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

What: Global trade policy shifts are compelling retailers to revolutionise their operations through technology adoption, focusing on AI-driven solutions for cost management and supply chain resilience.

Why it is important: The scale of trade policy changes, affecting 44% of US imports, demands unprecedented operational adaptation, making technological innovation no longer optional but essential for maintaining competitive advantage in global retail.

The retail industry faces a transformative challenge as new tariffs threaten to disrupt established supply chains and operational models. Advanced supply chain solutions are emerging as critical tools, enabling retailers to rapidly integrate enterprise-wide data and assess country-specific risks. Through AI-powered analytics and predictive modeling, companies can now pinpoint high-risk SKUs and proactively adjust their strategies to maintain profitability. The integration of real-time simulation capabilities for multiple tariff scenarios has become a competitive necessity, allowing businesses to analyze duties, evaluate alternative vendors, and automate pricing adjustments swiftly. This technological evolution extends beyond immediate operational concerns, encompassing sophisticated risk management strategies that address both current challenges and future uncertainties. The industry's response demonstrates a clear shift towards data-driven decision-making, with retailers leveraging AI to optimise supply chain efficiency, balance inventory, and ensure product availability despite tariff challenges.

IADS Notes: The retail industry's response to tariff pressures has accelerated significantly in early 2025. As reported in March 2025, retailers are implementing AI-powered analytics for supply chain optimisation, while BCG's projections of USD 640 billion in additional import costs are driving widespread operational changes. February 2025 saw the elimination of the USD 800 de minimis rule, further complicating international trade. Despite these challenges, January 2025 data shows that 87% of early AI adopters achieved significant revenue increases, though only 10% of retailers have successfully scaled their AI applications, highlighting both the potential and challenges of technological adaptation.

Tariff turmoil: How retailers adapt to shifting trade policies

What: China prioritises consumer spending over technology development in its 2025 economic strategy, introducing a YEN 300 billion stimulus package to boost domestic consumption.

Why it is important: This strategic pivot reflects China's recognition that balanced economic growth requires stronger domestic consumption, particularly as household spending remains 20 percentage points below global averages and international trade tensions persist.

China's government has announced a significant shift in its economic priorities for 2025, elevating consumer spending above technology and industrial production in its national agenda. Premier Li Qiang's parliamentary report outlined a "special action plan" to boost consumption and domestic demand, supporting a target of roughly 5% growth. This strategic reorientation is evidenced by the term "consumption" appearing 31 times in the report, compared to 28 mentions of "technology." The government plans to issue ultra-long special treasury bonds valued at 300 billion yuan to support an expanded trade-in scheme for various consumer goods. This initiative represents a departure from previous hesitancy to implement direct consumer stimulus measures. The policy shift addresses a significant imbalance in China's economy, where household spending comprises less than 40% of annual economic output, approximately 20 percentage points below global averages. While technology remains important, particularly in areas like AI and quantum computing, the focus has clearly shifted towards encouraging consumer expenditure.

IADS Notes: This policy shift builds upon evolving retail trends in China, where January 2025 data showed retail sales reaching YEN 44.2 trillion alongside 230 million consumers embracing AI-powered retail solutions. The transformation of retail spaces, with major cities allocating 16% to entertainment zones, demonstrates the market's readiness for increased consumer focus. Early 2024 performance showed promising signs with a 5.5% year-on-year increase in retail sales and 15.3% surge in online transactions, while December 2024 data revealed stronger growth in rural areas, suggesting the potential effectiveness of these new consumer-focused policies.

China shifts focus to consumer spending over technology amid economic concerns

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A store fostering a community of customers

Established in 1881 in Stuttgart, IADS member Breuninger has long been a cornerstone of the city’s retail landscape. It has evolved from a single department store located outside of the city’s retail centre into the multi-faceted and lively mixed-use Dorotheen Quartier that has redefined urban shopping and leisure in Stuttgart. Attached to this 62,000 sqm project, Breuninger’s flagship store plays an integral role, showcasing a curated blend of luxury goods, private-label success, and customer-centric services and experience. Together, these elements illustrate how Breuninger has managed to not only maintain its relevance as a modern department store but also lead the way in building an active community of local customers.

The Dorotheen Quartier : an example of a successful mixed-use area

As a company, Breuninger imagined and built Stuttgart’s Dorotheen Quartier in 2007, with the department store as its anchor. After 10 years in the making and a EUR 200 million investment, the company opened this 62,000 sqm mixed-use project in 2017 to revive the area located between Stuttgart’s gourmet Market Hall, the historic Karlsplatz and the Breuninger store. Complementing it and constituted of three 6-storey buildings, the area offers a mix of luxury-oriented retailers (including Louis Vuitton, a Porsche dealership and the newly opened Tiffany store), restaurants, apartments, offices and a 350-slot underground parking lot. The project included the transformation of a street into a retail space, the Karlspassage, now a small mall connected to the Breuninger store. Overall, the Dorotheen Quartier feels very lively and offers an alternative to Stuttgart’s high-street shopping area, the Königstrasse, which feels outdated (home to Peek & Cloppenburg and Galleria mid-range department stores).

The Breuninger store : five floors catering to casual, premium and luxury customers

The Stuttgart store has grown over the last decades, adding a second and a third building to reach 42,000 sqm of retail space. 900 people are working in the store (in total, Breuninger has 6,800 employees). The store has three managers:

• In charge of luxury, visual merchandising, marketing, and customer relationship.
• In charge of the men’s department, cashiers, cash desks and store finances.
• In charge of the beauty and sports department as well as store replenishment.

The customer base is mostly local, with only a few tourists coming from Switzerland and Italy.

With three buildings built at different times, the store has uneven ground levels, preventing some of the floors from connecting to one another. For example, the -1 level is home for women’s shoes, kidswear and men’s and women’s underwear: while the shoe department connects to kidswear thanks to a short escalator linking two of the three buildings, these departments don’t connect to the underwear section. This makes customer circulation a bit more complicated than in other department stores.

The store floors offer:

• Ground floor: home of luxury leather goods, beauty and casual women’s fashion. It took seven years to build the leather goods department as luxury brands were reluctant to come to Breuninger in Stuttgart as they had successful businesses in Munich, a 2-hour drive away that people easily do. The brands operate under the wholesale business model. The leather goods section offers large shop-in-shops: Dior is the best brand, followed by Gucci, Saint Laurent, Loewe and Bottega Veneta. This section has been beautifully renovated and is very airy. In comparison, the beauty department design looks a bit outdated and cluttered. With 1,500 sqm, it is rather small compared to the overall store surface. Breuninger considers redoing it and will focus on leading brands and niche brands, removing the “unremarkable middle.”1 Niche fragrances are numerous and have impressive results, with this section packed on Saturdays. Not directly connected to these sections, women’s fashion casual brands are also on the ground floor. It also accommodates a small Breuninger-owned mall in the Karlspassage with stores such as a florist, a newsstand, fashion and beauty stores, a Breuninger restaurant and Breuninger confectionary, a retail hit with locals that achieves way more in sales than neighbouring successful cosmetic brands. Located at one of the store entrances, the Breuninger champagne bar is a famous and packed meeting point for local customers, acting as a community-builder. Overall, the nature of the stores in the Karlspassage and the shopping mall relatively small size contribute to the impression of a community anchor.
• First floor: women’s fashion premium and luxury sections span 7,500 sqm. Brands are mostly run under the wholesale business model and don’t have their brand concept fixtures. Instead, Breuninger set up a harmonised store concept. The first floor also offers a large sunglasses section, premium handbags, jewellery and watches. A coffee place is available on this floor.
• Second floor: men’s fashion (with the same casual, premium and luxury segmentation as for women’s) and men’s shoes span 6,800 sqm and have an even better profitability per sqm than women’s. Men’s fashion achieves roughly the same turnover as women’s fashion. A coffee place is available on this floor./nbsp]
• Third floor: sportswear and sports equipment, including a large ski section and a ski workshop. Customers can either buy or rent ski equipment (skis and shoes). There is also a bike section that grows bigger during the summer. At the time of the visit, the store staff was setting up a new Lululemon shop-in-shop. Also, there is a unisex streetwear-oriented space catered to younger generations, but its location is not optimised. In the future, Breuninger might switch this section with kidswear. Finally, there are outwear sections for both men and women and women’s occasionwear on this floor. A travel agency partially owned by Breuninger is available on this floor.
• Fourth floor: home offerings, luggage, a 44-seat hairdresser, a large restaurant, and busy customer service are available on this floor.
• -1 floor: women’s shoes, kidswear and men’s and women’s underwear are spread out in the three different buildings, as explained above. The shoe department is very airy and has club vibes thanks to special lighting. In that perspective, Breuninger is considering hosting an actual party at night. A tiramisu coffee shop is available in this section. The kidswear department has a busy kid's hairdresser and a candy tunnel offering all sorts of sweets.

Private label successful segmentation

The Stuttgart store visit is also  an occasion to highlight Breuninger’s private label strategy defined by clear segmentation, with each brand targeting specific customer demographics and market segments:

• Darling Harbour has the highest turnover, representing 50% of women's private label turnover and the second-best margin. Positioned to compete with Marc O’Polo, Darling Harbour is contemporary, cashmere-focused, with 5 to 6 collections annually. With large displays, the brand is extremely visible and has additional locations (in the outerwear section for example). Sweaters are priced between EUR 50 and EUR 230.
• Mrs. & Hugs is a bit more modern, having great success with cashmere in winter and summer dresses. The brand has the best private label margin, representing 40% of the women’s private label turnover. Customers think it’s a real brand. It is positioned at the same aspirational level as Essentiel Antwerp and Samsoe Samsoe. Since the brand is the most aspirational of all Breuninger’s private labels, they advertise the brand a lot online, on social media and in the store windows. The brand appeals to younger demographics and offers more frequent drops. Sweaters are priced between EUR 100 and EUR 300.
• Lilienfels represents 10% of the women's private label turnover. The brand is very classic, offering great materials like cashmere and leather. The margin is lower than for the other private labels (approx. the same margin as for national brands) as products are primarily ready-made designs from external suppliers. They maintain the brand as it sells well and doesn’t require too much manpower. Sweaters are priced between EUR 80 and EUR 350
• Johann & Johanna is a new premium brand with a higher price point, inspired by a traditional German wardrobe. The first results are great, with items 100% sold out in 2 months. Sweaters are priced between EUR 100 and EUR 200, with dresses up to EUR 530.
• Paul targets men between 30 and 50 and competes with brands like Fred Perry and Samsoe Samsoe. Shirts are priced between EUR 40 and EUR 200. The brand is showcased in different locations in the store.
• Strokesman’s is designed for older men as it is more classic. The brand competes with Marc O’Polo and Mr Marvis. Shirts are priced between EUR 50 and EUR 80.
• Finally, Breuninger has a home called Private Label, E.B. Home, which mainly offers home textiles.

