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Retailers have spent the last decade chasing the promise of omnichannel, often equating it with being everywhere at once. But the real challenge today is not ubiquity—it is focus. The most advanced players are learning to guide customers toward journeys that create value, while reshaping their store networks into engines of proximity, trust, and fulfilment. Omnichannel is no longer just about touchpoints; it is about rethinking the very infrastructure of retail.

The IADS has published several articles on the topic, including from Dr Christopher Knee, the Association’s honorary advisor. To go further and make conceptual advances, we invited Robert Rooderkerk, an Associate Professor at Erasmus University (Rotterdam), to give IADS CEOs an idea of where research about Omnichannel stood at the time. By a fortunate coincidence, his lecture took place the very week when he published his latest article in the Harvard Business Review, When omnichannel retailers don’t deliver what customers ordered.

Rooderkerk holds an M.Sc. in Econometrics with a specialisation in logistics from Erasmus University Rotterdam and a Ph.D. in Marketing from Tilburg University – both earned with cum laude distinction. His research focuses on the intersection of marketing and operations, addressing critical challenges in omnichannel retail and retail analytics.

Drawing from collaborative academic research, insights from management journals and popular media, and conversations with practitioners across industries such as apparel, consumer electronics, grocery retail, and DIY— he offered a fresh view on the steps department stores could take to become truly omnichannel and remain competitive against specialist retailers and Direct-to-Consumer (DTC) brands.

Introduction: the new competitive reality in omnichannel retail

Today, department stores face competition from many directions. Digitally native brands are opening their own flagship stores to protect their brand and collect richer customer data. Specialists like Sephora are winning by offering very deep product ranges and seamless cross-channel experiences. At the same time, luxury online marketplaces are setting new standards for what customers expect.

In this context, department stores can’t just keep up with omnichannel capabilities—they need to use those tools to guide customer behaviour. In other words, they must stop relying only on defensive strategies and instead take an active role in shaping customer experiences that increase profitability. To achieve this, Rooderkerk suggests two angles.

The first one is to push omnichannel optimisation forward: the goal of omnichannel is no longer just connecting all channels but actually optimising them—steering customers toward the paths that are most valuable for the retailer. This can mean higher profitability, better efficiency, or progress toward sustainability. To make this work, retailers need a more precise understanding of how customers move between channels and touchpoints. The most advanced companies have gone past simply allowing every possible shopping journey. Instead, they now nudge customers to channels or combinations of channels that bring higher margins, reduce returns, or balance inventory across the network. They use data to shape behaviour through personalised offers, dynamic user experiences, and fulfilment strategies that serve business goals.

The second one is to make store networks work through smaller formats. Smaller formats are becoming strategic assets: lower cost, highly flexible nodes for last mile, localised assortments, and experiential service—especially in cities. Rooderkerk insists that store strategy and digital strategy can no longer be separated. Each store should not only be judged on sales per square metre but also on how it supports customer experience, delivery efficiency, and brand visibility across all channels.

The omnichannel evolution: moving into the optimisation stage

The term “omnichannel” is often misunderstood—if not outright misleading. Robert Rooderkerk emphasises that omnichannel is not about being present in every possible place at once, but about being present where it matters, delivering value to both the customer and the business simultaneously. This shift in perspective is essential.

According to Rooderkerk, the industry’s fixation on perfectly seamless customer journeys has pushed many companies into strategies that don’t make money. Removing every bit of friction can look customer-first, but if there’s no solid business reason, it becomes financially unsustainable. The goal isn’t to abolish all friction—it’s to remove friction intelligently where it supports broader strategic objectives. In this sense, omnichannel isn’t a tech spend or a tactical add-on—it’s a mindset—a mindset of continuous evolution, iteration, and optimisation.

Through a broad research effort with C-minus-one level leaders (such as heads of omnichannel, operations, and marketing) across categories from luxury to consumer electronics, in 2025, Rooderkerk outlined a maturity model that most companies are currently moving through.

Credits: Robert Rooderkerk, 2025

The journey typically begins in a fragmented, multichannel phase, where online and offline channels are siloed and serve different customer segments. This setup fell short during the COVID-19 pandemic, when retailers rushed to stand up click-and-collect using a mix of manual workarounds and disconnected systems. That time was the “experimentation” phase: it worked, but it wasn’t efficient.

As retailers progressed, they moved into what Rooderkerk calls the “ramping up” stage—scaling services like same-day or even same-hour click-and-collect, expanding geographic reach, and increasing speed. Still, most companies today are stuck in this phase or the next, known as “channel integration.”

This third stage focuses on omnichannel order orchestration—using centralised systems to choose the best fulfilment nodes, whether stores or distribution centres, based on stock availability, distance, and delivery efficiency. Yet many organisations are still held back by internal silos between digital and physical teams, with ongoing “tribal” conflicts over budgets, authority, and strategy.

The move from a channel-led to a customer-led organisation is signalled by customer journey segmentation. That means spotting and investing in the most valuable or frequent journeys based on transaction volume or customer value. Instead of trying to optimise every possible journey, the most forward-looking retailers focus on the ones with the most significant return potential.

But the most advanced retailers don’t just support these journeys, they shape them. This higher level of maturity, which Rooderkerk calls “omnichannel optimisation,” is about steering customers toward the channels and touchpoints that improve profitability or customer equity. Strategic guidance might mean encouraging in-store visits in areas where delivery performance is weak, or nudging customers away from home delivery when in-store interactions offer better upsell opportunities or long-term loyalty benefits.

Holland & Barrett, for example, uses different nudges by market to influence channel selection. In the UK, customers are prompted to pick click-and-collect with a prominent “free” message. At the same time, in the Netherlands, the highlighted benefit is sustainability—each tailored to local motivations and levels of disposable income. These nudges, Rooderkerk notes, are both low-cost and highly effective.

Fulfilment strategy is another lever. Swatch shows how simple, inventory-aware rules can avoid waste. When stock of a particular watch is low, the reservation option disappears from the site, preventing high no-show rates that tie up valuable inventory and reduce availability. This inventory-sensitive approach decreases operational friction and protects margins.

Store layout is another underused but powerful optimisation opportunity. Working with Coolblue, a Dutch consumer electronics retailer, Rooderkerk examined how the physical placement of click-and-collect points can meaningfully affect cross-sell potential. Early versions placed pickup desks near the entrance for convenience. However, that didn’t lead to additional purchases and resulted in scattered labour use. By routing certain high-value pickups—like smartphones—to spots near accessory displays, the retailer lifted cross-sell by 10 percentage points. This targeted rerouting was enabled by customer self-check-in kiosks and conditional logic, demonstrating that smart spatial design can significantly increase revenue per visit.

The last, and perhaps least discussed, pillar in this omnichannel shift is incentives, especially for ship-from-store. Rooderkerk points out a worrying 7% to 10% order cancellation rate due to insufficient inventory data or lack of store compliance. Often, stores deprioritise e-commerce orders when there are no incentives, or when picking disrupts in-store work. He has observed that without financial incentives, stores might cancel online orders to conserve inventory for themselves or to avoid additional tasks. This has clear effects: research shows that cancellations cause measurable drops in future customer spending and loyalty, even in high-frequency areas like grocery.

Solutions need to align technology with human incentives. Companies like Adidas have rolled out reward-based routing, sending orders to stores with strong compliance and fulfilment performance. Walmart and Target, for their part, are relying heavily on real-time inventory accuracy as a key routing factor. Rooderkerk’s findings show that orders sent to stores with verifiable stock availability achieve much higher fulfilment rates and customer satisfaction. Bonus systems linked to order volumes, real-time traffic signals, and available labour are additional factors being tested to fine-tune this orchestration layer.

As omnichannel optimisation turns channels into levers—nudges, routing, spatial design, and incentives—the next question is where those levers have the greatest force. That answer sits in the store network: the physical footprint that doubles as a fulfilment node, service stage, and brand amplifier. To make optimisation real at scale, retailers must decide when to open, resize, relocate, or densify. The following section explores how to architect that footprint for both growth and profitability.

Leveraging an omnichannel store network

The much-talked-about halo effect—the idea that opening stores lifts nearby online sales—is often exaggerated. Using the example of Warby Parker in the U.S., Rooderkerk notes that digitally native brands can indeed see halo effects because their stores act as showrooms, physical billboards, and trust anchors. For Warby Parker, which initially had low brand awareness and a strong reliance on showrooming, store openings served as a catalyst for growth across all channels.

However, this effect depends on context. In Rooderkerk’s research with Coolblue, which has 90% brand awareness in the Netherlands, no meaningful halo effects were observed after domestic store openings. In fact, online sales were more often cannibalised than expanded. But when Coolblue entered new markets—Belgium and Germany—halo effects did appear. This suggests that halo dynamics are most likely in low-awareness markets, where a physical presence helps build visibility, trust, and brand familiarity.

Rooderkerk also cautions against flawed internal analyses that credit all post-opening growth to the store, without isolating organic growth that would have happened anyway. He adds that misclassifying click-and-collect orders as purely online can distort how a store’s impact is evaluated, since many of these purchases depend heavily on in-store experience, upselling, and service.

Beyond opening new stores, Rooderkerk proposes a wider framework for store network strategy that includes expansion, downsizing, relocation, and densification. In particular, densification—adding smaller stores closer to high-density customer segments—is becoming a strategic frontier. Smaller formats enable retailers to target specific stages of the customer journey, reduce capital intensity, and increase proximity to key demographics.

These smaller stores can follow two main models:

• The first focuses on specific touchpoints in the journey, offering services like advice, pickup, or returns without holding full inventory. Nordstrom Local is a clear example, providing click-and-collect, tailoring, and return services in compact urban spaces. Similarly, IKEA’s “Plan & Order” stores in central Paris allow city dwellers without cars to plan complex purchases like kitchens without visiting large suburban warehouses. These locations focus solely on configuration and consultation—products are then delivered to the customer’s home.
• The second model supports the full journey within a smaller footprint. Galeries Lafayette’s store in Paris’ 15th arrondissement illustrates this approach. Although much smaller than the flagship, it offers a curated yet comprehensive assortment tailored to local families. By combining proximity with personalisation, the store increases visit frequency and deepens loyalty. For many consumers, especially families, this localised convenience reshapes their preferred shopping journey.

Designing these compact stores for high engagement requires agility. Layouts must be modular so assortments can shift quickly with seasons or trends. Rooderkerk highlights Decathlon as best-in-class: the retailer dynamically adjusts floor space by sport based on the calendar, enabled by highly flexible fixtures.

But proximity alone isn’t enough. To succeed, small-format stores must act as gateways to the broader ecosystem. Staff need training in endless aisle capabilities to access online inventory. Technologies that power smart recommendations or real-time inventory lookups can bridge physical and digital channels. However, services like ship-to-store or buy-online-return-in-store should be adopted carefully. While attractive to customers, these models carry significant cost and operational risk. Rooderkerk warns that returns, in particular, can overwhelm store teams and harm the shopping atmosphere—unless they are clearly segmented and potentially monetised through smart conversion efforts.

Deployed with rigorous measurement and clear roles, store networks become the most tangible arena where omnichannel optimisation compounds.

Conclusion: from “everywhere” to “the right where”

Omnichannel is no longer about being everywhere; it is about being decisive—prioritising the journeys that matter, removing the frictions that don’t pay, and steering customers to the touchpoints that maximise both profitability and equity. The maturity path shows that progress stalls when organisations stop at integration; value unlocks when orchestration becomes intentional, incentives are aligned, and stores are treated as precision instruments rather than blunt expansion. With rigorous measurement (including a sober view of the halo effect), role-based formats, and inventory-aware rules, the store network is where strategy meets unit economics. Retailers that iterate their nudges, layouts, routing, and incentive systems—and redeploy their footprint via relocation, downsizing, and densification—won’t merely follow customer behaviour; they will shape it, profitably. In fact, this relates to a simple truth: optimising customer journeys and reinventing the store network are not parallel projects, but interdependent levers of transformation.

Credits: IADS (Selvane Mohandas du Ménil)

What: Luxury goods are losing value as wealthy consumers shift their spending from products to exclusive services and experiences.

Why it is important: As traditional luxury goods lose their allure, brands must adapt to a market where scarcity and status are tied to experiences, not possessions.

