and reduced private-sector spending. Hong Kong saw a similar decline in the second half of 2024 due to the shift in consumer behaviour among mainland Chinese visitors. In Japan, Seven & i Holdings completed the sale of Sogo & Seibu department stores to Fortress Investment Group in October 2023.
• The retail industry is undergoing a transformation due to AI-driven hyper-personalisation, with the global market for AI in retail valued at USD 11.61 billion in 2024 and projected to grow at 23% annually through 2030.
• Department stores advanced their sustainability commitments against growing regulatory demands. Harrods published its first-ever ESG report in June 2024 highlighting its progress in the reduction on Scope 1 and 2 carbon emissions and setting future goals.

Fiscal Year 2023-2024 financial results: The post-Covid boom in retail is tapering off

In 2024, the global economy, including the retail sector, faced significant market uncertainty, slow economic growth, and unfavourable interest rate environments across regions.  The post-COVID-19 peak of 2021 and 2022 has passed, and growth has now stabilised across the retail sector, with department stores largely following this trend, albeit with regional divergences. Some broad observations from the Global Department Store Monitor for FY 2023-2024 covering 59 department store companies indicate that:

• The average global year-on-year sales growth in FY 2023-2024, after two years of significantly positive sales growth in 2021 and 2022, shows a slightly negative sales trend of around –1.6%.
• The share of department store sales in total retail sales is stabilising and has almost returned to pre-COVID levels.
• This is also due to the reduction of total global retail sales after hitting a peak in 2021 and 2022. Global retail consumption is starting to slow down due to considerations such as reduced purchasing power, slowdown in the luxury sector, environmental responsibility considerations and other factors that differ regionally.

In the Americas, department store sales have stabilised and are contributing more to their owners’ retail sales than pre-COVID. This is due to increased department store sales and lower total retail sales per company. The average sales trend for these group-owned department stores is negative compared to 2021 and 2022, suggesting that the post-Covid peak has passediii. On the other hand, stand-alone department stores are almost stable and slightly positive in year-on-year sales growth.

In the Asia-Pacific region, department store sales have stabilised but have not yet reached pre-Covid levels regarding contribution to their owners’ total retail sales. Department store sales have reduced due to a global retail slowdown, especially in Japan, South Korea and Hong Kong. The average sales trend for department stores was negative, after two consistent years of sales growth in 2021 and 2022. In India and the Philippines, on the other hand, department stores saw a positive sales trend.

Similarly, in Europe, sales in group-owned department stores have risen and crossed the pre-COVID contribution to their owners’ total retail sales. European department store performance has been decent on average. However, total retail sales have reduced. Both, department stores owned by groups and standalone department stores saw a muted positive sales trend of less than 1% on average.

Americas: Marked by restructuring and innovation

In Chile, Falabella (-10.7%) saw a negative sales trend but increased its profit. Falabella’s increase in profit may be explained by its sale of two major assets during the financial year. It also invested over USD 100 million into enhancing its omnichannel capabilities, store network expansion, and sustainability efforts. Cencosud Paris (+6.6%) saw an upward sales trend but declining profit. Cencosud Paris undertook several store transformations and launched its digital wallet CencoPay. Ripley (-7.1%) saw a declining sales trend and increased its losses. It introduced cafés and beauty salons in its flagship Lima stores following its strategic decision to reinvent itself as a lifestyle destination.

Mexican department store El Palacio de Hierro (+10.6%) increased its sales and profits during this fiscal year. It recently revamped two stores and relaunched one in Mexico City. Similarly, Liverpool (+23.2%) also saw rises in its profits and sales. Post-pandemic consumer sentiment in Mexico has tended towards value for money and convenience. Liverpool acquired Nordstrom in the US and established a significant North American-Mexican retail alliance.

In the US, Nordstrom (-5.7%) and Macy’s (-5.5%) saw a decline in sales and reduction in profit, although it stayed positive. Nordstrom was privatised by family ownership and Mexican retailer Liverpool. Macy’s announced that it would close 150 stores and focus on expanding Bloomingdale’s and Bluemercury operations. It also faced pressure from investors to create a real estate subsidiary for better asset management citing Dillard’s successful operating model. Similarly, Dillard’s (-1.73%) and Kohl’s (-3.35%) saw fewer sharp sales downturns but while Dillard’s saw a slight dip in its profit, Kohl’s plunged much further into loss. Dillard’s was the best performing department store among its competitors; it achieved superior results through focused operations and disciplined capital management. Kohl’s undertook leadership changes and tightened its budget to cope with its results. All major US department stores went through a tough financial year prompting mergers such as Saks- Neiman Marcus which was finalised in December 2024 and privatisations such as Nordstrom.