Services build and nurture an active community of customers

With 636,000 residents, Stuttgart is a relatively small city. Besides, having a vast majority of local customers makes it key for a luxury retailer such as Breuninger to build a strong community of customers. To that end, they offer remarkable services:

• Recently rebuilt, the Beyond store loyalty programme is paramount to Breuninger’s strategy, knowing that more than 80% of the customers are local. The programme has four tiers: bronze, silver, gold, platinum. It is point-based (EUR 1 spent = 1 point) and offers various benefits such as cashback, early access to products and discounts, free shipping, event invitations, birthday presents, longer product returns and dedicated customer service.
• Most importantly, the loyalty programme offers two credit cards (basic and platinum), with which EUR 1 spent = 2 points. Seventy-one per cent of the turnover is made with Breuninger credit card holders. The platinum level equals EUR 7,000 spent annually and grants customers access to invitations to specific events and their dedicated customer service, fostering a sense of belonging and community.
• Seven personal shoppers pamper 3,100 active customers who are extremely attached to the store. The average basket with a personal shopper is more than ten times higher than what a customer purchases without such service. Several private lounges are available for personal shopping appointments. To increase the personal shopper customer base, Breuninger finances tickets to the opera or any relevant event for them to attend, introduce themselves, mingle and attract these potential new customers to Breuninger.
• Events: Breuninger was used to organise paid events proposed to their best customers. They were, for example, buying opera tickets to organise a special night for their best customers who pay for their tickets. These initiatives have been so successful in the past that Breuninger is now organising its own events. For example, they hire a singer, rent a venue, hire a catering company, and organise the whole event. Only customers who are part of the loyalty programme and spend at least EUR 7,000 annually are informed and can access those events. This is probably one of the most remarkable community-building initiative run by Breuninger.
• Customer service: in addition to traditional customer service, gift-wrapping and tax-free shopping, it includes a separate service for platinum customers, which is connected to the store staff office space. It is very common for customers to enter the office and ask for anything that they might desire. As a result, it is not the usual small and uncomfortable store office space: it’s airy, properly furnished and tidy.
• Click & collect: included in the customer service, it offers approximately ten fitting rooms equipped with special lights to try garments in different lighting conditions. Click & collect represents 28% of online orders.

They also offer services related to product categories:

• Runners: the women’s shoe section has runners to better serve customers who complained about being left alone when the sales staff went to the stockroom to fetch shoes. All shoes are equipped with a bar code scanned by the sales associates, who then choose the required size. During weekdays, the sales associates alternatively sell and act as runners. On Saturdays, Breuninger has dedicated runners. Depending on how busy the store is, shoes are delivered to the shop floor in one to three minutes.
• Made-to-measure: the department can make anything from suits to knitwear, shoes, belts and even denim pants. A suit is sold for between EUR 5,000 and EUR 10,000. The service is extremely successful. Breuninger is considering expanding it but lacks the highly skilled staff needed.
• Ski department and workshop: customers can buy or rent skis and ski shoes as Breuninger runs a ski workshop. During wintertime, customers must book appointments on Fridays and Saturdays as the department is extremely busy. During summertime, the staff working in the ski department is attached to the bike department.
• Luxury buyback: Breuninger partners with a luxury second-hand company coming in-store four times a year for customers to sell their luxury goods. Customers are given a Breuninger store voucher in exchange for the products. Breuninger finances an additional 10% voucher value.
• There are many F&B options, with almost one per floor: a candy tunnel in the kidswear department, a tiramisu bar in the women’s shoe section, Breuninger Sansibar restaurant, a champagne bar and confectionary on the ground floor, coffee shops on the first and second floors, a large restaurant on the fourth floor.

The Dorotheen Quartier exemplifies how Breuninger leveraged a real-estate project to create new sources of revenue. The thoughtfully designed mixed-use project has invigorated the area and set an alternative city centre, seamlessly blending luxury shopping, dining, residential, and office spaces to create a lively urban ecosystem. Meanwhile, the flagship Breuninger flagship store showcases a deep understanding of consumer needs with its curated and clearly segmented departments, strategic private-label offerings, and exceptional customer services, from personal shoppers to bespoke tailoring and a tiered loyalty programme that fosters long-term engagement. Ultimately, Breuninger’s success is rooted in its ability to maintain deep and personalised connections with its community of customers.

Credits: IADS (Christine Montard)

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Every IADS event is designed to allow the Association members to learn from each other, and the General Assembly is no exception. This is why the 2024 edition took place in Türkiye. It was the perfect opportunity for one of the IADS’ newest members, Boyner Grup, to showcase the progress made since the COVID-19 pandemic and how it radically reinvented itself to adapt to the new market conditions.

The text below is a synthesis of a presentation by Cihan Yildiz, Boyner's CTO, describing the company’s journey into this field. Today, Boyner Grup uses AI in various use cases after taking the necessary steps to ensure the company structure was adapted.

It has been stripped of confidential information, including the Q&A section, which IADS members can find in the meeting recap related to the 2024 General Assembly on the IADS Website

Introduction: how AI is a game-changer for all industries

Artificial Intelligence (AI) has traditionally been defined as replicating human intelligence using machine algorithms. Over time, research and technological advancements in machine learning and deep learning have substantially expanded the scope of AI. These developments enabled computers to recognise images, understand speech, and perform tasks like facial recognition, which once seemed futuristic. The arrival of Generative AI, propelled into the mainstream by solutions such as ChatGPT, represents a particularly significant milestone. Some commentators describe the launch of ChatGPT as an “iPhone moment,” meaning it heralds a new phase of AI maturity where advanced language capabilities become available to a broad audience.

Yildiz attributes this accelerated growth in AI partly to the near ubiquity of smartphones, which now serve as vast data generators. This surge in data, coupled with more sophisticated algorithms, has opened the door to various innovative solutions that were almost unimaginable a few years ago. Generative AI exemplifies these advancements by using large datasets and specialised learning techniques to produce new content, drive complex analysis, and engage in nuanced conversations in efficient and highly adaptable ways. It is this aspect of AI—its agility and creativity—that many experts believe will shape the next wave of business and consumer applications.

Business perspectives

Boyner regards Artificial Intelligence (AI) as a powerful catalyst for transformation across numerous industries, especially retail, where data-driven decision-making can dramatically improve efficiency and spark innovation. According to Yildiz, who has led several AI initiatives at Boyner, businesses should adopt a systematic approach to AI implementation to leverage its full potential. During his presentation, he underscored the importance of understanding AI’s evolving capabilities, its immediate applications, and its expected long-term impact on operations and customer engagement. His perspective highlights that AI can remarkably quickly reshape an organisation’s strategies, processes, and culture when introduced through carefully chosen projects.

Current forecasts suggest that Generative AI will attract around three trillion US dollars in investment between 2023 and 2027 globally, indicating the extent to which companies believe in its transformative capacity. Nearly half of all technology companies are expected to embed Generative AI into their offerings, a sign that AI is becoming not just a technical addition but a foundational element of future products and services. Enterprises typically move through three distinct phases when they adopt AI: first comes the learning phase, during which teams become familiar with AI tools and concepts; second is the testing phase, which involves running small pilots to validate new ideas; and finally, the investing phase, where proven AI models are scaled to the enterprise level.

Even though only a fraction of AI use cases today explicitly involve Generative AI, results show that those use cases alone can drive notable increases in efficiency and customer satisfaction. Studies indicate a nearly thirty per cent improvement in operational efficiency, matched by a thirty per cent uplift in customer experience measures. Projections for the future amplify this trend. By 2028, a third of enterprise software is expected to include agentic AI features, compared to a negligible portion in 2024. Similar shifts are anticipated in digital storefronts, where a significant share of interactions could be managed by AI tools rather than human agents, and in daily work decisions, an increasing number of which will be delegated to AI systems that can analyse data and deliver real-time recommendations.

How Boyner crafted its vision and roadmap

In its approach to AI, Boyner has closely followed Gartner’s strategic guidelines, focusing on high-impact opportunities, including price promotion strategies, optimisation of markdown processes, and improvements in in-store product availability. The company also prioritises personalisation, social media monitoring, and demand forecasting. Leveraging these focus areas, Boyner articulated five central pillars that define its AI roadmap: personalisation, data-driven insights, efficiency, innovation and creativity, and continuous improvements.

The company’s priority is personalisation, which aligns with the ongoing Boyner Now initiative and other efforts to tailor experiences for individual customers. Boyner also intends to develop a platform that generates data-driven insights, allowing it to consolidate all relevant data and transform it into accessible, actionable information.

Furthermore, Boyner remains committed to operational efficiency, building upon Gartner’s assessment that AI could help address nearly a quarter of retail's overall costs. Alongside these goals, the organisation embraces creativity and innovation as essential catalysts for new AI-driven solutions, ensuring that experimentation is encouraged at all levels.

The final pillar is the cultivation of a Kaizen-style system of continuous improvement, a principle that guides Boyner in regularly assessing and refining its AI applications to keep pace with rapidly evolving technologies and market demands.

Using partnerships to become AI-ready

To put these ideas into practice, Boyner devised a strategy it calls “AI readiness,” designed to ensure that every relevant stakeholder, from data scientists to C-level executives, understands AI's value proposition and is equipped to manage its risks and benefits. This process begins by defining a clear vision and identifying what AI can accomplish for the organisation. Boyner also articulates key performance indicators that guide measuring success, highlighting aspects such as revenue impact, customer satisfaction, and risk mitigation.

Collaborations with key partners like Gartner and Microsoft form another critical dimension of this readiness strategy. While Boyner maintains in-house development capabilities, it also relies on external expertise to stay aligned with cutting-edge advancements. Aligning AI with Boyner’s broader organisational strategy is a critical first step, ensuring that all departments recognise how AI projects serve shared corporate objectives. Boyner invests in awareness programs, teaching employees about Generative AI and providing them with tools built on Microsoft’s OpenAI services. The company encourages grassroots innovation by offering workshops and safe sandbox environments and ensures that the best ideas are brought to light. Following these initial learning and testing stages, Boyner evaluates all AI use cases and solutions based on ethical principles and data privacy standards and ultimately presents a tactical roadmap backed by executive sponsorship.