The luxury market is undergoing a significant transformation as the value of traditional high-end goods—such as fine wine, watches, art, and real estate—declines, while demand for exclusive services and experiences surges. Once driven by the scarcity and rivalrousness of physical products, luxury is now increasingly defined by access to unique, unrepeatable moments, from Michelin-starred dining and elite sporting events to private travel and bespoke hospitality. Social media and resale platforms have democratized access to many luxury goods, eroding their exclusivity and prompting the wealthy to seek status through experiences that cannot be replicated or resold. As a result, prices for luxury services have soared, even as the value of goods like Bordeaux wines and Rolex watches has dropped sharply since 2023. This shift challenges luxury brands and retailers to rethink their strategies, focusing on creating new forms of exclusivity and desirability rooted in personalised, memorable experiences rather than material possessions.

IADS Notes: The current downturn in the luxury sector, as reported by the Financial Times in December 2024, marks the industry’s worst year since the 2007–09 recession, with global luxury sales declining by 2% and the loss of 50 million consumers over two years. This contraction is echoed by Forbes in June 2025, which projects up to a 5% drop in 2025 and highlights the growing emotional disconnect between brands and consumers. The shift from goods to experiences is particularly pronounced in China, where Inside Retail in January 2025 notes that 68% of luxury consumers are increasing their spending on wellness and experiential luxury, while the second-hand market is booming as price pressures mount (Inside Retail, June 2025). The industry’s identity crisis is further underscored by Forbes in July 2025 and LUXUS PLUS in March 2025, both of which highlight the challenges of maintaining exclusivity and desirability in an era of democratized access and social media influence. Successful brands like Hermès and Brunello Cucinelli are navigating this transformation by focusing on controlled scarcity, authentic storytelling, and exclusive experiences, while mass-market strategies and overexposure have led to declining sales for others. These developments collectively signal a fundamental restructuring of the luxury market, with exclusivity, experience, and community engagement emerging as new benchmarks for value.

Why the ultra-rich are giving up on luxury assets

What: Amazon retreats from checkout-free grocery in the UK, highlighting the challenges of scaling frictionless tech.

Why it is important: The failure of Just Walk Out technology demonstrates the need to align innovation with customer trust and operational realities.

Amazon’s withdrawal from its Just Walk Out-powered Fresh stores in London marks a pivotal moment for frictionless retail, revealing the challenges of implementing advanced technology in the grocery sector. Despite significant investment in AI-driven systems designed to eliminate checkout lines, the model struggled to gain consumer trust, with many shoppers expressing discomfort over the lack of transaction transparency and occasional receipt errors. The economics of the model also proved unsustainable, as the high costs of outfitting and maintaining these stores could not be offset by increased sales or efficiencies in a low-margin environment. Amazon’s shift toward hybrid checkout solutions, such as Dash Carts and the conversion of some stores to Whole Foods Market, reflects a broader industry trend favoring incremental innovation and customer-centric flexibility over wholesale reinvention. This experience underscores that successful retail technology must not only be innovative but also practical, transparent, and aligned with both customer expectations and operational realities.

IADS Notes: Amazon’s closure of its UK Fresh stores in October 2025 (Inside Retail) and broader exit from the UK grocery market in September 2025 (Retail Week) highlight the challenges of scaling frictionless retail in established sectors. The industry’s move toward hybrid models and smart store technologies, as seen in January 2025 (Journal du Net), reflects a growing preference for practical, customer-centric innovation. Amazon’s leadership, as noted in January 2025 (Forbes), continues to emphasise risk-taking and adaptation, underscoring the need to balance technological ambition with operational and consumer realities.

Why Amazon’s Just Walk Out tech failed

What: Inclusive-learning survey questions offer a practical tool for evaluating and improving the inclusiveness of employee training in multinational organizations

Why it is important:  The adoption of inclusive-learning survey tools reflects a broader industry shift toward structured frameworks and accountability in diversity and inclusion

The article explores the critical need for inclusiveness in employee training, particularly within large multinational organizations where diverse workforces are the norm. Grounded in critical socio-cultural theory, the research demonstrates that neglecting inclusiveness in training perpetuates inequality and undermines both individual and organizational potential. By piloting a set of distinctive learner survey questions in a global consumer goods company, the study reveals that such tools not only provide actionable insights into the inclusiveness of training programs but also nudge trainers and designers to address barriers related to gender, race, language, and disability. The findings highlight that while many participants felt included, significant gaps remain, especially for marginalized groups, and that traditional training often fails to address systemic inequities. The research advocates for the integration of inclusive-learning survey questions into standard evaluation practices, emphasizing the importance of ongoing refinement and adaptation to different cultural contexts. Ultimately, the study positions inclusive evaluation as a catalyst for organizational change, employee engagement, and sustainable development.

IADS Notes: Recent industry evidence, such as the LEADNetwork’s February 2025 report, confirms that inclusive workplaces in retail achieve notable gains in engagement, retention, and performance, but still face persistent gaps in leadership representation and unconscious bias (ERE Media, April 2025). Retailers like Selfridges have successfully piloted feedback tools and community engagement strategies to refine inclusiveness (Drapers, April 2025), while July 2025 research from Forbes demonstrates that tailored accessibility initiatives yield measurable improvements in employee well-being and business outcomes. The shift toward embedded inclusion strategies, supported by frameworks and leadership accountability (Seramount, June 2025), is transforming HR and L&D practices, with value alignment and EDI networks now central to employee engagement (The Retail Bulletin, May 2025).

Evaluating the inclusiveness of employee training programmes: a research-practice partnership

What: Shein’s planned launch of a permanent store in Paris’s BHV Marais has triggered a wave of backlash from French brands, unions, and authorities, exposing deep tensions between global fast fashion and local retail values.

Why it is important:  This controversy highlights the operational, reputational, and regulatory risks facing department stores and brands partnering with disruptive fast-fashion platforms amid growing scrutiny in France and the EU.

Shein’s announcement of a 1,000-square-meter boutique inside Paris’s BHV Marais has ignited fierce opposition from French brands, labor unions, and city officials, with several local labels withdrawing from the department store in protest. The move has intensified existing operational and financial challenges at BHV, including supplier tensions, payment delays, and declining sales, while also straining franchise relationships with Galeries Lafayette, which publicly opposed Shein’s entry on grounds of brand values and contractual obligations (Inside Retail, October 2025; Fashion Network, October 2025). The backlash is unfolding against a backdrop of escalating regulatory scrutiny: Shein was fined €40 million for deceptive pricing in July 2025, and the EU is abolishing duty exemptions and making platforms directly liable for compliance and duties (Fashion Network/Inside Retail, July 2025; Financial Times, February 2025). Shein’s broader European strategy, including partnerships with local brands like Pimkie and plans for further store openings, has triggered industry-wide debate over market flooding, price wars, and the erosion of sustainability and responsible commerce standards (Fashion Network, September 2025; Vogue Business, March 2025). The controversy underscores the complex risks and opportunities facing legacy retailers as they navigate disruptive partnerships and a rapidly evolving regulatory landscape

IADS Notes: The backlash against Shein’s physical retail debut at BHV Marais in October 2025 mirrors sector-wide resistance to fast-fashion partnerships, as seen in Galeries Lafayette’s move to block Shein’s entry into SGM-affiliated stores and Pimkie’s expulsion from French retail associations after its Shein alliance (Fashion Network, October and September 2025). These events highlight the operational and reputational challenges facing department stores, compounded by financial instability and supplier tensions. Regulatory scrutiny is intensifying, with Shein fined €40 million for deceptive pricing in July 2025 and the EU introducing new platform liability and customs reforms (Fashion Network/Inside Retail, July 2025; Financial Times, February 2025). The debate over sustainability and responsible commerce is further fueled by industry concerns about market flooding and the environmental impact of ultra-fast fashion (Vogue Business, March 2025).

Why France is pushing back against Shein’s physical store launch

What: European e-commerce turnover grew by 7% in 2024, reaching €842 billion, driven by digital transformation, regulatory shifts, and evolving consumer preferences.

Why it is important: The development reflects both the opportunities and pressures facing European retail, with technology and circular economy strategies emerging as key differentiators

European e-commerce achieved a 7% increase in turnover in 2024, reaching €842 billion and reflecting the sector’s remarkable ability to adapt to shifting market conditions and regulatory demands. This growth is exemplified by France, where online sales surged to €175.3 billion, now representing 11% of the country’s total retail sales and underscoring the digital transformation underway across the continent. However, the broader retail sector faces significant distress, particularly in Germany, as weak discretionary spending and tighter credit conditions weigh on traditional retail models. Regulatory changes are also reshaping the landscape: the EU’s introduction of new customs fees and platform liability measures, along with the Omnibus Simplification Package’s reduction of sustainability reporting requirements, are forcing retailers to balance compliance with operational agility. Technology investments are proving crucial, with AI-driven operations and innovative logistics solutions delivering measurable gains in profitability and customer experience. Regional disparities remain, with mature markets like France contrasting with more vulnerable regions. At the same time, the rise of second-hand and circular economy options signals a fundamental shift in consumer values and retail strategies.

IADS Notes: The robust growth of European e-commerce in 2024 is reflected in France’s record €175.3 billion in online sales, which marked a 9.6% year-on-year increase and signaled a new balance between digital and traditional retail (Ecommerce Europe, March 2025; Journal du Net, February 2025). Despite this momentum, the sector faces mounting distress, particularly in Germany, where weak discretionary spending and tightening credit conditions have made retail the most distressed sector in the region (BoF, June 2025). Regulatory changes are reshaping competition, with the EU introducing new customs fees and platform liability measures in response to the rise of Chinese e-commerce platforms (GDI, August 2025), and the Omnibus Simplification Package reducing sustainability reporting requirements by 80% (Vogue Business, April 2025). Technology-driven transformation is accelerating, as AI-driven operations and logistics innovations deliver measurable gains, though only a minority of retailers have scaled these solutions effectively (Zebra, October 2025; Journal du Net, February 2025). The mainstreaming of second-hand and circular economy practices is also reshaping retail models, as nearly a quarter of global consumers now purchase secondhand items and one-third prioritize eco-friendliness (Retail Asia, December 2024; The Retail Bulletin, March 2025).

European E-commerce Report 2025: New growth in European e-commerce indicates sector’s ability to adapt and reinvent - Press release

European E-commerce Report 2025: New growth in European e-commerce indicates sector’s ability to adapt and reinvent - Full report

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CLICK HERE TO SEE PHOTOS OF RIYADH MALLS

As Chalhoub Group stated during the IADS CEO meeting in Dubai earlier in 2023, Saudi Arabia stands out as one of the Middle East’s most dynamic retail markets, undergoing rapid transformation fueled by Vision 2030’s drive to diversify the economy beyond oil[1]. 

In 2024, the Saudi retail market reached approximately USD 270.8 billion, with forecasts projecting growth to USD 408.7 billion by 2033 at a compound annual growth rate (CAGR) of 4.2%. The retail landscape has shifted from a dominance of traditional souks and small traders to a more organised and modern format, adapted to the needs of an urban, digitally savvy population (83% of Saudis live in urban areas, 98% of Internet traffic is done via smartphones) and making the most of an increasing consumer spending, especially among youth, expected to account for 75% of retail spending by 2035.

E-commerce is a significant growth engine, with online retail reaching an estimated market size of USD 8.7 billion in 2023 and experiencing a 32% CAGR over the past five years. Apparel, beauty, and food and drink are among the leading online categories, with apparel alone generating USD 4.18 billion in online sales. Substantial investments in omnichannel strategies, digital payments, and experiential retail concepts further energise the retail ecosystem.

This robust growth positions Saudi Arabia as a regional retail powerhouse, attracting local and international retailers considering entering, or strengthening their positions, in KSA. Taking the opportunity of conferences in the country, the IADS visited a selection of malls in Riyadh to understand the market and how department stores are faring there. From the most traditional malls (Olaya Mall, Panorama Mall), to the more Dubai-like (Cenomi Nakheel Mall), luxury-oriented (Al Faisaliah, Kingdom Centre, Solitaire), and experiential (Via Riyadh) ones, it is clear that there is room for the unity of space, supply and time that the department store format offers, much more than just for Harvey Nichols Riyadh and Al Rubaiyat.

Olaya Mall, Panorama Mall: two very different ways of being “traditional” 

Olaya Mall is located in Riyadh's bustling Al Olaya district, a central business and retail hub of the Saudi capital which also includes the Kingdom Centre, just across the road, Al Rubaiyat, a fashion and lifestyle department store, and, a little further, Al Faisaliah mall (where Harvey Nichols is located) and the Panorama mall (where Etre, a fashion and luxury multi-brand store, is located).