Asia-Pacific: Diverging results across South, East and South-east Asia

The 2023 sales trend in China has been fairly stable. Parkson Retail Group Ltd (+9.9%), Wangfujing (+13.2%) and Wushang (+13.2%) reported positive sales growth. Several Chinese department stores included in the Global Department Store Monitor showed stable sales numbers with negligible deviation. New World (-34.4%) and Maoye (-5.1%) reported negative sales trends; while the former’s negative sales growth mounted, the latter was able to reduce its negative sales growth from the previous financial year significantly. In FY 2023-2024, the Chinese economy was characterised by real estate crises, high youth unemployment rates, and a generally cautious consumer sentiment. With moderate expansion, China saw the emergence of new trends; rural areas outperformed urban areas regarding consumption. The luxury sector showed a decline of 18-20% overall but rural consumers showed more propensity for luxury consumption while their urban counterparts exhibited luxury fatigue. Government stimulus measures and local economic conditions also influenced rural customers. Aspirational urban consumers that once fuelled luxury growth preferred products and services that enhance their quality of life like travel and health.

In Hong Kong, Wing On showed modest sales growth of almost 1.5% but was able to achieve a good pre-tax profit after marked losses in the previous year. Sogo was privatised mid-2022 and has not released public financial statements sinceiv. Hong Kong saw a shift in consumer behaviour from mainland Chinese consumers. Inbound tourism has not recovered as quickly as expected and tourist expenditure saw a drastic fall compared to 2018 levels. The Hong Kong Dollar was strong which encouraged locals to shop abroad, adding to the decline of retail sales in Hong Kong. Given this perspective of the Hong Kong retail scene, department stores have been remaining afloat.

Indian department stores, Lifestyle and Shopper’s Stop have been performing well. While the 2023 sales numbers for Lifestyle are not available yet, it has been consistently growing sales since the COVID-19 pandemic and announced plans to open at least 50 new stores in the next three to four years. Shopper’s Stop reported a positive sales trend of 5.4% after two consistent years of double-digit sales growth. Despite Amazon divesting its stake in Shopper’s Stop, the department store saw a growth in sales driven by beauty. The Indian retail market is booming with several foreign brands entering the country during the year. In Sri Lanka, Odel (-11.5%) saw a continuing downtrend in sales and almost doubled its losses. The country saw a sluggish economy ridden with inflation and political instability. The consumer expectation of digitisation and personalisation is strong and sales at Odel have consistently declined with its owner, Softlogic Group, seeking investors for the retail store.

Japan has seen a strong pattern of recovery post-COVID, with all department stores finally achieving the green in this financial year. Tobu (+3.45%), Kintetsu (+4.39%), Takashimaya (+5.1%), Marui (or 0101) (+7.97%), and H2O (Hankyu Hanshin) (+9.6%) showed growth with Tokyu (+11.44%), J Front (Daimaru Matsuzakaya) (+15.3%) and Isetan Mitsukoshi (+17.54%) reaching double digit sales growth. Isetan Mitsukoshi especially has shown steady recovery since experiencing a significant operating loss in Financial Year 2020-2021 due to the impact of Covid-19, with particularly strong performance in Financial Year 2023-2024 which represented the highest operating income since the merger of Isetan and Mitsukoshi in 2008. All reported department stores had positive profits surpassing 2022 levels. In Japan, department stores saw their growth rate decline dramatically from 10.8% in the first half of 2024 to just 2.3% in the second half. However, stores in tourist areas outperformed other stores by a large margin. Japan's luxury market experienced a significant sales spike driven by international tourists capitalising on a weak yen and resilient domestic spending. The weakened domestic currency overinflates Japan’s retail performance and is likely economically unsustainable.

Korea has seen an overall decrease in sales growth, with the most severe decreases being in Lotte (-5.9%), Shinsegae (-12.8%), and Hyundai (-16%), while Hanwha Galleria (+0.5%) was the only department store to remain stable. The spinoff of Galleria can explain this as a separate entity starting in 2023. Following this trend, there have been slight decreases in operating profit figures. During the fiscal year, the South Korean economy saw a downturn marked by high interest rates and rising prices. While department stores posted growth in the previous fiscal year, they could not maintain it in the rough economy during FY 2023-2024.

Interestingly, the pre-owned luxury market performed well and much better than the declining luxury sector in both South Korea and Japan. Even before the depreciation of the Japanese yen in the first half of 2024, Japan’s secondhand market saw strong growth driven by TikTok where secondhand shopping in Japan has become a trend. In 2023, South Koreans were the world’s largest online shoppers in resale with almost 62% shopping for secondhand luxury goods.