Current AI use cases

Boyner’s commitment to AI is exemplified by the fact that every new or experimental AI solution it develops moves swiftly into production, where it can deliver real value.

One such example is the automation of order and product sorting, allowing the logistics team to handle items more efficiently across the supply chain. In addition, Boyner has introduced an AI-based product import tool that extracts attributes from product images and retrieves any missing details through web scraping, significantly reducing the time and manual effort required to add items to its e-commerce catalogue.

Personalisation efforts take shape through micro-segmentation, allowing Boyner to offer tailored promotions, such as raincoat discounts only in regions experiencing adverse weather conditions. The marketing team has also implemented sophisticated in-house Marketing Mix Models to allocate budgets strategically, incorporating profitability targets and, in the future, data from CRM systems and omnichannel sources.

Another key innovation involves a Semantic AI Assistant that improves the e-commerce platform’s user experience through content summarisation and intelligent responses to customer inquiries. Moreover, Call Center voice-to-text transcription has been introduced to capture and analyse customer conversations, further enhancing service quality.

While these AI solutions bolster operational efficiency and customer satisfaction, Boyner has also championed Generative AI-driven chatbots. These include tools that assist customers in choosing gifts, manage stock levels in real time, and even handle internal human resources inquiries, as evidenced by the success of the People Chat application.

To unify these efforts, Boyner consolidated four disparate data warehouses into a single AI-ready platform, making it easier to draw connections between different data points and support informed, evidence-based decision-making.

Boyner’s journey with AI offers a compelling example of how an organisation can systematically integrate data-driven solutions into its operations and thereby reshape its future. By paying close attention to the learning, testing, and investing cycle, and by forming strategic alliances with prominent technology partners, Boyner has managed to introduce AI solutions that deliver tangible benefits. These benefits range from logistical efficiencies and robust customer experiences to increased creative capacity and a forward-looking corporate culture.

Yildiz concluded that Boyner’s focus on empowering all employees to experiment with AI tools—while maintaining strict safety and privacy protocols—goes a long way toward embedding AI in the company’s DNA. This approach secures buy-in from both leadership and frontline staff. As Generative AI continues to mature, Boyner looks to deepen its expertise, exploring new frontiers in retail automation, customer personalisation, and knowledge management, all while keeping an eye on responsible practices. In doing so, Boyner serves as an illustrative case study for other organisations: the potential of AI to drive meaningful change is substantial, but realising that potential requires consistent engagement, thorough preparation of data, and a measured, adaptable roadmap.

Credits: IADS (Selvane Mohandas du Ménil)

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Riding the AI wave: decision-making tools for department stores

The IADS Academy programme, a 29-year-old tailor-made mentoring workshop open only to our members’ high potentials, promotes cooperation and future orientation. Over the years, the IADS Academy has trained 190+ executives from 29 companies in 22 countries, some of whom reached top positions in member and non-member companies (for IADS member companies alone, 4 CEOs).

The 2024 topic was as follows:

AI and department store activities - Given the number of possible AI applications, how can retailers develop a decision-making tool (in terms of investments, teams and time)?

Once in the forecast, how can they decide and prioritise the right areas of application (examples: product development, customer loyalty, in-store operations, productivity-saving operations...)?

The following is an attempt to report all insights the Academy group considered and worked on during the journey to their final presentation shown to the IADS member CEOs.

Introduction: department store's never-ending transformation

The retail industry is undergoing the AI seismic shift and department stores, long-standing symbols of traditional commerce, are in the midst of this transformation. AI is no longer a futuristic concept but a technological breakthrough, as were the printing press, electricity, and the internet, making it a present-day reality and necessity. As for those game-changing innovations, AI is designed to make life easier, especially in an increasingly complex world.

To navigate this complex landscape, department stores need tools that not only assess their readiness for AI but also guide their strategic decisions. Those are the two value propositions introduced by the 2024 IADS Academy cohort. This article explains their findings on creating a decision-making tool for AI initiatives in department stores, exploring the challenges, solutions, and opportunities that lie ahead.

The paradigm shift: from human to “machine customers”

Attracting customers and hopefully catching a share of their wallets is at the core of any retail company. These customers, so far human beings, are difficult to navigate as their emotions drive them. Also, they are impulsive, lazy, highly demanding, and easily distracted, especially with a shrinking attention span. They are often late and lack urgency. To answer this, department stores spent decades and immense resources such as advertising and marketing campaigns, CRM and loyalty programmes, data analytics systems, and sales strategies to target and reach these coveted human customers.

Customers have always evolved over time, but technology drives a new type of evolution. What can be called “bound customers” came to life with the rise of Web 2: these human customers are supported by machines executing requests, such as when they shop online. Department stores had to adapt to answer the needs of this new omnichannel breed. The next type of customer is not totally there yet, but retailers have started dealing with what the Academy called “adaptable customers”: leads are shared with the machine, and the machine executes.

Tomorrow, retailers will serve AI-powered “machine customers”, with the machine leading and executing, a fundamental paradigm shift for retail. While its human counterpart will still exist as a department store customer, the “machine customer” will develop and require new adjustments, yet again. Analytical and logical, highly observant, goal-focused, tireless, and emotionally unaffected, equipped with a strong memory, they will operate autonomously and make purchasing decisions based on extensive research.

This future is already there, as proved by Perplexity AI's latest innovation. In November 2024, they launched an AI-powered shopping assistant in the US that allows users to research and purchase products directly through its platform. This new feature, “Buy With Pro”, streamlines online shopping by enabling one-click checkout for select products, saving users time and enhancing their shopping experience. If “Buy With Pro” is unavailable for a product, users are redirected to the merchant's website to complete their purchase. Additionally, Perplexity AI offers a visual search tool called “Snap to Shop”, which allows users to find products by uploading photos. The assistant integrates with platforms like Shopify to provide unbiased product recommendations tailored to users' searches.

AI disruption is on the way for all economic sectors. In retail, analytical AI already supports better customer segmentation, predictive maintenance and fraud detection, to name a few. For department stores, generative AI has become a reality as it already generates content, code and efficient chatbots. What comes next is multi-modal AI, which can think, feel, process, and create.

This shift underscores the urgency for department stores to adapt to a new reality where human and machine customers coexist. Using the surfing metaphor, retailers should take steps to catch the AI revolution wave, deciding whether to ride it or let it pass and paddling hard to catch it before it crashes over them. The Academy's message was clear: AI is not just a trend but an imminent wave that must be embraced.

Assessing department store AI-readiness: the AIRI framework

To help department stores navigate this wave, the Academy cohort introduced the Artificial Intelligence Readiness Index (AIRI), a comprehensive assessment tool designed by the University of Singapore to evaluate an organisation's readiness for AI adoption. Based on extensive research and testing, AIRI focuses on five critical pillars to evaluate company readiness:

• Business value to understand how AI can generate tangible benefits.
• Organisation to gauge the cultural and structural adaptability of the company.
• Infrastructure to ensure the availability of robust technological foundations.
• Data, as its quality and accessibility, should be assessed.
• Ethical practices to establish governance frameworks to manage risks and ensure compliance.

The assessment tool has four levels:

• Unaware: staff in the organisation perceive AI as a threat to jobs and do not understand its potential.
• Aware: the organisation and its employees trust AI applications.
• AI-ready: the organisation trusts AI applications, has the necessary resources and infrastructure, and is ready to move forward.
• Competent: the organisation is at the forefront of AI and sets the standards for others.

The AIRI framework operates like a game of Jenga: if one pillar is weak or missing, the entire structure risks collapse. By scoring organisations across these four dimensions, AIRI provides actionable insights into where improvements are needed. For instance, some companies might excel in infrastructure but lag in ethical practices or data quality. The tool also offers two approaches to implementation: top-down (organisational level) and bottom-up (functional level). This flexibility allows department stores to tailor their AI strategies based on specific needs and priorities.

The Academy group used the AIRI tool to assess their departments and companies and found that most department stores fall between the Unaware and Aware levels. During the Academy presentation, CEOs were invited to quickly evaluate their AI level (without using the AIRI tool), and most considered their organisations AI-ready. This discrepancy shows how relevant it would be for departments and organisations to use the AIRI tool.

A new team member: Lola, department stores’ AI instructor

The Academy introduced a second value proposition in the form of a department store-only generative AI tool, Lola (a name randomly chosen by the Academy group), a new department store team member. While AIRI provides a roadmap for readiness, Lola, the AI chatbot built by the Academy cohort, acts as a guide for execution. Developed over a few months using data from IADS members and other reliable sources, Lola is specifically tailored for the retail industry. Lola is not just another chatbot but a generative AI tool designed to provide tailored, contextualised insights and actionable recommendations.

Lola’s capabilities were demonstrated live during the Academy presentation to CEOs. Its responses were not only more relevant than any generic gen AI tool, but also enriched with examples from real-world department store information. Unlike generic AI tools like ChatGPT, Lola is fed with precise retail-specific data curated by experts. This makes it uniquely positioned to address challenges faced by department stores, from optimising foot traffic analysis using CCTV footage to improving conversion rates through advanced customer segmentation.

However, Lola is still in its “infancy”, as it is a proof-of-concept that requires continuous learning and refinement. To grow into a robust decision-making assistant, it needs to be nurtured with high-quality data aligned with ethical standards.

Building an experimental culture within organisations and beyond: leveraging the IADS resources

One of the key takeaways from the Academy cohort was the importance of fostering an experimental culture within organisations. AI adoption is not just about technology; it requires a mindset shift at all levels of management. Leaders must champion innovation while ensuring that employees feel empowered rather than threatened by AI. Management support goes beyond CIOs or CTOs, it starts with CEOs and executive sponsors who set the tone for organisational change. They also highlighted the need for upskilling employees to handle new responsibilities brought by AI technologies.

In the future, the Lola experiment should use the endless resources of the IADS. Lola would be fed not only with broad information about AI but also with AI-specific data from IADS members and all the data from the IADS years of research. While it will support IADS members' decision-making about AI, it will become a broader information tool for members to ask about any topic and get an answer instantly. To make Lola a reality, IADS members and the IADS need to establish governance guidelines, guarantee a secure environment and establish the use process.