Launched in 2000 by the AlMogren group, it was the first mall in Saudi Arabia to introduce international brands in the city, two years before the Kingdom Centre. It is now recognised for its family-friendly atmosphere, offering an appropriate environment for shopping and dining. It has a large food court that includes a mix of local and international fast-food chains, dedicated children's play areas, and shops that mostly showcase women’s apparel.

While, in theory, the mall benefits from its proximity to luxury hotels and business centres, making it accessible and attractive to locals and tourists, its current state and design make this unlikely.

Although the building remains pristine, its dated design betrays the era in which the mall was conceived. Several tenants wisely operate double façades—opening both to the parking lot and the interior concourse—but the shopfronts march down unbroken, monotonous corridors with no pauses for surprise or variety. Almost every retailer sells one thing—women’s dresses—so the offer has narrowed over time, appealing to a single product category and a single audience. The result is a mall frozen in the early phase of Western-style retail in the Gulf, a stark counterpoint to the more progressive Kingdom Centre just across the road.

Located 10 minutes away by car from Al Olaya, and a stone's throw from the King Khalid Grand Mosque, Panorama Mall represents another way of looking at tradition in the mall business. It was opened in 2010 on 130,000 sqm, developed by Mohammad Al Habib (a real estate company founded in 1972 with a track record of 50 projects in KSA) for the account of Aswaq Almustaqbal Company, the owner until 2020, when all stakes were sold to Borouj International Company for €23m. Leasing company Hamat Holding, is managing the property.

Panorama Mall is known for its panoramic facade, reinforcing its status as a visual landmark. The retail mix at Panorama Mall is robust and diverse, featuring over 200 stores that cater to a broad audience: luxury brands such as Louis Vuitton, Gucci, Chopard, and Rolex share the space with high-street names like Zara, H&M, and Marks & Spencer. Speciality boutiques and high-end jewellers enhance the shopping experience, while the presence of the Danube Hypermarket, Jarir Bookstore, various electronics and home décor complete the offer.

What makes it unconventional (and, from our point of view, exaggerated) is the amount of space dedicated to experience[2]. While every retailer in the world knows the value of such space these days, Panorama Mall offers an experience on steroids: not less than 7,325 sqm is dedicated to one of the region's largest Sparky’s indoor amusement parks, attracting families in crowds. The mall also houses an AMC cinema and a food court oriented towards international fast food, conveniently located near the amusement zone. As a consequence, while such a heavy focus on family entertainment creates an sizeable traffic, it also seems disconnected from some parts of the mall, such as the luxury section with surprising adjacencies (Dior near Steve Madden, Chanel near Tumi), not to mention Etre, a multi-brand store that used to be fashion oriented and which now only focuses on home.

Panorama’s ambition mirrors its façade: broad, impressive, but unfocused. Families flock to Sparky’s, teens queue for AMC blockbusters, and luxury shoppers weave past sneakerheads under one roof that tries to please everyone. Yet history has shown that malls that trade distinction for dilution eventually lose both edge and audience. Panorama Mall may still glitter in 2025 Riyadh, but without a more deliberate point of view, it could be rehearsing the very script that closed so many U.S. anchor stores before the final curtain fell.

Olaya and Panorama stand side by side in this “traditional mall” section because—despite their opposite tactics of monotony versus maximalism—both cling to the same first-generation, one-size-fits-all template that newer retail formats have already begun to abandon.

Raising the bar: Cenomi Nakheel Mall  

Opened in 2014 by Arabian Centres (a Riyadh-based real estate company, developer, owner, and operator of shopping malls in the Middle East trading under the Cenomi Centres brand), Al Nakheel Mall rapidly became a local reference. In 2015, the mall received awards from the International Council of Shopping Centres (ICSC) in the New Media/emerging Technology Marketing and Design and Development categories.

Cleverly situated along major roads leading into Riyadh and relatively far away from the Olaya catchment zone (which is crowded with four malls), Al Nakheel Mall attracts more than 200,000 visitors weekly, including many Riyadh residents, thanks to its visitor-friendly, single-level design spanning 370,000 square meters as well as a location ensuring easy access by car or private car services like Uber or Careem.

The mall's architecture is noteworthy for its walkways and design, which incorporate open spaces and intimate corners, allowing for a comfortable shopping experience. Accessible through eight gates, it is composed of two large wings, hinged on a central food court (relatively smaller than other malls). It includes family activities on the first floor: Muvi Cinemas, Sparky's, and Playnation playgrounds. The wings, which are inviting and perfectly maintained, are large enough to have stands in the middle, either for small accessories or refreshments.

The retail space boasts a selection of high-end luxury brands such as Chanel and Gucci, alongside popular international chains like Zara (located in a spectacular and central store) and H&M and a surprising array of Turkish brands (LC Waikiki, Kahve Dünyası…). Overall, the offer is lifestyle- and aspirational-oriented, and complete with experiences (a Jamie Oliver cooking school or an Australian restaurant).  Essential services such as banks, pharmacies, and customer service desks further enhance its functionality and visitor convenience.

Despite a significant number of hoardings hiding empty units, the mall felt crowded during the visit, and many shopping bags were in sight. Compared to the two previous malls, this one felt modern, well-curated, and organised, competing with other successful regional generalist malls[3].

Going upscale: Kingdom Centre, Solitaire, Al Faisaliah 

The Kingdom Centre, a symbol of modern Riyadh at the heart of the city in Olaya, was designed by Ellerbe Becket and completed in 2002. It is an iconic structure distinguished by its almond-shaped tower, which reaches a height of 302 meters, making it one of the tallest buildings in the city (and the third-tallest building with a hole worldwide). The tower's design is characterised by an inverted catenary arch, capped by a glass skybridge that offers panoramic views of Riyadh.

This mixed-use complex includes commercial, residential, and retail spaces. The tower comprises office spaces, a five-star Four Seasons Hotel, and luxury residences. It also includes the King Abdullah Mosque on the 77th floor, the world's highest mosque from ground level. At the tower's base, two symmetrical wings extend east and west, encompassing landscaped public gardens and a mall that spans 56,000 square meters across three levels.

This mall is a key feature of the complex and was inaugurated in 2001. It houses 161 stores, including a wide range of luxury brands, with a general design meticulously tailored to an affluent clientele. Interestingly, while in the past the mall housed a Debenhams and a Saks Fifth Avenue store, both of which closed a long time ago, only mono-brand stores are present, without any non-luxury anchor. During the visit, the mall was being revamped with quite a number of hoardings hiding units and part of the structure. Another notable feature is the food court on the top floor, “Al Mamlaka Social Dining”, where customers must pay an entry fee.

Solitaire, located in another catchment area up north in the city (near the Kingdom Hospital and the Financial District), is a new multi-use lifestyle complex covering over 65,000 square meters. Inspired by a geode, its design features an angular stone façade that evolves into a crystalline interior, creating a striking experience.

The complex includes three aboveground levels dedicated to retail, food and beverage, entertainment, wellness, and sports and three levels of basement parking. This layout caters to a diverse clientele, including high-net-worth individuals and expatriates living in nearby residential compounds. The North Plaza features fast-fashion brands, casual dining, and entertainment, while the South Plaza focuses on luxury retail and fine dining.

Sustainability is integrated into the mall design through wind towers for climate control, using mechanical fans to circulate air and offering a passive cooling solution. Similarly, water features, including misting elements, contribute to a cooler environment. Therefore, it is unsurprising that such a commitment has encouraged the Chalhoub Group to team up by bringing in a selection of luxury brands it operates in joint ventures, including Loewe, Celine, Fendi, or Tiffany & Co.

The most surprising during the visit was the fact that, even though almost no boutiques were open by then, with scaffoldings in the middle of the passageways and a strong smell of glue, the mall was already crowded with passers-by and customers sitting at the few restaurants (including French Paris Society brand Perruche) and cafés already in operations (including Ladurée, Patchi or luxury chocolate maker Bateel). While the opening date was set for a few weeks later, locals explained that this showed the enthusiasm of the KSA clientele for new experiences and places (also suggesting that this enthusiasm can wane as fast as it arrives).

Interestingly, both Kingdom Centre and Solitaire share a notable characteristic distinguishing them from traditional mall developments worldwide: the absence of department store anchors. While these destinations excel in creating immersive luxury environments through curated mono-brand boutiques and experiential elements, neither has incorporated the retail stability of flagship department stores or hypermarket. This choice reflects a local retail aspect but may also present challenges for consistent foot traffic beyond the initial excitement.

This is not the case at Al Faisaliah Mall, not far from Kingdom Centre. After a brief stint as Mode Mall, it re-emerged under its original name to align with Saudi Arabia's Vision 2030. The mall covers a retail area of 35,600 square meters within the Al Faisaliah Centre complex. This mixed-use development also houses the 267-meter Al Faisaliah Tower (for a moment, the tallest in the country, before losing its crown to Kingdom Centre) and a five-star Mandarin Oriental hotel, which is directly connected. The mall's architectural design, crafted by Foster + Partners, emphasises modern aesthetics with a glass atrium offering panoramic city views across three levels.

A major point of differentiation is that the mall houses a Harvey Nichols store in addition to the usual brands (see below). The mall was painstakingly empty during the visit.

A completely different experience: VIA Riyadh 

Welcome to another planet! VIA Riyadh is a mixed-use development located far from all the other locations, adjacent to the Ritz-Carlton hotel, and includes a St-Régis hotel. This complex, inaugurated in Q2 2023, combines high-end retail, hospitality, and entertainment facilities, using local stones and drawing inspiration from the Nadji architectural approach.

The exterior of VIA Riyadh is striking, with architectural elements that evoke a sense of grandeur and opulence. The development is conceived as a fort-like structure or a mountain, with spectacular buildings that create an impressive visual impact upon arrival. Inside, the design maintains this high level of quality, featuring multiple distinct spaces that are large and elegantly staged.

VIA Riyadh is not about scale, but experience. At its heart is MWAZ, a spectacular multi-brand concept store displaying niche and rare brands. The store has high-tech displays and screens that contribute to its avant-garde presentation.

In the rest of the mall, the retail section only features 25 upscale shops, presenting international and local brands (from Brandon Maxwell to Elie Saab), art galleries (Richard Orlinski,  Phoenix Ancient Art), a robust dining scene of 17 restaurants (including UK's Sexy Fish, US’ Spago, and the French Les Deux Magots) and seven cinemas each offering unique thematic experiences. The -1 level houses a car lounge showcasing brands like Ferrari and Porsche, a concierge service, and the Via Mercato luxury food market.

VIA Riyadh is designed as a human-scale luxury mall, creating an experience centred around relaxation and high-end retail. The absence of a dominant anchor store, apart from Zegna and MWAZ, emphasises a curated approach to luxury shopping. However, questions remain about the foot traffic and how the destination qualifies its market appeal, given its location outside the city near gated compounds. The place was empty during the visit.

And what about department stores? 

While malls are omnipresent (up to 18 in Riyadh only), the department store format is not that common.

Harvey Nichols at Al Faisaliah Mall is the most prominent representative of this format. As visitors enter the mall, they are greeted by a prominent storefront featuring large display windows and calls to action for click-and-collect. This creates an inviting entrance adjacent to brands like Boss and Cartier.

The ground floor is dominated by a strong emphasis on fragrances, with a series of branded concept stores dedicated to perfumes. Visitors encounter a tunnel-like layout where brands such as Dior and Guerlain are creatively interwoven, a rarity.

The basement level was undergoing renovations at the time of visit. The first floor displayed a well-curated selection of women’s RTW brands within a concept unique to Harvey Nichols. The RTW area is divided into two main sections near the escalator, offering a luxurious ambience akin to an apartment setup, transitioning smoothly into a more generic yet well-executed section. This area features a selection of high-end brands, stopping just short of ultra-luxury. A dedicated zone for local designers presents shoes and accessories, though this section remains underdeveloped compared to others.

On the second floor, the focus shifts to children's luxury multi-brand concepts and leisure activities. This includes kid’s brands not featured in the women's sections. The central sale areas are effectively designed, with the athleisure zone featuring brands like Veja and Axel Arigato, a corner displaying The Edit LDN concept (an original Harvey Nichols London feature), and a transition into home goods and streetwear collections. Nearby, the men's section is somewhat compact, featuring a concept store, sneaker laundry, design area, and a t-shirt bar towards the back, all looking cluttered. Probably due to space issues, an area on that floor is dedicated to a couture-like women's RTW salon, complete with shoes, bags, and dresses from brands such as Oscar de la Renta. The store becomes somewhat chaotic toward the back, with a t-shirt bar adding to the eclectic mix.