In the Philippines, SM (+6.8%) showed a positive sales and profit trend. Robinson’s Retail (+7%) showed a positive trend for sales but reduced profit, though the latter remained positive. The FY 2023-2024 growth was attributed to store expansion initiatives and recovery from pandemic restrictions. Robinson’s Retail’s department store segment grew at more than its combined retail operations at 8%. It was driven by improved category performance in travel-related items, sportswear and improved gross margins from a better category mix. The retail industry in the Philippines has seen steady growth, driven by rising consumer spending and a youthful population. The focus of Philippine retailers has now turned to expanding omnichannel integration.

In Malaysia and Singapore, Parkson Retail Asia faced concerns regarding operating as a going concern. Its subsidiary for Vietnam operations filed for voluntary bankruptcy later in April 2023. The Singaporean economy saw declining growth in the retail sector. This was also driven, in large part, by tourists opting to shop in cities that provide cheaper alternatives. Though Malaysia posted decent growth in the retail sector, this did not translate into better performance for department stores.

In Indonesia, Matahari (+1%) saw a small positive sales trend combined with a massive jump in profit. Overall, Indonesia’s retail sector has perfomed well.

Central Retail in Thailand saw modest sales growth of 5% and a slight increase in profit. The country also experienced strong economic growth and an uptick in luxury sales.

Australian department store David Jones was sold by Woolworth’s in March 2023 hence no results are available for the last fiscal year. David Jones saw a significant decline in sales after its sale to Anchorage Capital Partners. However, reinvestment was planned for both in-store and online shopping experiences. Myer (-2.9%) saw a slightly negative sales and profit trend. It purchased Apparel Brands in October 2024 to expand its loyalty programme, Myer One. Both Australian department stores are reducing their number of stores overall; while David Jones is reducing the size of its physical stores, Myer is reducing its locations while focusing on a younger consumer.

Europe: Decent performance across countries

The UK saw mixed results with rising profits and reducing losses being the broad trend. However, Selfridges (according to press sources) and Fenwick (-14%) saw deepening losses attributed to high inflation, increased competition, and a challenging retail environment. Selfridges saw notable property devaluation, changes in ownership stakes, and impending loan repayment. This decline in valuation was attributed to external market factors including rising interest rates and rents. Fenwick closed its flagship and sold it to developers, reflecting its sales decline. Harvey Nichols decreased its losses but remains in the red. On the contrary, John Lewis (+1.4%), Liberty (+6.6%), Harrods (+8%), Fortnum & Mason (+9.1%) Marks & Spencer (+9.6%), all showed positive sales trends and an increase in profit. John Lewis reduced its losses and increased its profit. This was attributed to the effectiveness of strategic initiatives such as relaunching the ‘Never Knowingly Undersold’ promise and joint loyalty programme with Waitrose that showcased its resilience and market adaptability. Liberty saw success across product categories and subscription services despite a decline in e-commerce revenue. Harrods was sued by the victims of alleged sexual abuse by its previous owner but managed to post a notable sales growth and profit despite this bad publicity. At Fortnum & Mason, sales recovered, and turnover returned to pre-COVID levels. This was primarily driven by international customers supported by opening a new store at the Hong Kong airport. It was also reported to have been considering entering the US market. Marks & Spencer saw a big rise in profit supported by a substantial investment in enhancing staff compensation and family leave policies. It saw private label success including its own beauty brand. The UK saw an unexpected upswing in department store and non-food store sales during the year's second half. Despite the calculated loss of over GBP 10 billion due to the removal of tax-free shopping for tourists in 2021, UK department stores managed to grow their sales.

In Denmark, Illum (+10.5%) and Magasin du Nord (+0.5%) reported positive sales trends; Illum lessened its loss while Magasin du Nord saw a slight decrease in its profit. Denmark saw positive consumer sentiment but a reduction in net spending for all categories except groceries.

In Finland, Stockmann (-3%) saw a negative sales trend but a rise in its operating profit. Due to its struggling financials, Stockmann in Helsinki considered a potential name change to that of parent company Lindex and the sale of the department store.

In Sweden, Ahlen’s (-19.5%) saw a downtrend after consecutive years of growth after the pandemic. After its ownership change in 2022, it has not broken out its profit for department stores. Sweden saw higher prices due to inflation, with consumers transitioning to lower-cost goods and actively reducing consumption for environmental reasons. NK (+4.2%) saw a positive sales trend, but it reduced its profit during the 2023 financial year.

The Norwegian retail market showed signs of expanding with potentially becoming a new luxury destination driven by currency devaluation, tax-free shopping and disincentivising luxury imports, as well as an uptick in tourism during warmer months. According to press sources, Steen & Strøm in Oslo witnessed sales growth of 14% in the first half of 2024v.

Kaubamaja (+9.8%) in Estonia saw a significantly positive sales trend and rise in profit. However, Estonia saw a 1% reduction in total retail trade volume, comprising a 3% drop in textile, clothing, and footwear store sales.