Conclusion: catching the AI wave together

The journey toward AI adoption in department stores is akin to mastering the art of surfing: it demands observation, vigilance, preparation, and agility. Through their dual value propositions, the AIRI assessment tool and the pioneering Lola generative AI agent, the Academy group has laid a foundation for a structured and practical approach to AI adoption. By identifying readiness gaps and fostering a culture of education and trust, the AIRI tool offers a clear roadmap for organisations navigating the complexities of AI integration. Meanwhile, Lola shows how generative AI can be tailored to the unique needs of the retail sector, providing actionable insights and decision-making support. Lola can certainly become the IADS members’ private agent.

As one presenter aptly noted during the Q&A session, “AI is not just a tool; it’s a way of doing things.” By aligning AI initiatives with business strategies and fostering collaboration across teams, department stores can ride the AI wave with confidence.

Credits: IADS (Christine Montard)

Printable version here

Introducing the NRF Big Show

The 2025 edition of the NRF Big Show took place last 12-15 January 2025. It was reportedly a record show, with an attendance of more than 40,000 visitors from 105 countries, 1,000 exhibitors and 500 journalists . Just like last year, the lines were long, and energy was palpable, even though one can wonder if traffic was evenly distributed over all days or if more action took place on day one, with the audience then disseminating in side events, meetings and visits during the following days.

The sense of energy was also echoed in the streets and stores of New York, with a clear message: the US market is back on track, confident and optimistic. NRF reported that US sales in December were up 2.19% month-on-month in December and +8.41% year-on-year, thanks to a well-performing Thanksgiving.

The key outcomes of the conferences and events were :

-    AI is now a tangible reality, with many exhibitors claiming to be part of the game (to the point of saturation). Many use cases are already in use in stores or within companies: Dick’s Sporting Goods uses an AI-powered pricing model to handle its markdown strategy across 11m SKUs. This re-orients the conversation: the story is not anymore about “AI or not AI” but “how to deal with investments, ROI and potential financial risks when implementing AI in operations?” as successful implementation requires substantial investment and a willingness to embrace trial and error. Somehow, this guides the implementation of new use cases towards simpler ones with more immediate ROI, which might explain the following:

• The omnipresence of computer vision in fraud detection as presented by Diebold Nixdorf, Zebra, and Microsoft,
• 3D assets for faster ad creation and “digital twins” for warehouse management, as touted by NVIDIA in the opening keynote, with Lowe’s creating a digital twin of its 1,700 stores to simulate various layouts and optimise merchandising.
• Going further than “simple” AI, Agentic AI was the big buzzword, with Microsoft presenting an agent that indicates the SKUs to move from warehouse to stores according to real-time sales. Google, NVIDIA, Salesforce, and SAP all announced similar new launch announcements.

-    Unified commerce: Customers are increasingly hungry for seamless personalisation across all channels through digital tools and platforms, interpreted by many as “physical retail has a future, provided it reinvents its stores to acquire more data and becomes competitive with e-commerce”. H&M announced during the conference a testing campaign with RFID coupled with AI, allowing salespeople to localise products better and be assisted during the sale process. Many guest speakers insisted on the importance of in-store experience, with the prediction of seeing in 2026 the rise of “fantailing”, embodied by Taylor Swift: spending is increasingly driven by entertainment, events and cultural passions.

-    Gen Z and Alpha customers are an increasing reality that retailers need to consider (especially given that Gen Z is more eager to visit a physical store than a Millennial). This raises questions about their concerns, such as sustainability, its costs, what needs to be done, the regulatory environment, or how to remain time-proof and culturally relevant.

IADS Note: From a more general perspective, our take is that this edition displayed an AI-powered frenzy, with acres of exhibition space dedicated to suppliers often offering “magical” solutions to retailers. In our opinion, which is shared with some analysts, one of the issues retailers now face is to cut through the noise and be able to select the right AI solution in a jungle of options, many of which seemed to be “solutions looking for a problem”, simply forgetting that AI is a facilitator. Another significant issue is to ensure cybersecurity as AI implementations open up the range of available vulnerabilities. This is why the IADS has re-ignited its partnership with the Retail and Hospitality Information Sharing and Analysis Center (RH-ISAC).

What follows is a subjective selection of conferences, news and stores that we believe could be interesting for our members as we try to cut through the noise and self-promoting topics.

Heritage meets innovation: Digital growth strategies with Mattel and Reebok – Jamie Cygielman, Sr VP/GM, American Girl, Ivy Solari, VP digital commerce, Reebok.

American Girl's journey from its 1986 origins as a catalogue-based business sending out 500,000 mail orders to its current status as a digital-first retailer under the Mattel umbrella demonstrates the brand's adaptation to changing consumer behaviours. The company leverages its first-party data to understand customer buying patterns, collection preferences, and demographic information. Their rewards programme has become a key tool for building customer relationships through various initiatives, including e-certificates, exclusive events, and product launch priorities.

Reebok's transformation has been equally significant, though following a different path. Originally a wholesale-focused footwear and apparel manufacturer, the company has undergone substantial organisational changes. Following Adidas's divestiture, Reebok's intellectual property is now owned by Authentic Brands Group (ABG). U.S. operations were recently transferred to Galaxy Universal from Spark, which has merged with JCPenney to form Catalyst brands.

The physical retail strategy of both brands reveals distinct approaches to customer engagement. American Girl operates flagship stores in key locations like New York City and Chicago, alongside newer expressions in Los Angeles and Dallas. These stores exemplify the "retailtainment" concept, offering experiences beyond traditional shopping, including tea services, doll hair salons, and celebration spaces. The strategy has proved successful, with store visitors spending 25% more over their lifetime with the brand than non-store customers.

Reebok's retail presence has historically focused on outlet locations targeting value-driven consumers, but plans are underway to expand into full-price, experiential stores by 2025-2026. The brand maintains a strong wholesale presence across various channels, from big box stores like Costco to fashion-forward retailers like Urban Outfitters.

Digital engagement strategies have evolved significantly for both brands. American Girl's social media success relies heavily on video content across Instagram Reels and TikTok, structured around three pillars: cultural trends, nostalgia, and storytelling through dolls. The brand has found particular success with micro-influencers, perceived as more authentic than traditional high-follower influencers. Their YouTube strategy, primarily through YouTube Shorts, has effectively driven demand among younger audiences while maintaining traditional catalogue distribution for its proven effectiveness in driving child engagement.

Reebok's digital strategy emphasises partnerships and cultural relevance. The brand recently announced collaborations with athletes like Bryson DeChambeau and maintains relationships with basketball icons Shaquille O'Neal and Allen Iverson. The brand has successfully executed cross-industry collaborations, such as its Barbie-themed product line with Mattel, demonstrating its ability to leverage partnerships for broader market appeal.

Both companies are carefully balancing upper and lower-funnel marketing investments. American Girl maintains year-round brand campaigns while intensifying lower-funnel activities during the critical fourth-quarter holiday season. Reebok has recently increased upper-funnel investment with its new brand campaign while maintaining strategic lower-funnel activities during key selling periods.

Key takeaways:

1. Data-driven omnichannel integration is critical: Modern retail leadership requires seamless integration of digital and physical channels, powered by robust data analytics. American Girl's utilisation of first-party data from its house file and rewards program, combined with its experiential retail locations, has created a 25% lifetime value increase for store visitors. Data-informed omnichannel strategies can significantly enhance customer value and brand engagement.
2. Physical retail evolves beyond traditional commerce: To remain relevant, physical retail spaces must offer more than transaction opportunities. American Girl’s success with experiential elements like tea services, doll hair salons, and celebration spaces demonstrates that stores should function as brand experience centres. This is further reinforced by Reebok's strategic .pivot from purely outlet-focused locations to planned experiential stores.
3. Social media strategy requires authentic, platform-specific approaches. Both brands' experiences highlight the evolving nature of social media engagement in retail. The shift from high-follower influencers to micro-influencers demonstrates the growing importance of authentic content over reach. The success of video content across platforms like YouTube Shorts, Instagram Reels, and TikTok, combined with platform-specific content strategies, shows that retailers must develop nuanced, platform-appropriate content strategies rather than taking a one-size-fits-all approach to social media.

Game-changing: Culture’s influence on navigating volatility and fueling long-term growth – Brian Cornell, CEO, Target, Abubakarr Bangura, Group Vice President, Target, Michael Bush, CEO, Great Place To Work

Over the past 11 years, Target has added $35 billion in revenue, representing a 50% increase in size, while building 250 new stores and remodelling 1,200 locations. The company has expanded its workforce to over 400,000 team members, developed a $30 billion own-brand portfolio, and tripled its digital business. Cornell emphasised that these achievements weren't simply the result of boardroom decisions but were driven by investments in people and culture.

The company's culture, centred on “care, growth, and winning together”, has proven to be a powerful differentiator (even though Cornell admitted it was often easy to forget the “care” part of the motto). This is evidenced by metrics from Great Place to Work surveys, showing that 70% of Target employees consider it a great workplace and feel personally cared for. The company ranks third on the Best Workplaces in Retail list and leads among organisations with over 100,000 employees.

Abubakarr Bangura, a high-ranking Target executive, was invited on stage as a testimony of this policy. Bangura’s journey from Sierra Leone to leading 80 Target stores across five states in one of America's fastest-growing regions exemplifies the company's commitment to talent development. His region has experienced 14% population growth and attracted over $100 billion in new income across states like Texas, Florida, the Carolinas, Georgia, and Tennessee, serving as an innovation hub for the company's latest initiatives.

Target's approach to leadership development is particularly noteworthy. The company recently launched a six-month-long Store Director Development Programme, co-created with store directors, which has already shown remarkable results. Among the 1,000 participants (out of a total target of 2,000), 100% believe they can grow their careers with Target, and 92% report improved performance. The program's success stems from its collaborative design.

The discussion also addressed the issue of AI in retail. Target has implemented an AI chatbot called Stores Companion, which helps frontline teams with operations and customer experience. Rather than viewing AI as a threat, Target positions it as a growth enabler, similar to how e-commerce has created new opportunities. The company's unique model, where stores fulfil 95% of sales, demonstrates how technological integration can enhance rather than replace human roles.

Investment in employee education remains a priority, with Target's Dream2B program offering tuition-free education opportunities. Notably, 90% of programme participants are frontline workers, highlighting the company's commitment to developing talent at all levels.

These investments have yielded tangible results, with Bangura’s region seeing a 71% improvement in store director retention and a 63% reduction in executive team turnover over three years, leading to a 4-5 point improvement in guest experience scores.

For retail leaders navigating similar challenges, the discussion emphasised several key principles:

-    Listening to frontline teams,

-    Investing in talent development regardless of company size,

-    Maintaining human connection while embracing technological advancement.