While the store was impeccable during the visit, it was also very empty, with VM employees ironing products on the sales floor and staff dressed casually, which fostered an approachable atmosphere but could also lead to confusing them with visitors. The omnipresence of promotional material for online shopping and up to 60% discounts also suggested that the business was not so fluid.

Al Rubaiyat is a concept standing halfway between the department store format and a concept store, and is located across the road in front of Kingdom Mall. Originally a company from Jeddah, Al Rubaiyat opened the Riyadh location in 2019, spanning 2,100 sqm, with a concept crafted by Virgile + Partners. It focuses primarily on luxury womenswear, showcasing brands such as Gucci, Balenciaga, and Saint Laurent.

A notable security measure was immediately apparent upon entering: a guarded entrance where customers had to leave their bags (a feature not seen elsewhere during the visits). The heightened security measures suggested a proactive stance on preventing theft, which may reflect broader concerns about inventory loss or a strategic effort to enhance the shopping experience by ensuring a safe and orderly environment.

The store was in the midst of a sales event, as indicated by the ubiquitous sales signs and densely packed clothing racks. The store layout was somehow confusing, with kids' offerings intertwined with women’s RTW and the dressy part upstairs and quite visible: anyone looking for evening gowns would be immediately spotted by other visitors.

While the store was beautiful, it also felt packed with products and only crowded with hostile salespersons more occupied with preventing theft than offering their services. While the timing may not have been the best (at the end of the day), this visit was the most unconvincing of the whole tour.

It seems that Riyadh’s two flagship department-store experiments (Harvey Nichols and Al Rubaiyat) expose both the promise and the peril of a retail format that has not yet truly taken root in the Kingdom. Each strives for curated luxury, yet both compensate for thin footfall with deep markdowns, dense merchandising, and conspicuous security in Al Rubaiyat’s case. The result is a shopping experience that feels more guarded than guided, more promotional than aspirational.

Today's Riyadh retail landscape is defined by malls that either cling to the comfort of tradition or chase the latest trends with maximalist ambition. Across the spectrum—from the single-category monotony of Olaya Mall, to the entertainment-driven sprawl of Panorama Mall, to the carefully curated luxury of Kingdom Centre and VIA Riyadh—a common thread emerges: the absence, or underperformance, of true department stores as anchor retail experiences.

The limited experiments so far—Harvey Nichols and Al Rubaiyat—have only scratched the surface of what a department store could mean for Riyadh. Both stores display flashes of curation and aspiration but are hobbled by a reliance on deep discounts, dense merchandising, and a guarded, transactional atmosphere. Far from the bustling, service-rich hubs in other world capitals, these stores remain peripheral, their value yet to be fully articulated or realised.

Yet, beneath the surface, the opportunity remains. While Saudi shoppers have grown accustomed to the convenience and spectacle of malls, the department store format—when reimagined—offers something that no mall or boutique can replicate: an all-under-one-roof experience built on true curation, seamless service, and coherent storytelling across categories and brands. In an environment where retail destinations either dilute their identity or fragment their offer, a department store with a clear point of view can become an oasis of discovery, personalisation, and hospitality.

For a new generation of Saudi consumers—curious, globally connected, and eager for differentiated experiences—a department store that embraces curation, brings together international and local brands, and delivers best-in-class services (from personal shopping to seamless omnichannel integration) could unlock a form of value they do not yet suspect. It is not about nostalgia but anticipation: meeting needs and desires that have yet to be fully expressed. We believe that in Riyadh, the space is still open for a department store that dares to define itself, not by what has been tried and failed, but by what has not yet been imagined.

[1] Vision 2030, launched in 2016 under the leadership of Crown Prince Mohammed bin Salman, is the country’s flagship development plan. It is a comprehensive blueprint aimed at transforming Saudi Arabia’s economy, society, and government, and is structured around three main pillars: a vibrant society, a thriving economy, and an ambitious nation. The plan includes 96 strategic objectives, focusing on economic diversification, reducing dependence on oil, empowering citizens, fostering investment, and enhancing the Kingdom’s global role.

[2] And yet, the IADS is a fervent supporter of experience in retail.

[3] Cenomi Centres is not a rookie: the company operates 22 malls in KSA, including the Mall of Arabia in Jeddah and the Mall of Dharan among the most iconic ones alongside Nakheel Mall Riyadh.

Credits: IADS (Selvane Mohandas du Ménil)

What: The rise of AI-driven instant checkout is redefining retail by placing algorithms at the center of discovery, purchase, and brand engagement.

Why it is important: Retailers must now optimise for AI-driven discovery or risk invisibility, as traditional marketing and loyalty strategies lose effectiveness.

The activation of ChatGPT Instant Checkout signals a pivotal transformation in retail, as algorithms now mediate not only product discovery but also the purchase process and ongoing brand engagement. This shift collapses the traditional retail funnel, placing unprecedented power in the hands of AI systems that determine which products and brands surface in consumer interactions. As a result, retailers face the risk of becoming invisible unless they adapt their data, content, and digital strategies for machine readability and algorithmic relevance. The loss of direct customer touchpoints and the rise of AI-mediated transactions threaten established loyalty and attribution models, fundamentally altering how relationships are built and maintained. In this new landscape, the ability to be surfaced by AI agents becomes a critical competitive factor, and brands must prioritise structured, transparent, and diverse data to ensure fair representation. The urgency for robust governance, transparency, and industry standards is clear, as the sector navigates the ethical and operational complexities of algorithmic commerce.

IADS Notes: The launch of ChatGPT Instant Checkout in September 2025 (Inside Retail) and the rise of agentic commerce (Journal du Net, September 2025) highlight the rapid shift of power from retailers to AI agents, with autonomous systems now orchestrating the shopping journey and raising the stakes for data optimisation and responsible AI use. Forbes in February 2025 underscores the need for brands to recalibrate their digital presence, while Harvard Business Review in March 2025 demonstrates that responsible AI features such as privacy and auditability are essential for building trust and driving adoption in this new era.
ChatGPT Instant Checkout, AI-driven retail, algorithmic commerce, agentic commerce, brand visibility, digital strategy, customer relationship, data optimization, responsible AI, retail transformation

How ChatGPT Instant Checkout shifts the ethics of retail power

What: The LEAD Network Gender Diversity Scorecard 2025 reveals that women now hold 39% of senior executive roles in European retail and CPG, with progress varying across sectors and functions.

Why it is important:  The findings highlight the ongoing challenge of translating boardroom diversity into executive leadership, reinforcing the need for systemic change to unlock business value.

The LEAD Network Gender Diversity Scorecard 2025 provides a comprehensive snapshot of gender diversity in senior executive roles across the European retail and consumer goods sector. Women now occupy 39% of these positions, marking a modest but positive shift from previous years. While consumer-packaged goods companies are outperforming the sector average with 42% female representation, retail lags behind, and certain functions, such as IT and general management, have seen declines. The report underscores that women, despite making up half the workforce and driving most consumer purchasing decisions, remain underrepresented at the highest levels of leadership. This underrepresentation not only limits individual career growth but also constrains innovation and long-term sustainability for the sector. The Scorecard, unique in its sector-specific benchmarking, serves as both a pulse check and a call to action, urging companies to move beyond isolated DEI programmes and embed inclusion into core business strategies. Case studies from leading companies demonstrate that systemic, data-driven approaches can yield measurable progress, but the overall pace of change remains slow, highlighting the urgent need for deeper transformation

IADS Notes: The Scorecard’s findings are reinforced by recent industry analyses. In March 2025, Retail Week reported that while FTSE 350 retailers achieved 42% female board representation, only half met the 40% target for women in leadership, illustrating the persistent gap between boardroom and executive roles. The Economist’s glass-ceiling index from March 2025 highlights similar challenges across OECD countries, with women’s leadership and pay gaps persisting despite their economic influence. LEADNetwork’s February 2025 report quantifies the business case for inclusion, estimating a $3.7 trillion global profit opportunity, while Drapers and Seramount in early 2025 emphasize that embedding inclusion into business strategy is key to innovation and long-term success.

Gender Diversity Scorecard Insights Report 2025 

What: Brands that maintain clear social and sustainability values, prioritize inclusivity, and align leadership with consumer realities are best positioned for loyalty and growth in today’s retail landscape.

Why it is important: This approach reflects a proven strategy for building lasting consumer relationships, as demonstrated by leading retailers and recent industry research.

In today’s retail environment, brands face mounting pressure to define and uphold their core values, particularly around social responsibility and sustainability, despite the risk of backlash. Industry leaders at Advertising Week New York emphasized that unwavering brand values are essential for fostering authentic consumer loyalty and driving growth. The discussion highlighted how brands like E.l.f. Beauty and Gap have doubled down on inclusivity, with E.l.f. achieving consistent sales growth by making inclusivity a non-negotiable part of its business. The fastest-growing consumer segments are increasingly diverse, and inclusive marketing strategies are now recognized as central to capturing this $6.8 trillion market. The panel also stressed the importance of internal alignment, urging brands to ensure their employees understand and embody these values. Women’s influence on household spending, accounting for up to 85% of U.S. consumer spend, was identified as a critical factor in shaping retail strategies. As political and social tensions persist, brands are encouraged to act with courage and authenticity, focusing on building deeper connections with specific communities rather than attempting to appeal to everyone. This evolving approach is setting new standards for meaningful engagement and long-term brand resilience.

IADS Notes: Recent developments in the retail industry underscore the critical importance of brands maintaining unwavering values, especially as community-driven loyalty strategies redefine consumer engagement, as seen in May 2025 with Selfridges and Nykaa’s focus on authentic community-building (Fashion Network). The July 2025 Forbes report on disability-inclusive service further illustrates how tailored, inclusive marketing not only addresses social responsibility but also drives measurable business performance, with inclusive practices yielding significant operational gains. In October 2025, ESG Dive reinforced the imperative for brands to stand firm on social and sustainability values, emphasizing that long-term loyalty is built on consistency and courage, even amid political backlash. Leadership remains central to this transformation; April 2025 BCG insights reveal that systematic leadership development and internal alignment are essential for embedding values throughout organizations, resulting in higher returns and stronger employee retention. Finally, the December 2024 BCG recognition of women’s economic influence, with women controlling nearly 75% of discretionary spending, highlights the necessity for brands to understand and engage with household dynamics, ensuring their strategies reflect the realities of modern consumer power.

Why brands should stand firm on their social, sustainability values despite fear of backlash

What: Intelligent operations and workflow optimisation have directly contributed to measurable gains in retail profitability and revenue growth.

Why it is important: This development demonstrates that technology-driven workflow optimisation is now a proven lever for financial performance in retail, as confirmed by recent industry data.

The retail sector is experiencing a significant transformation as intelligent operations and workflow optimisation deliver tangible improvements in both profitability and revenue. Over the past year, retailers who have embraced advanced operational strategies, particularly those leveraging artificial intelligence and data-driven processes, have reported profit increases of up to 1.8 percentage points. This shift marks a departure from the industry’s historically modest productivity growth, with leading companies now achieving annual gains far above previous benchmarks. However, while the benefits of these technologies are clear, only a minority of retailers have managed to scale their implementations effectively, leaving substantial value unrealised due to persistent inefficiencies. The most successful retailers are those who not only adopt new technologies but also integrate them deeply into their organisational processes, creating new revenue streams and optimising core operations. As competition intensifies and margins tighten, the ability to harness intelligent operations is becoming a critical differentiator, setting apart digital leaders from those at risk of falling behind.

IADS Notes: Recent industry reports from March, May, June, July, and November 2025 consistently highlight the transformative impact of intelligent operations on retail performance. Leading retailers have achieved significant productivity and revenue gains through AI integration, but only a small fraction have scaled these solutions effectively. Persistent inefficiencies continue to erode potential profits, yet those who embrace comprehensive digital strategies and new business models are outperforming their peers and redefining industry standards.

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The formation of Saks Global in July 2024 was positioned as a landmark moment in luxury retail, a merger meant to give Saks and Neiman Marcus dominance in a shrinking department store business. Backed by tech allies Amazon and Salesforce, and reinforced by a partnership with Authentic Brands Group, the deals promised operational synergies, expanded customer and brand reach, and digital acceleration. So much has happened since then, and behind the headlines lies a more fragile reality. What was touted as a strategic move may, in fact, be a high-stakes gamble with a limited margin for error.