In France, while Galeries Lafayette does not release its financial results, according to press sources, the company returned to its pre-COVID sales volume of EUR 3.85 billion by the end of 2024 and is currently implementing its EUR 400 million investment plan over the next five years. Similarly, Printemps does not share revenue or profit figures but confirmed in the press that it entered 2023 profitablyvi.

In Greece, Attica (+18.8 %) saw an upward sales trend and an increase in its profit. Although it was fined EUR 400,000 for misleading pricing practices, it was still able to grow financially. In general, the rent for retail spaces in Greece followed an upward trend.

El Corte Inglés (+2.6%) in Spain saw a positive sales trend and a drastic rise in its operating profit. Spain saw robust growth in consumer spending reflected in department store sales.

In Switzerland, Jelmoli (-4.2%) saw a negative sales trend and improved its EBIT while remaining in the red. Coop (+1.34%) saw a positive sales trend and an increased profit figure. In Switzerland, luxury department stores such as Jelmoli and Globus faced declines due to a shift in the retail landscape. Jelmoli’s flagship store in Zurich is now closed waiting for Manor to takeover.

Middle East and Africa: Operating in a complex environment

In South Africa, Woolworth’s (-16%) showed a significant drop in sales and profit explained partly by the closure of over 30 stores. Woolworth’s sold David Jones to Anchorage effective in March 2023. The South African economy saw an increasingly complex environment due to load shedding, inflation, and global supply chain disruptions. The South African Reserve Bank raised interest rates multiple times to combat persistently high inflation of almost 6% as of August 2024. The national power crisis required retailers to undertake substantial costs for alternative energy sources like generators and battery systems.

What to expect from Fiscal Year 2024-2025 and beyond

Retailers are presently gathering the results for the current FY 2024-2025. However, clear global challenges throughout the year will undoubtedly impact their results:

• the election of President Donald Trump in the US and impending tariffs, some of which have already been enforced, across the globe are sure to restructure global retail supply chains. Though inflation across other economies has been decreasing, the US market fears stagflation – a combination of high inflation and slow growth - despite Trump’s pro-domestic growth agenda. The ripples of US American economic actions will no doubt be felt worldwide, with the EU, China and Canada, among other countries, discussing retaliatory tariffs. Canadian department store Hudson’s Bay has already applied for creditor protection given a weak recovery post-COVID and tensions with the US. India, conversely, is preparing a tariff reduction proposal with the US.
• The potential US TikTok ban pending its sale to a US owner adds to the uncertainty, given that it is an essential social media channel that drives trends and influences consumer behaviour in the fashion industry. Furthermore, the rise of TikTok Shop, which emerged as the second-largest e-retailer behind Amazon during UK's Black Week, represents its influence over the fashion and retail sectors. Already available in the US, the UK and Spain, it is poised for entry in other European markets later this year. The global economic forecast of 2025 is hence dodgy and will digress from 2024 results sharply.

In Asia, Vietnam’s total retail sales are projected to reach USD 350 billion this year and with a young, expanding middle class with rising purchasing power, Vietnam is rapidly becoming a key player in Asia’s retail landscape. Luxury retailers such as Tiffany & Co and Montblanc have opened their first flagship stores in Hanoi and Ho Chi Minh City. The Indian market will continue to grow with Galeries Lafayette’s first Indian department store set to launch this year in Mumbai and a second one in Delhi in 2026 in partnership with Aditya Birla Group.

In the EU, revised sustainability directives CSRD (Corporate Sustainability Reporting Directives), CSDDD (Corporate Sustainability Due Diligence Directive), and ESPR (Ecodesign for Sustainable Products Regulation) mandate comprehensive environmental reporting and due diligence from retailers by 2028. Nordic countries such as Norway are seeing dramatic rise in tourist shopping due to tax-free benefits. Steen & Strøm doubled its tax-free shopping revenue in 2024. This is further supplemented by an increase in climate tourism where visitors flock to cooler countries due to climate change.

The next edition of the Global Department Store Monitor will examine the results from FY 2024-2025. While the global retail landscape is constantly changing, the factors discussed above will have a definite impact on department stores, adding to their current transformation, which includes prioritising omnichannel presence, experiential retail, and adapting to changing consumer preferences.

[i] And a reason for international analytic platforms such as the International Association of Department Stores to exist in the first place.

[ii] Companies’ accounting standards reflect both whole and broken fiscal years which is indicated in the monitor by marking it as Fiscal Year 2023-2024.

[iii] Note: here are only three Latin American department stores owned by groups that are analysed in this section due to the limited availability of public financial data, so inferences may not be fully extrapolatable.

[iv] Since results are not published, this department store is not included in the Global Department Store Monitor.

[v] However since results are not published, this department store is not included in the Global Department Store Monitor.

[vi] Ibid.

Credits: IADS (Anchita Ranka)