Cornell stressed that success in retail's future will depend on effectively balancing technological innovation with meaningful human interaction.

Key Takeaways:

1. Culture of care is fundamental to success: Target's success demonstrates that prioritising a culture of care is not just about employee satisfaction but drives business performance. With 7 out of 10 employees saying they feel cared for as people (not just employees), and an 83% retention rate, Target's approach shows that investing in people yields tangible results. This is evidenced by their store director development programme, which achieved 100% of participants feeling they could grow their careers with Target, and 92% reporting improved performance.
2. Leadership development must be co-created and systematic: Target's approach to leadership development emphasises the importance of co-creation with frontline leaders and systematic implementation. Their six-month store director development programme, co-created with store directors, has been scaled to 2,000 leaders. This systematic approach to development has led to concrete results, including a 71% improvement in store director turnover rates and a 63% improvement in executive team turnover rates over three years, directly impacting operational performance and guest experience scores.
3. Technology integration requires a growth-focused culture. As retail faces AI and technological transformation, success depends on creating a growth-focused culture that helps employees embrace change rather than fear it. Target's approach includes:

• Implementing AI tools like their Store Companion chatbot while simultaneously investing in employee development,
• Offering programmes like Dream2Be (tuition-free education) with 90% participation from frontline workers,
• Maintaining a balance between technological advancement and human interaction, recognising that both will be crucial for retail's future.

Three brands, one growth strategy: The power of Macy’s, Inc.’s bold new chapter – Tony Spring, CEO, Macy’s Group, Olivier Bron, CEO, Bloomingdale’s, Maly Bernstein, CEO, Bluemercury

Macy's Inc. is implementing its "Bold New Chapter" strategy, a three-year transformation plan adressing fundamental retail challenges while positioning its portfolio brands for future growth. The strategy emerged from consumer research involving 60,000 customer interviews and focuses on enhancing retail fundamentals: merchandise assortment, service experience, marketing modernisation and supply chain efficiency.

According to Spring, early results are promising, with the company reporting positive indicators in its initial execution phase. Specifically, Macy's has seen three consecutive quarters of improvement in net promoter scores and comparable store sales growth in its first 50 focus stores, where enhanced merchandise assortment, improved visual presentation, and reinforced fitting room service have been implemented. The company also leverages advanced technologies, particularly in inventory operations, using algorithmic approaches to optimise fulfilment and reduce split shipments.

Blue Mercury has consistently performed in 15 consecutive quarters of comparable sales growth. The beauty retailer's success stems from its neighbourhood-focused approach and personalised beauty consultation model. CEO Maly Bernstein emphasised the company's strategy of creating custom beauty plans for customers, supported by enhanced staff education and training and a recent brand refresh that reinforces its position in luxury beauty for modern consumers.

Under new CEO Olivier Bron, IADS Member Bloomingdale's is executing its strategy of elevating the brand from aspirational to luxury positioning. Bron highlighted the unique customer mix and brand assortment that distinguishes Bloomingdale's, emphasising that its customers are often exclusive to the brand and not typically found in standalone luxury boutiques. In luxury, customers are not that interested in buying a product than an exciting and compelling story, which is why Bloomingdale’s focuses on experience and relationship to convey that story to them. As a consequence, Bron mentioned that a key area of investment was in the stores themselves, to be coherent with this strategy. Also, he noted that such a strategy was a good answer to the growing culture of “dupes” in the US.

Addressing the persistent question of department store relevance, Spring defended the format's viability, reframing it as a "physical marketplace" model offering unique merchandise curation and channel flexibility advantages. While remininding that the company was closing up to 150 stores, he emphasised that the portfolio approach, combining Macy's, Bloomingdale's, and Blue Mercury, provides significant operational synergies in warehousing, legal, finance, and brand negotiations (even though he acknowledged that these brands' value might not be fully reflected in Macy's share price).

Adressing integrating artificial intelligence in retail operations, all three brands leverage AI for personalisation, forecasting, and planning while maintaining a careful balance between technological advancement and human connection. Spring highlighted the ongoing tension between privacy and personalisation, emphasising the importance of responsible data usage in building customer trust.

Regarding the current retail environment and potential policy changes, Spring addressed concerns about tariffs and immigration policy impacts, noting that the company has experience navigating similar challenges from 2016 to 2017 through supply chain diversification and partner collaboration. The consequence of the upcoming regulatory shift on immigration remains a question mark.

The executives' assessment of the American consumer revealed an optimistic outlook, with customers characterised as both cautious and excited about retail's future. Bron emphasised consumers' desire for inspiration and exceptional experiences. At the same time, Spring noted the intersection of technology and humanity in current retail dynamics through establishing fair and mutually beneficial trading relationships with the rest of the world.

Key takeaways:

1. Transformation through consumer-centric strategies: Macy's Inc. is undergoing a significant transformation with its "Bold New Chapter" strategy, rooted in extensive consumer research. The company focuses on retail fundamentals such as enhancing merchandise assortment, improving service experience, modernising marketing efforts, and optimising supply chain efficiency. This consumer-centric approach is yielding positive early results, with increases in net promoter scores and store sales growth.
2. Leveraging brand synergies and AI: The portfolio of Macy's Inc., including Macy's, Bloomingdale's, and Blue Mercury, benefits from operational synergies that support backend efficiencies and brand negotiations while maintaining distinct brand identities. The use of AI across operations to enhance personalisation, forecasting, and planning exemplifies how technology can be integrated to augment both customer experience and operational efficiency, while still preserving the human element in retail.
3. Positioning for the future amidst external challenges: The leadership remains attentive to external economic and policy challenges, such as tariffs and immigration changes, which could impact operations. However, they are ready to adapt through strategic diversification and collaboration.

Lacing up for success: Transforming retail experiences and deepening customer relationships - Mary Dillon, CEO Foot Locker

Foot Locker celebrates its 50th anniversary by reimagining its approach to an evolving consumer while staying true to its heritage. Its strategic vision centres on becoming the premier destination for sneakers and discovery across its various banners, including Foot Locker Global, Kids Foot Locker, Champs Sporting Goods, and WSS.

The company's transformation is built on three fundamental principles:

• Enhancing customer satisfaction through the "Power Portfolio" initiative. A cornerstone of this effort is the new “Reimagined” store concept, with eight locations already operational worldwide, including a flagship store on 34th Street in New York City. These stores feature innovative elements such as the "Drop Zone" showcasing trending products, the "Kick It Club" for communal try-ons, and customisation stations. The basketball-focused "Home Court" section pays homage to the company's legacy while offering a multi-brand experience featuring Nike, Adidas, and Puma products. By the end of 2025, Foot Locker plans to have refreshed approximately two-thirds of its global fleet of 2,500+ stores. Regarding digital, the company launched a completely redesigned mobile app on major platforms, integrating seamlessly with its enhanced loyalty programme. This revamped loyalty system extends beyond providing access to product launches, incorporating broader rewards, perks such as free shipping and returns, and unique experiences like NBA game access.

• Leveraging the expertise of their "stripers" (store associates), thanks to a practical approach to in-store technology, including equipping them with handheld devices for improved inventory visibility and point-of-service access, as well as implementing virtual shoe sizing technology, especially in the kids' section. These technological enhancements enhance operational efficiency while allowing staff to focus on customer interaction.

• Fostering strategic growth partnerships with brands: a multi-year agreement with the NBA as an official marketing partner and a collaboration with the Chicago Bulls demonstrate Foot Locker's commitment to maintaining its leadership position in basketball culture. These partnerships manifest in various initiatives, including major activations during events like NBA All-Star Weekend.

Despite broader industry challenges, including a tough recent quarter, Foot Locker remains ahead of its transformation goals. Expanding into women's footwear has emerged as one of the company's fastest-growing segments. This expansion aligns with the company's goal of broadening sneaker culture and attracting new consumer segments while maintaining strong relationships with core customers.

Key Takeaways:

1. Reimagining the retail experience: Foot Locker's "Power Portfolio" initiative boldly redefines the in-store experience, emphasising innovation and customer engagement by focusing on creating a vibrant, experiential shopping environment that celebrates sneaker culture.
2. Digital transformation and integration: The redesign of Foot Locker's mobile app and the enhancement of the loyalty programme demonstrate a pivot towards digital integration. By linking the app with loyalty rewards and offering features like virtual shoe sizing, Foot Locker is enhancing the customer journey and ensuring that digital investments translate into tangible benefits.
3. Strengthening brand partnerships and cultural ties: Foot Locker's renewed focus on basketball, through partnerships with the NBA and the Chicago Bulls, underscores the strategic value of aligning with cultural icons and sports heritage. These partnerships reinforce Foot Locker's brand identity and solidify its leadership in sneaker culture.

Interesting stores:

Note: we will add the locations below to the New York City Guide.

Dyson SoHo, 155 Mercer St.

Banana Republic SoHo, 552 Broadway

Whole Foods Market Daily Shop, 1175 Third Avenue

Skims, 647 5th Avenue

A subjective selection of innovative startups - AI

The NRF Retail’s Big Show replaced this year the “Innovation Lab” exhibition space by the “Innovator Showcase”, a selection of 50 companies already in operation and with robust solutions (the Innovation Lab was more a showcase for POCs). Here is a selection of companies from this space:

Lili AI: a natural language tool that enriches product attributes on e-commerce platforms according to consumers’ searches and sends them to Google Ads or other recommendation tools. Revenue is said to grow +3 to +25% thanks to this solution, which is already used by Macy’s or Abercrombie & Fitch.

G2RL: a tool allowing to predict and recommend what to do with returned products, make the best economic decision and look for re-commerce opportunities.

Vanish Standard, a Japanese company allowing store employees to create content for their e-commerce websites. The platform measures customer engagement and employees are commissioned on sales made through this new tool. CLV is said to triple for customers interacting with these videos.

Curated for you: a tool that personalises product pages and content according to customers’ tastes and expectations.

Credits: IADS (Selvane Mohandas du Ménil)

What: Major retail brands launch innovative pop-up experiences across Asia, combining digital integration, cultural elements, and experiential retail in key markets.

Why it is important: The integration of digital technology with physical retail spaces shows how brands are adapting to changing consumer behaviors while testing new markets through innovative engagement strategies.

Leading retail brands are revolutionising the pop-up concept across Asia through sophisticated integrations of technology and cultural experiences. Ugg's Shanghai activation exemplifies this trend with its NFC-enabled music sharing system and collaboration with Marzo cafe, creating a multi-sensory shopping environment. Documents' winter-themed Red House in Shanghai demonstrates how luxury brands can incorporate cultural elements, featuring symbolic Year of the Snake motifs alongside innovative scent experiences.