At the time of the merger, the IADS took stock of the freshly minted Saks Global company. A year or so later seemed to be the right time to pause and reflect on Saks Fifth Avenue’s history, a history marked by mergers from its inception in 1867 to its struggles in 2025.

A store is born: The foundations of Saks  

Innovation, family legacy, and the first major merger that shaped Saks 

In 1867, at the age of 20, Andrew Saks and his brother opened a men's clothing store in Washington, D.C. Early on, the small company implemented what would be recognised as department store innovations, such as banning bargaining, merchandise returns, and product catalogues. By 1897, Saks & Company had six stores, including one in Washington and two in New York City. In 1902, while Andrew’s sons, Horace and William, had joined the family business, they secured a long-term store lease at New York’s Herald Square. When Andrew died in 1912, Horace took over management of the company.

In 1923, Saks & Company merged with department store company Gimbel Brothers, Inc., which was owned by Horace’s cousin, setting the stage for future expansion. Having their Herald Square store rent doubled, Horace Saks and Bernard Gimbel decided to relocate their business. In September 1924, they opened New York’s iconic store at 611 Fifth Avenue, marking the first time a large retailer had established a presence in what was then primarily a residential district. Adam Gimbel (Bernard’s cousin) took over the leadership from 1926 when Horace Saks died. In 1931, a couture salon opened its doors, Salon Moderne, which soon ranked among New York’s most glamorous retail spaces. Ran by talented Adam’s wife Sophie, the salon sold her in-house designs alongside fashion from Chanel, Vionnet, Schiaparelli and more. By offering the finest quality, as well as an extraordinary programme of customer services, Saks Fifth Avenue soon became the reference for taste and elegance.

During the Great Depression, Saks proved relatively resilient thanks to its luxury positioning and the instalment options offered to customers, then a common practice among department stores. These challenging times also triggered innovation. Adam Gimbel revolutionised retail presentations by implementing creative solutions. New display techniques were introduced, along with cost-cutting practices such as using cardboard and papier-mâché instead of wood, stone and metal.

By 1940, Saks Fifth Avenue had 12 locations: four flagship stores (in New York, Chicago, Los Angeles’ Beverly Hills and Detroit) and seasonal resort stores. During World War II, in response to changing customer needs, Saks opened Navy and Army shops, which later evolved into University shops after the war, catering to the Ivy League communities.

The mall era and corporate hands 

From the 1950s, the shift from downtown shopping to suburban shopping malls gained momentum, opening a new chapter for the department store. Saks Fifth Avenue's first mall location opened in 1954, at The Galleria in Fort Lauderdale (Florida). Twenty new stores opened between 1972 and 1989. While a few of the new suburban stores were still freestanding in suburbs that had a significant downtown shopping district, dozens of new Saks stores opened in malls until the 1990s.

In 1973, Saks & Company was acquired by tobacco conglomerate B.A.T. Industries PLC, forming the Batus company to run US retail operations. Implementing efficiency policies, Batus also financed store modernisations. In 1979, Saks announced that the flagship store would be remodelled, including the installation of the store’s first escalator, marking the first significant renovation in the store's history. Then, a proposal for an adjacent 36-story mixed-use tower was presented by a joint venture of Saks and Swiss Bank Corporation in 1986. Completed in 1990, the store’s selling floor was expanded by nearly 30% through the first nine storeys of the tower, the other floors allocated to offices. Also, under Batus management, Saks launched Saks Off 5th in 1990, an off‑price concept aimed at monetising clearance merchandise without compromising full‑price sales. Finally, as summarised by The New York Times in 1982, “by hiring highly qualified merchants at high salaries and allowing them free rein, Batus has scored a success at Saks Fifth Avenue, where profits have largely improved after a prolonged slide in the late 1960s and early 1970s.” That said, Batus was a mixed success for B.A.T., as Gimbels struggled.

In 1990, affiliates of Bahrain‑based Investcorp S.A. and a group of international investors acquired Saks & Company. In 1994, to intensify its presence on the West Coast, the company acquired four former I. Magnin luxury department stores in Beverly Hills, Carmel, San Diego and Phoenix. In 1996, Saks became a public company as Saks Holdings, Inc. Public equity provided a currency for the 1998 merger with Proffitt's, Inc., a Tennessee‑based department store. The resulting entity, renamed Saks, Inc., briefly oversaw 330 stores under nine flags.

A century turns, and so does Saks: dot com, financial woes and more mergers

In 2000, Saks launched Saks.com and expanded its presence internationally, opening stores in the Middle East and Mexico. In 2008, the global financial crisis struck with force. While retailers were already discounting merchandise, no one thought luxury brands would be included in this frenzy. Saks decided to cut prices on designer clothes by up to 70%. The strategy helped Saks reduce excess stock, but it took three years before the company could resume selling at closer to full price. Management used this issue as an impetus for structural change, including tighter inventory management and the establishment of the invitation-only Fifth Avenue Club, completed with private lounges and concierge services.

In 2013, Hudson's Bay Company (HBC) acquired Saks, Inc. for US$2.9 billion, marking another significant change in ownership and paving the way for synergies between its own banner and Saks. HBC Chairman Richard Baker announced the group would open up to ten Saks stores in Canada and more than twenty Saks Off Fifth outlet stores. In the end, only three full-price stores opened, whose operations were shut down in 2025 when HBC Canada went bankrupt. In 2015, Baker also launched a US$250 million project to reimagine the Fifth Avenue flagship, elevating the luxury experience.

In 2021, HBC separated Saks Fifth Avenue’s e-commerce operations into a standalone company named Saks, in partnership with Insight Partners, bringing $500 million from venture capital. The move splits the 40 physical stores from the online sales channel, aiming to position better Saks.com to compete with digital competitors. However, the move raised questions about the very relevance of such a split. The initial idea was based on a financial reasoning that Saks.com could go public at six times revenue, an idea immediately pushed by activist investor Jana Partners at Macy’s. Whatever the strategy was worth, it overlooked the role physical footprint plays in driving online sales.

In July 2024, HBC disclosed that it would acquire the previously bankrupt Neiman Marcus Group at a US$2.65 billion price tag (including debts) and fold its assets into a newly formed holding called Saks Global. Last episode of the Saks series for now, in October 2024, Authentic Brands Group (ABG) and Saks Global announced they would build a $9 billion luxury ecosystem through their new venture, Authentic Luxury Group (ALG), which is expected to account for approximately 60% of luxury distribution in the US.

Saks Global: Big bet, bigger risks 

What the deal promises in scale, synergy and innovation 

Considered inevitable to some and mainly driven by the need to consolidate market share in the face of the ongoing department store contraction, the Saks-Neiman Marcus landmark deal is one of the most significant mergers in the luxury retail sector in recent years, at a time when the retail industry is at a crossroads, facing changing consumer habits, digital transformation, and economic pressures.

Hence, in 2024, the merger could be seen as a strategic move to strengthen further the companies’ ability to compete against both traditional rivals, such as Bloomingdale’s and Nordstrom, as well as platforms like Net-a-porter, Farfetch and MyTheresa. By combining resources, inventory, and customer data, Saks Global would enhance both its in-store and online offerings, streamline operations by integrating technology platforms and logistics networks, eliminate duplicative roles in commercial, finance, operations, human resources, technology, and transformation teams, and negotiate more favourable terms with vendors. When it comes to real estate, the merger could optimise the store portfolios for better competitiveness and margins, potentially leading to the monetisation of overlapping locations in major cities.

Additionally, the move was expected to position the company to better adapt to the ongoing digital transformation, bringing significant financial resources and technological expertise to the new entity. Amazon and Salesforce’s minority stakes would leverage technology to modernise operations and compete in luxury e-commerce. Central to Saks Global strategy is the rollout of AI-powered personalisation, designed to create highly tailored shopping experiences across both digital and physical channels. Early results showed significant improvements in conversion rates and revenue per visitor, validating the group’s investment in advanced data analytics and machine learning. In August 2025, Saks partnered with AWS to launch Sophie, an AI-powered virtual voice assistant that handles customer inquiries while reducing agent call volume by 20%.

The merger was also said to offer other strategic advantages. Neiman Marcus attracts more affluent customers (median income is $112,800 vs. Saks' $102,900) and has access to more family-oriented shoppers (26.2% vs. 23.7% of households with children).

The merger was also said to offer other strategic advantages. Neiman Marcus attracts more affluent customers (median income is $112,800 vs. Saks' $102,900) and has access to more family-oriented shoppers (26.2% vs. 23.7% of households with children).

The price of consolidation: Why vendors, shoppers and analysts remain unconvinced 

However, the merger raised concerns due to the differences in branding, clientele, and business models between Saks, primarily operating through concessions and moving further away from wholesale, and Neiman Marcus, which is more wholesale-focused. Brand differentiation appeared as a challenge, as the suggestions to reposition Saks as ‘accessible luxury’ and Neiman Marcus as ‘true luxury’ seem risky. Additionally, although a payroll decrease was on the table during the merger, the significant layoffs, particularly at Neiman Marcus’ Dallas headquarters, made headlines. Finally, with some Saks and Neiman Marcus stores close to each other and serving the same customers, deciding which ones should survive will be challenging, and exiting leases may be more costly and complex than anticipated.

Mounting challenges are exacerbated by the luxury slowdown:

• Saks Fifth Avenue sales fell 16% in Q1 2025, and combined Neiman Marcus and Bergdorf Goodman sales dropped 10% while Bloomingdale's saw 10% growth. Operating in the more favourable accessible luxury price bracket, underlying growth, Nordstrom and Bloomingdale’s have upped their game with new brands, installations, events and services designed to entice.
• Saks faces vendor payment issues for months, with $275 million in overdue bills. CEO Marc Metrick assured vendors that overdue payments would be settled in 12 instalments starting July 2025. New payment terms were announced (90 days from the receipt of inventory for all future orders), causing tension with suppliers, some pausing shipments and others filing lawsuits. However, in August 2025, many suppliers remained unpaid. These methods raise concerns among Neiman Marcus suppliers, putting at risk the stores' procurement as it diverges from the industry-standard 30-day payment terms.
• Customer service has deteriorated, with increasing complaints about damaged deliveries and delayed refunds, coinciding with significant cost-cutting measures.
• The company's attempts to streamline operations through store closures and workforce reductions have further complicated its market position.
• Recent financing efforts highlight ongoing liquidity concerns.
• Last but not least, luxury brands, the very essence of both department stores, are wary of Amazon's involvement.

Now what: Saks' balancing act 

Mounting debt, risky financing 

Saks is in a weak financial position. The company borrowed heavily to fund the acquisition of Neiman Marcus, and it now faces a cash crunch. In May 2025, the company had secured $350 million in financing to stabilise its operations and cope with interest payments. But mounting pressures have required additional funding, especially as Saks recorded a US$100 million loss in FY 2024. No later than June 2025, Saks secured a new $600 million debt arrangement with existing lenders, providing an immediate $300 million loan, with potential for an additional $300 million through a debt exchange. Also, the company's bonds have faced significant pressure, trading at record lows of 34.5 cents on the dollar, reflecting market concerns about its financial stability. In July 2025, the company's financial weakness led to a credit rating downgrade from S&P Global Ratings from CCC+ to CC and concerns about its $600 million financing transaction. S&P believed the company’s market position would further weaken, as illustrated by the new downgrade to CCC- in September 2025. Additionally, interest expense to cover the debt loan is expected to reach approximately $400 million over the next 12 months, which will come on top of overdue payments to vendors and new merchandise, S&P said. A reason enough to announce just days later that the company considers selling a stake in Bergdorf Goodman to inject much-needed capital and restore confidence among stakeholders. However, the sale might be challenged by the fact that only the retail operation, not the Fifth Avenue property, is considered.

When it comes to cost saving, the company projected $600 million in annual synergies over five years, with $285 million expected by the end of fiscal 2025. Illustrating this, Saks Global transitioned from four different purchase order and supply chain systems to one in early September 2025, marking a first and significant streamlining effort. However, the handover resulted in $110 to $180 million in cancelled orders, with no assurance that they can be fulfilled during the critical holiday period.