Miniso's approach in Singapore focuses on licensed character merchandise and blind box collectibles, showing how pop-ups can create engaging experiences for specific consumer segments. Meanwhile, Arket's debut in Shanghai's Reel mall showcases how Western brands can successfully enter Asian markets through carefully curated pop-up experiences that blend Nordic design with local retail preferences. These initiatives reflect a broader shift in retail strategy, where temporary spaces become sophisticated testing grounds for brand engagement and market expansion.

IADS Notes: The evolution of retail experiences in Asia throughout 2024-2025 marks a significant transformation in consumer engagement strategies. The trend began in October 2024 when pop-up retail emerged as a sophisticated market testing tool, moving beyond temporary installations to create meaningful brand experiences. This evolution gained momentum in December 2024 as established retailers like 10 Corso Como demonstrated how strategic partnerships could facilitate international expansion.

By January 2025, China revolutionised the concept with "slow pop-ups", emphasising longer-term experiential spaces that prioritise customer engagement over immediate sales. This shift aligned with broader Asian retail trends, where digital innovation and changing consumer behaviors drove transformation. The culmination of this evolution was evident in February 2025, when major brands launched pop-ups that seamlessly integrated digital technology with cultural elements, establishing a new benchmark for retail experiences in Asia.

Inside the latest pop-up activations in Asia

What: Asia's retail landscape is undergoing a fundamental transformation in 2025, driven by digital innovation, changing consumer behaviors, and strategic market expansions.

Why it is important: This transformation reflects a broader shift in global retail dynamics, where Asian markets are leading innovation while traditional retailers reinvent themselves to meet new consumer demands.

The Asian retail sector is experiencing unprecedented evolution, with traditional boundaries between physical and digital commerce increasingly blurring. Foodpanda's expansion to 130 cloud stores across 11 markets exemplifies the rapid growth of quick commerce, while Levi's strategic focus on premium offerings and women's apparel demonstrates how established brands are adapting to changing consumer preferences. The transformation is particularly evident in emerging markets, with India attracting 27 new international brands in 2024 and Thailand positioning itself as a luxury retail powerhouse.

Major players like Central Retail are investing heavily in technological integration, implementing smart retail solutions and enhanced digital capabilities. This shift is supported by changing consumer behaviors, with 63% of shoppers prioritizing environmental impact and 90% valuing AI-driven personalization. The landscape is further shaped by strategic partnerships and cross-border expansions, as demonstrated by Korean retail giants Lotte and Shinsegae's aggressive moves into Southeast Asian markets.

IADS Notes: Recent developments in Asian retail underscore this transformation. In February 2024, Central Retail announced a USD 665 million investment in AI integration and ecosystem development, while November 2024 saw MM Mega Market commit USD 20 million to Vietnam's expanding market. The evolution of consumer behavior is evident in the luxury sector, where experiential retail has gained prominence, with 68% of Chinese consumers increasing wellness-related spending. This shift is complemented by technological adoption, as seen in January 2025 when Korean retail giants began transforming their spaces to emphasize experiential retail and entertainment, demonstrating how established players are adapting to new market dynamics while maintaining their competitive edge through innovation and strategic partnerships.

Asian Retail Outlook 2025

What: The White Lotus exemplifies how premium television has become a sophisticated marketing channel for luxury brands seeking cultural relevance.

Why it is important: The success of pre-planned television partnerships is creating new revenue streams and marketing opportunities for both entertainment platforms and luxury retailers.

The evolution of television from a mere storytelling platform to a curated luxury brand playground is exemplified by HBO's The White Lotus, which has secured major partnerships before its third season premiere. This strategic shift represents a transformation from reactive sponsorships to meticulously orchestrated collaborations, with brands like American Express, Diageo, and Supergoop! positioning themselves within the show's universe pre-launch.

The approach extends beyond traditional product placement, creating immersive brand experiences through fashion collections, exclusive travel experiences, and high-end collaborations. This new model of entertainment marketing allows brands to be part of cultural conversations before they begin, while enabling television networks to fund ambitious storytelling through lucrative branding opportunities. The strategy's success is evidenced by the extensive roster of participating brands, including Bloomingdale's, BMW, and Away, all seeking to leverage the show's cultural cachet.

IADS Notes: As observed in February 2024, LVMH's creation of "22 Montaigne Entertainment" for producing movies and series demonstrates luxury brands' growing investment in content creation. This trend gained momentum in January 2025, when Bloomingdale's launched its White Lotus-inspired Aqua collection, showcasing the evolution of retail-entertainment partnerships. By October 2024, luxury brands had already begun adopting more sophisticated digital engagement strategies, as evidenced by the rise of lo-fi content and social commerce, while September 2024 saw traditional retailers like M&S partnering with television networks to create branded content.

How the White Lotus became the latest luxury brand magnet in streaming and TV

What: The solo consumer economy emerges as a powerful retail force, with single-person households driving significant changes in consumer behavior and market opportunities.

Why it is important: This demographic shift represents a fundamental transformation in consumer behavior, requiring retailers to rethink traditional approaches to customer experience and service delivery.

The rise of single-person households is reshaping the retail landscape, with significant proportions in major markets (29% in US, 34% in Japan, and 42% in South Korea). This demographic shift reflects conscious lifestyle choices, particularly among younger individuals delaying traditional commitments. The trend is driving substantial market opportunities, exemplified by the solo travel sector's projected growth to USD 200 billion by 2032. Consumer behavior is evolving accordingly, with solo dining seeing an 8% increase and solo diners spending 48% more per person than other customers. The emergence of the "me-market" has normalized solo consumption, with consumers confidently spending on self-care and personal experiences, creating new opportunities for retailers to develop targeted products and services.

IADS Notes: The rise of single-person households represents a fundamental shift in retail demographics that is reshaping consumer behavior. This transformation is particularly evident in research from November 2024 showing that 70% of shoppers now prefer personalized experiences. The impact of this shift is further demonstrated by September 2024 data revealing that nearly 7 in 10 shoppers prefer retailers offering personalized experiences across all channels. These findings suggest that the normalization of solo activities, from dining to shopping, is not just a demographic trend but a broader cultural shift requiring retailers to fundamentally rethink their approach to customer experience and engagement.

The power of the “solo” economy

What: A comprehensive guide from Seramount aims to bridge the gap between uncertainty and informed action for DEI leaders, as they face unprecedented workplace transformation driven by Generative AI technologies.

Why it is important: With AI reshaping traditional workplace structures, DEI leaders need practical frameworks to guide organizational policies and practices that maintain inclusivity while leveraging technological advancements.

Seramount's workbook addresses the growing challenge faced by DEI professionals in navigating the AI revolution, with research showing only 10% of Chief Diversity Officers feeling knowledgeable about Generative AI. The guide provides essential tools for understanding both the opportunities and risks of AI implementation in workplace diversity initiatives. Through a combination of key information and reflective exercises, it covers critical areas including AI bias, risk mitigation strategies, and the potential of AI as a catalyst for DEI goals. The workbook emphasizes the importance of human oversight in AI deployment, particularly in addressing inherent biases and ensuring ethical implementation. By focusing on practical applications and strategic considerations, it helps DEI leaders contribute meaningfully to their organizations' AI initiatives while maintaining focus on inclusivity and equity objectives.

IADS Notes: Recent retail industry developments underscore the urgency of this guidance. In January 2025, research revealed that companies implementing AI with proper oversight achieved 30% faster development and 60% higher user satisfaction rates . This aligns with the emergence of new frameworks like FAIR (fairness, access, inclusion, and representation) , which emphasizes measurable outcomes over symbolic gestures. The retail sector's experience with AI implementation shows varying success rates, with only 10% of companies successfully scaling their applications , highlighting the need for structured guidance in balancing technological advancement with inclusive practices.

Navigating the intersection of AI and DEI

What: Venture capitalists warn that while AI agents hold transformative promise for automating workflows, the sector's rapid growth and inflated valuations resemble past tech hype cycles like Web3 and the metaverse.

Why it is important: AI agents could revolutionise industries by automating complex tasks, but uncertainty about scalability, value capture, and competition from Big Tech raises questions about the sector's long-term sustainability and potential risks for investors.

AI agents—autonomous applications leveraging large language models to perform tasks without human intervention—are attracting significant investment, with European startups raising EUR 481m in early 2025 alone. These tools are touted as game-changers for sectors like customer service, sales, healthcare, and legal, offering cost savings and operational efficiency. However, concerns about an overheated market are mounting, as many startups lack clarity on their scalability and value proposition. Comparisons are being drawn to previous tech hype cycles, such as Web3 and the metaverse, which saw massive investment followed by rapid downturns. Challenges in adoption, including data readiness, privacy concerns, and regulatory hurdles, further complicate the landscape. Moreover, competition from major players like OpenAI, Google, and Microsoft adds pressure. While some VCs remain cautiously optimistic, others expect a bust when current funding frenzies fade, leaving underperforming startups exposed. The next few years will test whether AI agents can deliver on their promise or follow the trajectory of past tech bubbles.

IADS Notes: As observed in January 2025, the retail industry stands at a critical juncture in AI agent adoption. While 87% of companies implementing AI have achieved revenue increases of 6% or more, implementation challenges persist. The technology's evolution is reshaping core retail functions, with companies achieving 15-30% productivity improvements. However, cybersecurity remains a significant concern, with 76% of executives acknowledging the need for improved measures. Recent developments, including Walmart's processing of 850 million product data points in August 2024, demonstrate both the potential and complexity of AI agent implementation in retail.

AI agents could be the next tech hype bubble to burst

What: Workday has introduced the "Agent System of Record," a platform designed to register, manage, train, and integrate enterprise AI agents, offering businesses a centralised solution to handle their growing "digital workforce."

Why it is important: With companies deploying increasing numbers of AI agents, Workday’s solution simplifies governance, enhances security, and ensures seamless integration into existing workflows, addressing critical concerns like data privacy and operational efficiency in the age of enterprise AI. As the use of AI agents grows across enterprises, Workday has launched the "Agent System of Record" to streamline their management. This platform allows businesses to register, provision, and train AI agents while integrating them into the Workday Assistant for smoother operations.

The system enables companies to define agent-specific privileges, create security groups, and customise workflows through Workday Extend, functioning as a governance and innovation hub for AI agents. By offering a unified framework, Workday positions itself as a vital player in enterprise AI, ensuring customers can securely adopt and manage AI tools without risking data security or operational chaos. This move not only solidifies Workday's relevance in enterprise tech but also empowers developers and IT staff to tailor AI agents for unique business needs, reinforcing its value amid the evolving AI landscape.

IADS Notes: Workday's AI Agent System of Record launch comes at a critical moment in retail's AI transformation journey. As of January 2025, while 87% of retailers implementing AI are seeing revenue increases of 6% or more , the industry faces significant challenges in scaling these technologies, with only 10% successfully expanding their AI applications . The platform addresses crucial security concerns, particularly relevant as 76% of executives acknowledge the need for improved AI cybersecurity measures .

This solution is timely, as retailers currently lose 4.5% of gross sales due to inefficiencies , while successful implementations like Walmart's processing of 850 million product data points demonstrate the potential of well-managed AI systems. The platform's focus on integration addresses a critical pain point, as nearly half of retailers struggle with data accessibility and connecting data silos . With the global generative AI market reaching USD 79.8 billion in 2024 and 67% of executives considering AI systems as part of their transformation strategy , Workday's solution could bridge the gap between AI adoption ambitions and successful implementation.

Workday makes a play to manage your AI agents

What: A comprehensive analysis of potential impacts on retail DEI initiatives under a second Trump presidency, highlighting significant policy shifts that could affect industry practices and strategies.

Why it is important: As retailers navigate evolving approaches to diversity and inclusion, understanding potential policy changes is crucial for developing resilient strategies that maintain inclusive practices whilst adapting to new regulatory environments.

The retail industry faces significant changes in DEI implementation under proposed policies for a second Trump presidency. The document outlines plans to eliminate federal DEI programmes and modify enforcement of civil rights laws, particularly impacting how retailers approach workplace policies and supplier diversity initiatives. Key concerns include potential restrictions on DEI training, modifications to discrimination claim processes, and changes to data collection practices. The retail sector has already begun adapting, as evidenced by Walmart's recent strategic pivot to remove explicit DEI language whilst maintaining inclusion practices, and Costco's contrasting approach of firmly defending its DEI programmes. These divergent responses reflect the industry's broader challenge of balancing stakeholder expectations with business performance. The emergence of alternative frameworks, such as FAIR (Fairness, Access, Inclusion, and Representation), suggests retailers are proactively developing new approaches to maintain inclusive practices within evolving regulatory constraints.

IADS Notes: Recent retail industry developments provide context for potential adaptations to new policies. In January 2025, companies like Costco and Apple maintained their DEI commitments despite mounting pressure, while others like Amazon rebranded initiatives as "Inclusive eXperiences and Technology." Walmart's November 2024 strategy of maintaining inclusion practices whilst modifying terminology proved particularly successful, achieving strong market performance. The industry's evolution toward the FAIR framework in early 2025 demonstrates how retailers are preparing for potential policy changes by focusing on measurable outcomes rather than terminology, suggesting a path forward for maintaining inclusive practices in a changing regulatory environment.

What a second presidential term for Donald Trump means for DEI

Seramount's Key Pre-Election Takeaways from the 2024 US Presidential Election Executive Discussion

Charting the Future: DEI Strategies for the Next Four Years

What: Trump's proposed tariffs trigger significant consumer anxiety, with confidence indices showing the sharpest decline since 2021 as Americans brace for higher prices across retail sectors.

Why it is important: This consumer sentiment shift represents more than temporary anxiety; it reflects a structural change in retail economics, as evidenced by February 2025 data showing widespread supply chain restructuring and the elimination of key trade exemptions that previously supported competitive pricing.

The recent decline in US consumer confidence mirrors growing concerns about President Donald Trump's expanding tariff agenda. The Conference Board's Consumer Confidence Index has recorded its steepest drop since August 2021, with survey respondents increasingly mentioning trade and tariffs as primary concerns. This shift marks a stark contrast to the optimism that followed Trump's election triumph in November. Consumer anxiety is particularly focused on potential price increases, with inflation expectations jumping from 5.2% to 6% in February.

The impact extends beyond consumer sentiment, affecting various sectors of the retail industry. Companies like Clorox report increasing consumer stress, with customers maximising product usage to cope with economic pressures. The situation is further complicated by broader economic challenges, including concerns about business conditions, employment, and stock market performance. This confluence of factors has created a complex environment where consumer wariness about tariffs intersects with existing inflationary pressures, potentially reshaping spending patterns across the retail sector.

IADS Notes: The current consumer anxiety about Trump's tariffs is well-founded, as evidenced by significant developments throughout 2024 and early 2025. As reported in January 2025, BCG's analysis projects that a 60% tariff on Chinese goods could add USD 640 billion to US import costs, fundamentally reshaping retail economics. This concern has already manifested in concrete policy changes, with February 2025 seeing the elimination of the USD 800 de minimis rule, affecting millions of daily shipments and forcing retailers to restructure their operations. The impact extends beyond direct cost implications; October 2024 port strikes disrupted over 100,000 shipping containers, compelling retailers to adopt more agile supply chain strategies. The beauty industry particularly exemplifies these challenges, with January 2025 reports showing widespread disruption across 25,000 mass-market products. Consumer confidence has responded accordingly, with the Conference Board's index showing its largest decline since August 2021, reflecting the broader market anxiety about potential price increases and economic uncertainty.

Donald Trump’s tariffs spook consumers weary of inflation

What: A new 'goods getaway' trend is emerging where travelers choose destinations based on unique product availability, as evidenced by viral Dubai chocolate and Korean beauty product phenomena.

Why it is important: This trend signals a fundamental shift in travel retail, where product exclusivity and social media influence are becoming primary drivers of destination choice, creating new opportunities for retailers to attract international customers.

A significant transformation is occurring in global travel retail as consumers increasingly plan their journeys around specific shopping destinations and unique products. This emerging 'goods getaway' trend is particularly evident in two case studies: a viral Dubai chocolate bar that created distinct transaction peaks on delivery apps, and Korean beauty products driving increased tourist spending in South Korea.

The trend is being shaped by demographic and technological factors, with Gen Z, representing a quarter of the world's population in 2024 and projected to account for 30% of all travelers by 2030, leading this shift. Analysis of VisaNet data reveals how product availability in specific locations is no longer just a travel coincidence but a key motivator for destination choice. This evolution is creating new opportunities for both retailers and financial institutions to develop targeted strategies that cater to these travel-motivated consumers, particularly through digital platforms and exclusive offerings.

IADS Notes: The emergence of "goods getaways" in February 2025 represents a significant evolution in travel retail, building on several key trends observed throughout 2024. This shift aligns with findings from November 2024 showing how Gen Z travelers are fundamentally redefining travel retail by prioritizing immersive experiences over traditional duty-free shopping. The trend is supported by May 2024 projections indicating the global travel retail market's expected growth to USD 121.09 billion by 2029, driven by changing consumer behaviors and digital integration. This transformation is particularly evident in the Chinese market, where November 2024 data showed over 70% of travelers now plan their trips around shopping activities. The post-pandemic surge in tourism has particularly benefited fashion and beauty retailers, as noted in July 2024, though spending patterns have shifted significantly from traditional shopping to experience-driven consumption. These developments collectively signal a new era in travel retail, where product exclusivity and experiential elements are becoming primary drivers of destination choice.

Chocolate trails and beauty tales: ‘Goods getaways’ are on the rise

What: There are now 20 all-women led venture capital firms in Europe, marking a significant milestone in fostering diversity and inclusivity within the venture capital space.

Why it is important: Women-led VC firms not only bring unique perspectives to investments but also amplify support for female-founded startups, addressing gender disparities in funding and encouraging more diversity in the entrepreneurial ecosystem.

The number of all-women led venture capital firms in Europe has risen to 20, representing a growing movement towards inclusivity in the industry. These firms, including pioneers like Sweden’s Backing Minds and the Netherlands’ Borski Fund, focus on empowering female entrepreneurs and diverse teams. Notable funds include Revaia, Europe’s largest female-led VC with EUR 250m under management, and Auxxo, Germany’s first fund solely backing female-founded startups with 60% of its investors being women. Iceland’s Crowberry Capital stands out for its significant EUR 90m second fund, while Puzzle Ventures, led by solo GP Gloria Bäuerlein, is dedicated to B2B startups. These firms play a crucial role in addressing funding inequities and inspiring long-term change in venture capital.

IADS Notes: The emergence of 20 female-led VC firms in Europe marks a significant shift in retail investment dynamics. This development gains particular relevance against the backdrop of a USD 32 trillion opportunity in women-focused products and services , with women controlling nearly 75% of discretionary spending worldwide . Recent successes like Course Corrected's EUR 63m climate fund and Borski Fund's EUR 50m close for female-led startups  demonstrate growing institutional confidence in female-led investment strategies. The impact extends beyond gender diversity, as evidenced by Revaia's EUR 250m growth fund , which targets retail innovation and technology transformation. This trend is particularly timely as consumers show willingness to pay 15% premium for better quality products , suggesting alignment between female investors' understanding of market needs and consumer behaviour. The establishment of new funding channels through initiatives like Galeries Lafayette's Motier Ventures  further illustrates how female-led investment is reshaping retail's future.

Europe now has 20 all-women-led VC firms

What: A comprehensive DEI playbook outlines five key strategies for expanding diversity initiatives beyond workplace policies to encompass customer experience, product development, and supplier diversity.

Why it is important: With major retailers like Walmart and Amazon modifying their DEI approaches, this playbook offers timely guidance for maintaining inclusive practices while adapting to market pressures.

The Executive Playbook for Expanding the Impact of DEI presents a transformative approach to diversity initiatives in retail organisations. The document outlines five essential strategies that extend DEI beyond traditional workplace policies, addressing customer experience, product development, and supplier relationships. Through detailed case studies, including the Miami Heat's innovative size-inclusive apparel line, the playbook demonstrates how inclusive practices can drive business growth and market expansion. The framework emphasises the importance of data-driven decision-making and measurable outcomes, particularly in developing inclusive products and services. The text provides practical guidance for building inclusive marketplaces whilst maintaining business performance, offering solutions for common challenges in implementing comprehensive DEI strategies. The playbook's approach is particularly relevant as retailers navigate changing consumer demographics and evolving market expectations, supported by research showing the direct correlation between inclusive practices and business success.