How brand reductions threaten Saks’ fashion credibility 

In May 2025, Saks announced plans to eliminate 500 to 600 brands while increasing focus on strategic brand partnerships and aiming to achieve 20% of sales from higher-margin private label products. This reduction will include brands that Saks is dropping, as well as those that choose to discontinue their relationship with the retailer. While it makes sense to increase the private label share, eliminating brands can put the assortment diversity at risk. A product offer rationalisation is probably needed, but Saks must maintain the retail diversity, flair, and excitement that luxury shoppers need, with curated assortments mixing emerging labels and established global brands. Additionally, delayed vendor payments make this crucial requirement increasingly difficult to fulfil, as independent and small brands are particularly affected, many of which are lacking the cash reserves to absorb payment delays.  

Trading prestige for volume 

Reflecting the company’s current weakness, Saks let Nieman Marcus’ super personal shopper to the stars, Catherine Bloom leave for Nordstrom, probably taking more than $10 million in revenues with her. She is set to launch an innovative 350 sqm Catherine Bloom for Nordstrom private shopping destination in Los Angeles’ Melrose Place, bringing her eight-person team and decades of luxury retail expertise with her. In September 2025, veteran shoe force Will Cooper exited the company.

Also, Saks has undercut its status as a luxury player by partnering with less premium retail partners. Not only has Saks created a presence on Amazon, but the company has plans for the Saks men’s private brand to debut at Costco (with plans to extend to women's), raising concerns about brand dilution and questioning whether customers will continue to shop high-end brands at Saks when the nameplate is available at Costco. The deal emerges from Centric Brands, a division of Authentic Luxury Group, which will oversee the development and production of the Saks-branded merchandise for Costco. This move may weaken long-term strategic positioning at a time when Saks should allocate resources towards innovation and a clear brand story.

Authentic Luxury Group: A beacon of hope? 
Authentic Luxury Group aims to expand luxury brands like Hervé Léger, Judith Leiber Couture, Vince and Barneys New York globally. The latter should see the rollout of retail locations or in-store shops, expansion of existing brand categories, and wider distribution both in the US and abroad. Besides luxury retail, Authentic Luxury Group plots hospitality, travel, experiences and entertainment, reflecting a broader shift in luxury as fashion volumes decline. While this diversification becomes essential to generate new revenue streams beyond apparel, the project leverages the partnerships with Amazon and Salesforce to scale both online and offline. Also, Authentic Luxury Group could help shift power from vendors to retailers, driving higher margins, tighter control, and exclusivity. In May 2025 at the World Retail Congress, Authentic Brand Group CEO Jamie Salter and Saks Global chairman Richard Baker emphasised distribution, data, and customer experience as cornerstones of growth.  


Barely a year into its new chapter, the newly consolidated Saks Global stands in a curious position, being both a 158-year-old institution and a new experiment in platform retailing. While most retail mergers (50%+) fail outright, this one is, to some, a ‘last man standing’ strategy rather than visionary merchant leadership. Saks Global finds itself on unstable ground, with media coverage amplifying challenges that often overshadow the company’s strategic ambitions and fuel scepticism about its future. While Saks' history is a succession of mergers, consolidation alone doesn’t guarantee customer loyalty and credibility with brands. Neither does it guarantee the survival of merging companies, as exemplified by Proffitt’s locations ultimately converted into Belk stores, for example. Also, efforts to chase volume with Amazon and Costco risk undermining Saks’ luxury positioning at the very moment it needs to reinforce it. Whether it can move from survival mode to market leadership will determine if Saks Global becomes a new blueprint for luxury retail, or just another cautionary tale of overreach. Too big to fail or not, the actual test begins now.  

Credits: IADS (Christine Montard)

What: AI shopping agents are transforming retail by automating the consumer journey and shifting power from retailers to digital intermediaries.

Why it is important: The rapid adoption of AI shopping agents underscores the necessity for retailers to build robust operational foundations and embrace generative experience optimization to remain competitive.

Agentic commerce is rapidly redefining the retail landscape as AI shopping agents become central to the consumer journey, automating everything from product discovery to payment and delivery. This shift is fundamentally altering how consumers interact with retailers, as AI agents embedded in platforms like Perplexity, ChatGPT, and Google Gemini increasingly mediate purchasing decisions and erode direct customer relationships and brand loyalty. The rise of these agents is pushing retailers toward a new reality where traditional e-commerce websites and homepage-centric strategies are losing relevance, replaced by algorithmic mediation and data-driven engagement models. As a result, retailers face significant risks of disintermediation, with tech giants and AI platforms controlling access to consumers and diminishing the value of first-party data. To remain competitive, retailers must invest in generative experience optimization and generative paid media, shifting from SEO to strategies that prioritize visibility within AI-driven ecosystems. The urgency to develop proprietary AI-driven customer experiences and robust operational foundations is underscored by the rapid adoption of generative AI, with leading retailers reporting notable gains in revenue and efficiency. Looking ahead, the evolution toward agent-to-agent commerce—where autonomous AI agents transact with minimal human involvement—demands that retailers adapt swiftly, recalibrating their digital strategies and ensuring their platforms are optimized for both human and machine interactions. 

IADS Notes: Recent industry analysis from September and October 2025 confirms that agentic commerce is shifting power structures in retail, with AI agents automating transactions and redefining consumer relationships. Reports highlight that 38% of global consumers are already using AI shopping tools, and 87% of retailers implementing generative AI have seen at least a 6% increase in revenue. The transition is validated by major retailers like Walmart and Amazon, who are actively reinventing their strategies to remain visible in AI-mediated commerce. The need for robust standards of trust and transparency, as well as the importance of generative engine optimization, is emphasized across multiple sources, with Target and other leaders preparing for agent-to-agent commerce and contextual product discovery. These developments collectively demonstrate that the window for retailers to lead in this new era is rapidly closing, making strategic adaptation an urgent imperative.

Agentic commerce is redefining retail—Here’s how to respond 

What: Retailers are responding to tariff-driven cost increases and weak consumer confidence by raising prices, limiting hiring, and overhauling supply chains.

Why it is important: The convergence of tariffs, inflation, and labor market pressures is accelerating changes in consumer behaviour and forcing retailers to prioritise resilience.

U.S. retailers are entering the 2025 holiday season under significant strain from escalating tariffs, rising import costs, and persistent economic uncertainty. Executives report declining sales, shrinking gross margins, and widespread job cuts, with nearly all companies seeing no sales increase from tariff-related changes. The majority have passed on higher costs to consumers, resulting in price hikes and a sharp drop in consumer confidence. As a result, discretionary spending is contracting, and retailers are adopting defensive strategies—limiting inventory, pausing hiring, and focusing on risk management rather than maximising profitability. The timeline for reshoring manufacturing remains lengthy, with most companies expecting it to take several years, further complicating supply chain adjustments. This environment of instability is discouraging long-term investment and driving a cautious approach to both labour and capital commitments. Retailers are prioritising resilience and operational agility, fundamentally altering their approach to profitability and consumer engagement as they navigate a volatile and unpredictable market.

IADS Notes: The current landscape for U.S. retailers is shaped by escalating tariff pressures, rising costs, and persistent economic uncertainty, all of which are converging to redefine pricing, inventory, and labour strategies ahead of the 2025 holiday season. As detailed in Forbes (March 2025), the implementation of 25% tariffs has led to significant supply chain disruption and a projected $1,200 annual cost per U.S. household, with consumer confidence recording its sharpest decline since August 2021. The Robin Report (September 2025) highlights that 62% of Americans are concerned about rising prices, prompting retailers to overhaul supply chains, adopt AI-powered analytics, and prioritise scenario planning. Forbes (September 2025) reports that stalled job creation and new tariffs have resulted in the largest retail sales drop in four months, with layoffs surging to levels seven times higher than the previous year. Bain & Company (May 2025) notes that nearly 40% of executives anticipate double-digit increases in input costs, driving a shift toward diversified and resilient supply chains. Meanwhile, Forbes (March 2025) documents a surge in retail layoffs and store closures, underscoring the sector’s urgent need for operational agility and strategic adaptation in a volatile market.

Tariffs threaten 2025 holiday sales with higher prices, job cuts 

What: Shopping malls are evolving through AI, flexible leasing, and sustainability, responding to new consumer behaviours and market pressures.

Why it is important: Integrating AI, new commercial models, and sustainability is now critical for mall operators to remain competitive, as shown by recent market leaders.

The retail real estate sector is undergoing a profound transformation as shopping malls adapt to the demands of a digital-first, experience-driven era. AI and advanced analytics are empowering operators to make sharper decisions, optimise layouts, and enhance both tenant and customer experiences, as demonstrated by Liverpool One’s adoption of real-time footfall analytics. Gen Z’s growing economic influence is compelling retailers to shift from traditional approaches to strategies that prioritise technology, flexibility, and social engagement. Malls are increasingly being reimagined as experience hubs, with projects like Singapore’s City Square Mall showcasing how AI, sustainability, and community-centric design can create vibrant, relevant destinations. Flexible leasing models, such as Simon Property Group’s micro-spaces, are enabling emerging brands to bridge digital and physical retail, while sustainability is becoming a foundational element of innovation and operational strategy. These developments collectively signal that the future of shopping malls lies in their ability to integrate technology, adapt to shifting consumer values, and embed sustainability at every level, ensuring continued relevance and resilience in a rapidly changing retail environment. 

IADS Notes: In November 2024, Liverpool One’s use of AI analytics set a benchmark for operational optimisation in malls. February 2025 saw Retail Week highlight Gen Z’s transformative impact on retail strategies. Singapore’s City Square Mall’s April 2025 renovation illustrated the power of blending AI and sustainability for experiential retail. Simon Property Group’s micro-space initiative in September 2025 exemplified the rise of flexible, omnichannel leasing models. Finally, Euromonitor’s February 2025 report confirmed that sustainability is now a baseline for retail innovation and competitiveness.

AI will anchor tomorrow’s shopping malls 

What: The gap between AI adoption by retail leaders and frontline employees persists, with workflow redesign, leadership support, and training emerging as critical factors for successful integration

Why it is important: This gap highlights the urgent need for comprehensive training and leadership support, as only retailers who invest in both technology and people achieve sustainable productivity gains.

The integration of generative AI into retail organizations has advanced rapidly among leaders and managers, yet frontline employees lag behind, with only 51% reporting regular use. This disparity is critical, as the full value of AI is realised only when workflows are fundamentally reshaped and frontline engagement is prioritised. Companies that move beyond basic productivity gains to redesign their operations with AI report greater time savings, sharper decision-making, and more strategic work for employees. However, the transformation is not without challenges: only a third of employees feel properly trained, and just a quarter receive strong leadership support, leading many to seek unauthorised tools and increasing operational risks. The emergence of AI agents offers new opportunities, but adoption remains low and understanding limited. As AI becomes more integrated, concerns about job security rise, especially among leaders and managers. The path forward requires robust training, leadership commitment, and a focus on upskilling to ensure that AI augments rather than threatens the workforce, enabling both operational excellence and employee satisfaction. 

IADS Notes:  A persistent divide in AI adoption between retail leaders and frontline employees was documented in June 2025, with only 51% of frontline staff regularly using AI, despite higher uptake among managers (BCG, June 2025). Success in closing this gap has been linked to leadership engagement, access to appropriate tools, and comprehensive training, as highlighted in both June and April 2025, where only 10% of retailers were able to scale AI initiatives effectively (BCG, June 2025; BCG, April 2025). CEO leadership and a balanced approach between automation and human expertise have driven notable productivity gains and improved employee satisfaction (BCG, April 2025). The rapid pace of AI-driven transformation has left many retail workers feeling unprepared, with only 36% feeling ready for AI-driven change, emphasizing the need for systematic upskilling and human-centric strategies (BCG, September 2025). The rise of Agentic AI is redefining employee roles and customer experience, with 71% of employees using these tools weekly and measurable improvements in service efficiency and retention (Journal du Net, July 2025). However, as of January 2025, only a minority of retailers have successfully scaled AI agents, underscoring the ongoing need for robust training, leadership support, and risk management (Hugging Face, January 2025).

AI at work: Momentum builds, but gaps remain 

AI at work: Momentum builds, but gaps remain - slideshow

What: The activewear market is reaching saturation, with evolving consumer preferences and digital-first journeys reshaping how brands compete and connect with customers.

Why it is important: This shift reflects the urgent need for brands to embrace digital innovation and generational insights, as confirmed by recent industry analyses.