IADS Notes: The retail industry's approach to DEI has undergone significant transformation in recent months. In January 2025, Costco maintained its DEI policies despite activist pressure, while Amazon rebranded its initiatives as "Inclusive eXperiences and Technology" in December 2024. Walmart's strategic pivot in November 2024, which involved maintaining inclusion practices whilst modifying terminology, has proven particularly successful, demonstrating the effectiveness of balanced approaches to DEI implementation.

The Executive playbook for expanding the impact of DEI, executive summary

Check out the full playbook here

What: Amidst heightened political scrutiny, organisations are considering renaming their Diversity, Equity, and Inclusion (DEI) programs to ensure sustainability while continuing to foster inclusive workplaces.

Why it is important: As the current US administration targets DEI initiatives, renaming or reframing these programs could help organisations maintain their commitments to fairness and inclusion while mitigating legal risks and avoiding political backlash.

DEI programs have come under intense scrutiny in the United States following new executive orders from President Trump’s administration, which aim to dismantle federal diversity initiatives and discourage private-sector DEI efforts. Many organisations are contemplating renaming their DEI programs to avoid political and legal challenges while preserving their core objectives. The article highlights that renaming DEI—adopting terms like "Culture and Belonging" or "Opportunity and Access"—may offer a strategic way to embed inclusion within broader business strategies, ensuring these efforts continue to thrive under less controversial branding. However, the risks of perception and trust erosion among employees and stakeholders remain, and transparency in communication is vital. The shift to more integrated or rebranded DEI initiatives—what the article terms "Quiet DEI"—reflects a strategic evolution to sustain inclusive progress in a challenging environment.

IADS Notes: The retail industry's response to DEI challenges has evolved significantly since late 2024. In November, Walmart pioneered a strategic approach by maintaining inclusion practices while modifying terminology, achieving strong market performance. By January 2025, Amazon had rebranded its initiatives as "Inclusive eXperiences and Technology", while luxury brands maintained explicit DEI commitments. The emergence of the FAIR framework (Fairness, Access, Inclusion, and Representation)demonstrates how retailers adapt to maintain inclusive practices while navigating complex political landscapes.

Is it time to rename our DEI programs?

What: AI agents are transforming retail operations, optimising stock replenishment, automating shelf management, and improving supply chain efficiency through data-driven insights and learning capabilities.

Why it is important: The integration of AI agents into supply chain management promises significant productivity gains, minimised stockouts, and enhanced decision-making, enabling retailers to better compete in a demanding and evolving market.

AI agents are ushering in a new era for retail store supply chains, providing transformative tools for operational efficiency. By complementing existing AI technologies like predictive analytics, agentic AI enables greater explainability and learning capabilities, allowing supply chain managers to gain actionable insights about inventory risks, product optimisation, and purchasing priorities. These agents not only analyse and refine predictions but also suggest improvements, such as tailored product mixes or identifying alternative suppliers, with humans retaining validation control. Applied in stores, AI agents coupled with computer vision technology monitor shelf conditions in real time, sending alerts to replenish stock and reduce losses due to stockouts, which currently account for 4% of retailer losses. Early pilot results indicate productivity gains, including a 75% reduction in time spent addressing procurement risks and a 30% boost in employee efficiency. Despite these benefits, adoption in France is slower than in the US due to infrastructure challenges in physical stores, particularly limited network bandwidth. However, technologies like edge computing—featured prominently at the NRF retail event—are emerging as solutions to improve data processing and drive broader adoption of AI agents in supply chain management.

IADS Notes: The retail industry's embrace of AI agents has shown measurable impact throughout 2024-2025. While Coresight Research initially identified a 4.5% loss in retail sales due to operational inefficiencies , successful AI implementations have demonstrated significant improvements, with Intime Department Store achieving a 15% boost in counter sales . The technology's broader impact is evident in the 87% of companies reporting revenue increases of 6% or more through AI adoption . However, the article's emphasis on infrastructure challenges is validated by data showing only 10% of retailers successfully scaling their AI applications , though recent initiatives like France's €109bn AI infrastructure investment  suggest progress in addressing this gap.

AI agents, a promise of revolution for store supply

What: Young South Korean consumers are abandoning luxury brands in favor of affordable "dupe" products, marking a significant shift in Asia's luxury market dynamics.

Why it is important: This consumer behavior change in South Korea, a key trendsetting market in Asia, could indicate a longer-term restructuring of the luxury retail landscape, particularly among younger demographics.

South Korea's young consumers are increasingly turning away from luxury brands in favor of budget-friendly alternatives known as "dupes." According to Daehong Planning's social big data platform D-Bigs, mentions of premium brands like Chanel, Louis Vuitton, Hermès, and Rolex have disappeared from the top 50 words associated with "open run" on social media in 2024. The practice of queuing for luxury goods has declined, with "open run" mentions dropping from 405,736 in 2023 to 340,560 in 2024. Industry experts attribute this shift to market saturation and diminished exclusivity. Popular alternatives include Daiso's $2.06 Son & Park colour balm replacing Chanel's $43.29 product, and Uniqlo's $34.29 utility bag as an alternative to the $247.35 Yoshida Porter bag. This changing consumer behavior extends beyond products to experiences, with young Koreans redirecting spending toward travel, particularly to Japanese cities and local destinations, reflecting a broader shift in consumption priorities.

IADS Notes: The shift in South Korean consumers' luxury spending habits mirrors broader transformations observed throughout 2024 and early 2025. The trend aligns with December 2024's industry-wide challenges, where luxury sales declined by 2% globally amid changing consumer priorities. This evolution is particularly evident in Asia, where June 2024 data revealed growing "luxury fatigue" and a preference for discreet consumption. The redirection of spending towards travel experiences and affordable alternatives reflects a regional pattern, exemplified by July 2024's surge in tourist spending in Japan, where favorable exchange rates attracted value-seeking shoppers. As luxury brands adapt to these changes, many have introduced lower-priced products under $500 to maintain market share, while simultaneously pivoting towards the US market as Asian consumer behavior continues to evolve. This multi-faceted transformation suggests a fundamental restructuring of luxury retail, where value, experience, and authenticity are increasingly prioritized over traditional brand prestige.

Young South Koreans forsake luxury brands for ‘dupe’ products

What: Australia's second-hand market evolution into a USD 1.6 billion industry by 2032 reflects fundamental shifts in consumer psychology, sustainability awareness, and digital commerce.

Why it is important: The transformation of Australia's second-hand market mirrors global retail trends, where traditional retailers are rapidly integrating circular business models to meet evolving consumer demands for sustainability and value, as evidenced by recent innovations from major brands.

Australia's second-hand retail sector is experiencing a remarkable transformation, driven by a convergence of psychological, environmental, and economic factors. The market is projected to grow from USD 578.10 million in 2023 to USD 1,598.37 million by 2032, reflecting a compound annual growth rate of 11.88%. This growth is underpinned by changing consumer attitudes, with 86% of Australians now engaging in second-hand shopping. The appeal extends beyond mere cost savings, tapping into the psychological thrill of discovery and the growing desire for unique self-expression. This 'treasure hunting' experience creates a dopamine-fuelled engagement that keeps shoppers returning.

Environmental consciousness plays a crucial role, with Australia's annual clothing waste of 222,000 tonnes driving consumers toward more sustainable choices. The sector's digital evolution, facilitated by platforms like Depop and Facebook Marketplace, has democratised access to second-hand goods while creating income opportunities. Young Australians, particularly those aged 18-34, are leading this shift, demonstrating how second-hand shopping has evolved from necessity to an intelligent, ethical choice that balances financial pragmatism with environmental responsibility.

IADS Notes: The Australian second-hand market's projected growth to USD 1,598.37 million by 2032 aligns with broader global trends in circular retail. As noted in March 2024, ThredUp projected the global secondhand market to reach USD 350 billion by 2028, demonstrating unprecedented growth potential. The psychological drivers mentioned in the article are reflected in recent retail innovations, with Selfridges' May 2024 initiative making circular retail more playful and engaging. The integration of digital platforms has been crucial, as evidenced by IKEA's August 2024 launch of their Preowned marketplace, while traditional retailers are rapidly adapting their business models, exemplified by H&M's innovative secondhand section launch in February 2024.

The article's emphasis on younger consumers' adoption rates is supported by December 2024 data showing 79% of 25-34 year olds embracing pre-loved gifting, while the sustainability focus aligns with the June 2024 NRF report's recommendations for implementing circular business models. This convergence of economic, social, and environmental factors suggests that Australia's second-hand retail transformation reflects a broader global shift towards sustainable consumption.

The rise of second-hand shopping in Australia: A cultural and economic shift

What: German tech founders are advocating for political change ahead of the snap election, prioritising issues like preventing far-right influence and fostering economic growth over reducing bureaucracy.

Why it is important: The election outcomes could significantly impact Germany's startup ecosystem, migration policies, and its position as a competitive business hub, with founders fearing the growing influence of far-right politics and its potential impact on international talent and economic stability.

As Germany approaches its critical February 23 snap election, tech founders have intensified their political engagement, driven by concerns about migration, the economy, and the rise of the far-right party AfD. Entrepreneurs, like Klim cofounder Nina Mannheimer, have shifted their focus from traditional business concerns to more urgent matters, such as the threat posed by war and extremism. Migration policies are a key election topic, with fears that stricter asylum and language requirements proposed by parties like the CDU and AfD may deter skilled foreign workers. Founders worry these changes, alongside the AfD's growing influence, could harm Germany’s perception as a safe and welcoming hub for international talent. Additionally, Germany’s economic struggles, marked by consecutive GDP declines, are pushing business leaders to advocate for reforms in bureaucracy, digitalisation, and green technologies. Founders like Emanuel Heisenberg and Eric Demuth emphasise the need for transformational leadership to revive Germany’s innovative edge and prevent further shifts toward extremism. Many are taking active roles in campaigning and donating, hoping to influence a more progressive and business-friendly political landscape.

IADS Notes: The German tech ecosystem faces a critical juncture as revealed by recent developments. While October 2024 saw Breuninger successfully transform into a digital multi-channel retailer with over 50% of sales now online, broader challenges persist. The country's retail landscape shows concerning trends, with department store sales falling 34.8% in real terms over the past two decades. However, new opportunities are emerging through the EU's EUR 200bn InvestAI initiative and the rise of European AI agent startups. This comes as German tech founders actively engage in political discourse, particularly regarding international talent attraction and economic growth. The contrasting experiences of traditional retailers and digital innovators highlight the urgent need for technological adaptation in the German market, especially as the country navigates economic headwinds and political uncertainties affecting its position as a competitive business hub.

What German founders want from the election