Activewear’s era of effortless growth is ending as the market approaches saturation, with annual sales growth slowing to 3–5% through 2029. Brands face mounting pressure from challenger labels, economic volatility, and tariffs, eroding the dominance of established players and forcing a rethink of strategy, inventory, and pricing. Generational shifts are redefining demand: Gen Z drives trends through self-expression and digital engagement, Millennials blend wellness and identity, while Gen X and Boomers prioritize comfort and premium upgrades for everyday use. The consumer journey is now digital-first, with over half of purchases starting online and GenAI and social commerce rapidly transforming discovery and evaluation. Influencer marketing is increasingly precise, with brands balancing reach, trust, and authenticity across celebrity, macro, and micro influencers. To remain competitive, brands must differentiate sharply, tailor offerings to generational needs, and invest in agile, AI-driven engagement. The future of activewear will be defined by those who understand not just what consumers wear, but why, and who can adapt swiftly to a fragmented, tech-driven landscape.

IADS Notes: The activewear market’s slowdown and intensifying competition are reflected in Lululemon’s recent struggles (The Economist, Sep 2025) and the NRF’s slower retail forecasts (WWD, Apr 2025). Economic headwinds and inventory challenges, as noted by Forbes (Sep 2025), are driving leaner, more agile strategies. Generational shifts, especially Gen Z’s demand for personalization (Vogue Business, Nov 2024), are reshaping product and marketing approaches, while Millennials and Boomers bring distinct priorities (BCG, Sep 2025; WWD, May 2025). The rise of challenger brands (Fashion Network, Nov 2024; Retail Gazette, Nov 2024), digital-first journeys (BoF, May 2025; Vogue Business, Feb 2025; WWD, Oct 2024), and the evolution of influencer marketing (BCG, Apr 2025; Financial Times, Sep 2025; Vogue Business, Oct 2024) all underscore the sector’s need for agility and innovation.

Walk, lounge, sweat: How the generations are redefining activewear

BCG Activewear Trends report

What: AI-driven innovation and investment are redefining retail competitiveness, operational efficiency, and customer experience while intensifying the need for robust cybersecurity.

Why it is important: The convergence of AI-driven transformation and cybersecurity challenges is reshaping retail strategy, making technology integration and risk management critical for future success.

The Bain Technology Report 2025 underscores how AI-driven innovation is fundamentally altering the retail landscape, with leading retailers rapidly extending their competitive advantage through strategic technology investments. Over the past year, 87% of retailers adopting AI have achieved revenue increases of at least 6%, while also realizing significant improvements in customer service efficiency and supply chain optimization. This transformation is marked by a decisive shift from manual, Excel-based planning to AI-powered systems that enable dynamic inventory management and real-time decision-making. GenAI and agentic AI are now revolutionizing supplier negotiations and risk management, delivering measurable productivity gains and reducing operational bottlenecks. However, this accelerated digitalisation exposes retailers to heightened cybersecurity risks, as only 18% of companies have mature digital core security, and high-profile breaches continue to disrupt major players. As consumer expectations for personalised experiences intensify, retailers must balance innovation with robust investment in privacy and security to sustain growth and maintain customer trust in an increasingly complex digital environment.

IADS Notes: As reported in Forbes (March 2025), 87% of retailers implementing AI achieved revenue increases of 6% or more, with significant gains in customer service efficiency and operational productivity. BCG’s analysis (July 2025) confirms that only 10% of retailers have successfully scaled AI applications, yet those that have are outperforming peers by 7 percentage points in five-year TSR. Inside Retail (March 2025) highlights the critical role of AI-driven personalization in meeting the expectations of 71% of consumers seeking tailored experiences. Meanwhile, The Retail Bulletin (August 2025) and Retail Week (August 2025) document the surge in sophisticated cyberattacks, with only 18% of retailers possessing mature digital core security and high-profile breaches at M&S, Harrods, and Co-op exposing the sector’s vulnerabilities. These sources collectively illustrate that while AI and digital transformation are driving growth and operational gains, robust cybersecurity and risk management are now essential components of retail strategy.

Bain & Company: Technology Report 2025

What: US fashion retailers face significant financial and operational challenges as the “Ozempic effect” accelerates demand for smaller sizes and increases return rates.

Why it is important: Retailers must act quickly to recalibrate size curves and return strategies, as evolving consumer demand and fit-related returns reshape the economics of fashion retail.

The widespread adoption of GLP-1 drugs such as Ozempic is driving a rapid and unprecedented shift in American body sizes, with a marked increase in demand for smaller clothing and a corresponding decline in sales of larger sizes. This transformation is exposing U.S. fashion retailers to substantial risks, as traditional inventory planning and forecasting models are unable to keep pace with the speed of change. If retailers fail to realign their size curves and inventory, they could face up to $5 billion in margin losses by 2027, compounded by rising return rates and markdown pressures. Fit-related returns, especially among high-income consumers who are more likely to use GLP-1 drugs, are climbing sharply and adding to operational costs. The trend is forcing the industry to move away from multi-year, national averages and adopt real-time, region-specific planning powered by AI and advanced analytics. Retailers who adapt quickly will be best positioned to protect profitability and capture new demand in a rapidly evolving market.

IADS Notes: The “Ozempic effect” is accelerating a shift toward smaller sizes, compelling retailers to overhaul inventory and planning processes (September 2025). Industry research from late 2024 and early 2025 confirms that inventory misalignment and traditional merchandising inefficiencies can cost U.S. retailers up to 4.5% of revenue. The surge in fit-related returns, now totalling $890 billion annually, is being driven by bracketing and over-ordering, especially among high-income and Gen Z consumers. To address these challenges, retailers are increasingly adopting AI-powered, real-time planning solutions and moving away from outdated, multi-year models.
How the ‘Ozempic effect’ is reshaping the US fashion market

What: The convergence of digital currencies, AI, and instant payment networks is reshaping the retail sector’s competitive and operational landscape.

Why it is important: The integration of stablecoins, AI, and real-time payments marks a pivotal shift in retail, driving new business models and operational excellence highlighted in recent Notion reports.

The payments industry is experiencing a profound transformation as stablecoins, agentic AI, real-time payments, and platform-based merchant services converge to redefine retail operations and customer experience. Stablecoins are gaining traction among major retailers and department stores, offering near-zero transaction fees and greater accessibility, which is particularly relevant as local card schemes decline and global payment providers dominate cross-border transactions. At the same time, agentic AI is automating e-commerce processes, personalizing shopping journeys, and boosting operational efficiency, compelling retailers to adapt their engagement strategies for a machine-mediated environment. Real-time account-to-account payment networks are rapidly expanding, enabling instant, seamless transactions and opening new revenue streams, while platformization and embedded finance are fostering innovative business models and intensifying competition with traditional banks. The integration of AI and advanced analytics is further redefining productivity, with leading retailers achieving notable improvements in margins and customer acquisition costs. Collectively, these shifts are setting new benchmarks for customer experience, operational agility, and profitability, fundamentally altering the competitive dynamics of the retail sector.

IADS Notes: The adoption of stablecoins is accelerating, with major retailers and department stores embracing near-zero transaction fees and improved accessibility, as seen in January 2025 (“How stablecoins will eat payments, and what happens next”). This shift is further supported by the decline of local card schemes and the rise of global payment providers, which are reshaping cross-border transactions and driving innovation in payment solutions (October 2024, “Europe's Local Card Schemes on a Steady Decline”). At the same time, agentic AI is redefining the retail landscape, automating e-commerce transactions, personalising shopping experiences, and enhancing operational efficiency, as highlighted in September 2025 (“Agentic commerce: When AI takes control of e-commerce”). Real-time account-to-account payment networks are expanding rapidly, enabling instant, seamless transactions and unlocking new revenue streams for retailers, as detailed in the September 2025 “Global Payments Report 2025.” The move toward platform-based merchant services and embedded finance is fostering new business models and intensifying competition with traditional banks, while the integration of AI and advanced analytics is redefining productivity, with leading retailers achieving significant improvements in margins and customer acquisition costs (March 2025, “Redefining productivity in retail”). Together, these developments are not only reshaping the competitive landscape but also setting new standards for customer experience, operational agility, and profitability across the retail sector.

BCG’s Global Payments Report 2025

The future is (anything but) stable - article

Agentic AI, digital currencies and real-time - press release

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Mecca is an Australian beauty retailer founded in 1997 by Jo Horgan, a former executive at L’Oréal. Privately owned by the founder and her husband, Mecca operates 110 stores, serving over 4.5 million customers annually and employing 7,000 people as of 2025.

The company doesn’t disclose sales figures but says it has grown tenfold since 2017. A 2022 IBIS report estimated Mecca’s revenues to be approximately equivalent to €580 million. Other industry sources estimate revenue to be around €865m.[1] According to WWD’s BeautyInc, Mecca continues to outperform the overall market in Australia and is expected to end 2025 with around €1 billion in turnover. Horgan says Mecca’s growth rate is three times higher than the 2024 Australian prestige beauty market, which posted a 3% year-over-year growth.

Succeeding in maintaining its pole position in the market despite Sephora's power and means to develop in Australia, Mecca is an interesting company in its own right. The retailer also has more outlets than the two leading Australian department stores combined, David Jones’ and Myer’s 100 stores. Said to be the world’s biggest standalone beauty store, the recent opening of Mecca’s new flagship store in Melbourne (pics attached) is an opportunity to understand more about the retailer’s success.

1997 and beyond: the making of a beauty powerhouse

Brand-agnostic store from day one: Mecca’s original edge

In 1997, Horgan had identified a gap in the Australian beauty market. As was the case in many regions, beauty retail in Australia was dominated by department stores, where cosmetics were sold through brand counters. Similar to the Sephora concept, Horgan’s idea was to create a multi-brand beauty store where customers could browse freely, receive unbiased recommendations, and access a curated selection of international prestige products not otherwise available in the market. To this day, this remains a strategic goal for some department stores and beauty retailers alike.

Dubbed Mecca Cosmetica, the first store opened in Melbourne in 1997. From its inception and mirroring Sephora’s early days, Mecca was remarkable because:

• It positioned itself not as a traditional retailer but as a beauty authority, staffed with trained advisors who were not tied to specific brands. This was an early expression of the brand-agnostic ethos that would later become a hallmark of the company.
• It pursued exclusive distribution agreements with high-profile global brands,[2] giving Mecca a unique positioning in Australia. These exclusivities not only differentiated the store’s offer but also created a strong sense of discovery.

From dotcom to own brand: a pioneer strategy

By 2001, Mecca had launched its first e-commerce platform, making it a pioneer of online beauty retail in Australia. This early digital move predated Sephora's entry into the Australian market by more than a decade. It signalled Mecca’s ambition to combine physical and digital channels long before omnichannel retail became mainstream.

In 2003, the company introduced its first private label brand, Mecca Cosmetica. Interestingly, unlike Sephora’s own brand, which targets a mass-market price point, Mecca positioned its private label closer to the premium segment.[3] Besides increasing margins, it reinforced Mecca’s positioning as a beauty expert and tastemaker.

During this period, Mecca gradually expanded beyond Melbourne, opening new locations across major Australian cities. By the mid-2000s, it had established itself as a national player, developing its presence in prestige shopping districts rather than mass-market malls. In 2007, Mecca expanded internationally for the first time by entering New Zealand, with stores in Auckland and Wellington.[4]

Segmentation as strength: tailoring formats for every shopper

The late 2000s also saw the beginnings of format diversification. While Mecca Cosmetica stores were sleek, boutique-style outlets aimed at prestige consumers, the company began experimenting with larger footprints and broader assortments, laying the groundwork for what would later become the Mecca Maxima format. A turning point for the company, Mecca Maxima was conceived as a ‘beauty superstore’ offering both prestige and trend-driven brands in a larger, more playful environment. Mecca Maxima was aimed at younger consumers and equipped to compete directly with Sephora’s global model, which would enter the market in 2014.

The first Mecca Maxima opened in 2007, but it was in the early 2010s that the format gained traction and expanded nationally. This dual-format strategy, Mecca Cosmetica for prestige boutique experiences and Mecca Maxima for younger, more mass-oriented shoppers, allowed the company to segment the market more effectively. During this period, Mecca also continued to deepen its exclusive brand portfolio.

Scaling beauty: training, testing global ambitions and flagships

By the mid-2010s, Mecca invested heavily in its online store and began developing integrated services such as click-and-collect, 90-day return policy and personalised product recommendations. At the same time, it intensified training of in-store advisors through what would later evolve into Meccaversity, an internal training and education platform (see more below).

In 2017, the company launched Mecca Max, a new private label targeting Gen Z and Millennial shoppers with trend-focused products at accessible price points. By 2019, Mecca had grown to over 100 stores across Australia and New Zealand and was capturing an estimated 25% of the prestige beauty market in Australia, with sales quintupled in five years. At that time, Mecca credited its success partly to investments in e-commerce logistics, offering 1-day to 3-day shipping in a country often plagued by long delivery times. Its private labels represented around 10% of the local beauty market.

While Mecca remained focused on the Australian and New Zealand markets, it began to test international opportunities as Horgan wants her company to become the “world’s most loved beauty destination.” In 2020, it launched a store on Alibaba’s Tmall. The move was a cautious step toward international e-commerce, but the company pulled out in 2023. As a second international test, they launched Mecca Cosmetica in the UK, France, Germany and Spain.

The company also invested in flagship projects to reinforce its status as a destination retailer. In 2020, it opened its largest Mecca Maxima store in Sydney, featuring interactive elements and expanded services and designed to rival Sephora and reinforce Mecca’s reputation as an innovator in experiential retail. In August 2025, they opened their biggest store to date in Melbourne.

Exclusivity, community and service: Mecca’s winning formula

Differences and similarities with Sephora, the best of the two worlds

Sephora arrived in Australia in 2014 and now accounts for 31 stores. The company imported its global model, focusing on large-format stores, rapid expansion, and a standardised experience. By contrast, Mecca tailored its stores and product offer to local consumer expectations, emphasising exclusivity, service, and community engagement. Whereas Sephora’s stores often feel interchangeable across countries, every Mecca store claims to be unique and bespoke to its environment, and flagships are site-specific cultural landmarks that integrate experiential dimensions. Overall, Mecca’s stores are designed not just to sell products but to encourage discovery, play, and education.

Also, some stores combine both Mecca Cosmetic and Mecca Maxima concepts under one roof. These Mecca stores offer a ‘high’ and ‘low’ experience, featuring different price points and everything from one-on-one makeup applications to group tutorials, where team members guide up to ten customers through various topics. Unlike Sephora flagship stores, which typically have only a few skin treatment chairs, Mecca flagship stores offer customers a fully developed aesthetic area.

Despite Sephora entering the market, Mecca remains to this day the go-to beauty destination for most people. The company’s mission is to be Australasia’s leading premium beauty authority while embedding a distinctive Australian sensibility, less formal than department store counters, yet more premium than pharmacy or mass channels. Finally, Mecca also has a few shop-in-shops in Myer department stores, as is the case for Sephora at Manor in Switzerland or Kohl’s in the U.S., for example. This positioning has allowed Mecca to appeal simultaneously to prestige customers, aspirational Gen Z shoppers, and beauty professionals.

When it comes to brand offerings, the breadth of merchandise is key. Not selling beauty giants Chanel and Dior, the retailer carries 234 brands and claims around 80% are under exclusive arrangements (a thorough analysis of Mecca’s website shows only 59% of brands are exclusive). The number of brands and proportion of exclusives are said to be comparable to Sephora. Another similarity is that Mecca invested extensively in private labels that became a significant revenue stream. In addition to Mecca Cosmetica and Mecca Max, the retailer also has Kit: blending effective botanicals for total skin wellbeing and Mecca-ssentials, a short line of products such as reusable makeup remover pads.

Horgan says Mecca now has a market share of more than 30% thanks to its dual positioning as a retail destination and a cultural authority in beauty.

How Mecca turned loyalty into cultural capital

Horgan attributes Mecca’s success to customer loyalty. The Beauty Loop loyalty programme is instrumental here and accounted for 2,9 million members in 2024. Contrary to many beauty retailers’ programmes, customers are not rewarded with discounts, but with sample sets based on their annual spend. The programme has four tiers and offers:

• A minimum of a birthday gift, four rewards per year and complimentary samples with every online order for Level One,
• A birthday gift, at least nine rewards annually, exclusive first access to new products, extra product rewards, invitations to exclusive events and a complimentary makeup session and complimentary samples with every online order for Level Four.
• Not advertised on Mecca’s website, Level Five is called the magic circle and gathers customers who spend more than AU$10,000 per year.

According to McKinsey & Company, Mecca’s loyalty programme is a success thanks to the high perceived value of rewards and surprise gifts. In turn, it has allowed Mecca to build a strong community of customers. Illustrating the retailer’s effective community building, and with immediate success, Meccaland, a large-scale beauty festival, launched in 2018. Despite passes ranging from the equivalent of €39 to €83, the event drew over 15,000 attendees in its inaugural year, combining entertainment, product discovery, and influencer engagement. Extravagant, part shopping experience and part consumer conference, with service staff and Instagram-ready backdrops, the event doubled in size in 2019. It positioned Mecca as a cultural force in Australia’s beauty market, emphasising its role in building community and creating experiences rather than simply selling products. Since then, and with the impact of Covid, the festival has not returned, the company has rather focused on flagship store openings.

Customer loyalty also comes with e-commerce. Mecca's entering the online business as early as 2001 constitutes an unparalleled competitive advantage.

Educating for excellence: Meccaversity as a growth engine

Mecca’s success stems from customer loyalty, as well as exceptional service and education. In 2023, the company formally launched Meccaversity, not only as an internal training programme but also as a public-facing educational initiative. Considered by Horgan as the core engine driver of the business, Mecca allocates 4% of revenue to education. This reinforced the company’s positioning as a beauty authority and educator, beyond commerce. The new Melbourne store (see below) is equipped with a Meccaversity auditorium, serving as an educational space for both staff training and masterclasses for customers, be it mastering eyeliner to flower arrangements.

Additionally, Mecca has developed a strong reputation as an employer brand, appearing in the Best Places to Work list. Over 90% of promotions are internal, ensuring people are recognised for their achievements and given opportunities. Finally, they put a real focus on recruitment.

The new Mecca Melbourne

Historic canvas, modern theatre

In August 2025, Mecca unveiled its most ambitious project yet: a three-level flagship in Melbourne’s Bourke Street, spanning nearly 4,000 sqm. Reminding of the Printemps Wall Street lavish and opulent atmosphere, the store showcases a stunning renovation of a historical Art Deco building by Sydney-based Studio McQualter.[5] Previously the premises of David Jones’ menswear department, the store renovation is state-of-the-art. The original terrazzo floors were restored, along with the exposed concrete columns and ornamental plaster ceilings. Tiles from the 1930s were also revealed, showcasing the building’s rich history and conversing with new store designs and artistic interventions by female artists.

Horgan’s brief for the store was clear: “to create the world’s most extraordinary, innovative and loved experiential beauty destination.” The architecture features thoughtful zoning, ensuring each service seamlessly integrates into the overall experience. There is a significant central void, opening clear sightlines across all levels and highlighting the restored ceiling from the ground floor. A new mezzanine, introduced through this reconfiguration, enhances the store's sense of openness.

From concierge to clinic: a three-level beauty journey

At the entrance sits a large cloud-shaped concierge desk staffed by up to six people to direct shoppers and answer questions, and the Mecca Newsroom, a 300-square-foot space with a large digital installation featuring streams of beauty content and information, from TikTok to brand content.

At the heart of the ground floor is the Beauty Carousel, a circular anchor already tested in other stores. It is designed for customers to gather, try new products, learn techniques and connect with the staff. With space for up to 12 guests, this communal area is inspired by the joy of colour in makeup.

The ground floor is also home to skin care, grouped by trending skin care, high-performance, ingredient-led active skin care, and luxury skin care. Each of these categories comes with both products and services, such as microdermabrasion and deep cleanse facials. Makeup is also located on the ground floor and offers services such as makeup lessons and lash applications at an 18-seat salon. Most service costs are redeemable in products. With the new store opening, exclusive brands were secured, such as Glossier.

Haircare, The Apothecary and a florist complete the ground floor offerings. The apothecary focuses on wellness and is organised according to three concerns: general wellbeing, skin, sleep and stress, longevity and recovery, and hormonal health. A naturopath is available full-time. Wellness services include acupuncture and breath coaching, for example, with prices ranging from €25 to €110.

The mezzanine is dedicated to gifting with a calligrapher and an engraver, and Japanese-style gift wrapping. The space leads to the highly elevated 600 sqm Perfumeria staffed by “scent sommeliers.” There is a fragrance bar with stools where customers can have an in-depth consultation, as well as the Scent-Sorium, a large table with diffusers that dispense scent at the press of a button. Unlike Sephora, Mecca could secure brands such as Diptyque, Byredo, and Officine Universelle Buly, among others.

The floor is also home to the Josh Wood hair salon, a British celebrity hairstylist, Maria Tash piercing studio, Sener Besim jewellery and styling consultation and the Mecca Atelier, which offers makeup, hair, and nails all at the same time, so that customers can have it all done in an hour.

The second floor is 100% dedicated to services. It houses the Meccaversity, which will accommodate up to 150 people for education-oriented events and master classes, and Mecca Aesthetica, the skin care services concept that the company has been testing in other doors. Measuring about 400 sqm, it has seven treatment rooms and offers clinical-level services from brands like Biologique Recherche, Ultraceuticals and Zo Skin Health. Treatments range from €34 for a skin diagnosis (redeemable) to €540 for a peeling session.

A lifestyle landmark

The flagship appears as a cultural institution, positioning Mecca at the intersection of beauty, lifestyle, and education. The store combines retail with experience, offering more than 80 in-store services across hair, makeup, nails, fragrances and wellness, paid or free of charge. The gifting hub, the auditorium and the Mecca Café, which serves everything from martinis to baked goods from a renowned Melbourne bakery, further add a lifestyle flair to the store. The goal is to entice customers to stay the entire day. More than 20,000 visitors attended on opening day, underscoring the company’s ability to generate cultural buzz at scale. The store is expected to reach nearly €60 million in the first year.

Nearly three decades after its creation, Mecca has established itself not only as Australia’s leading beauty retailer but also as a cultural authority. Its strategy, anchored in bespoke stores, exclusivity, education, and customer loyalty, has allowed it to compete with Sephora while retaining a distinctly local identity. The Melbourne flagship exemplifies this ambition: part store, part cultural hub, and part educational institution.

As the global beauty market consolidates and international players intensify competition, questions about Mecca’s future remain. Tailoring online convenience and great in-store customer experiences, such as in the new Melbourne store, is expensive, with company staff and an extensive service menu. This strategy certainly generates significant volumes but smaller profit margins. Also, the company's challenge will be to scale its experiential and community-driven model beyond Australia. For now, however, the company has demonstrated that with brand agnosticism, private label innovation, and a focus on customer experience, a regional player can rival global giant Sephora.

[1] In comparison, Sephora has 3,000 stores in 35 countries and generated €18bn revenue in 2024.

[2] Brands, such as Nars, trusted Horgan for their local development.

[3] Their sunscreen hero product retails at an equivalent of €45.

[4] Mecca now has ten stores in New Zealand.

[5] Known for the Zimmermann stores.

Credits: IADS (Christine Montard)

What: AI hiring tools offer efficiency and speed but create new risks of bias, security vulnerabilities, and legal challenges, making human oversight and responsible governance essential.

Why it is important: As retailers increasingly adopt AI in hiring, only those who combine technological efficiency with strong human governance will achieve sustainable growth and avoid costly legal or ethical pitfalls.

AI’s integration into hiring processes promises faster screening and smarter decision-making, but recent research reveals that these tools are structurally vulnerable to manipulation and bias. Large language models, which underpin most AI hiring systems, can be exploited through prompt injection attacks, allowing malicious actors to alter candidate rankings or access confidential HR data. This “lethal trifecta” of exposure to external data, access to sensitive HR information, and external communication channels creates a uniquely precarious environment for organisations, especially in sectors like retail that depend on high-volume recruitment. Bias remains a persistent issue, with AI systems often perpetuating historical discrimination and, in some cases, enabling deliberate bias injection. Legal frameworks such as Title VII, ADA, and GDPR now intersect with these risks, exposing companies to significant liability. Despite vendor assurances, technical safeguards are insufficient, making human oversight indispensable. Retailers must prioritise comprehensive audits, cross-functional governance, and explainability to ensure that AI serves as a tool for progress rather than a source of systemic risk.

IADS Notes: Recent industry evidence shows that while AI-driven hiring tools have improved recruitment efficiency in retail by reducing work time by 16%, only a minority of retailers have successfully scaled these solutions, largely due to persistent concerns about bias and security (April, June, and August 2025). High-profile cases like Mobley v. Workday and major prompt injection attacks have highlighted both legal and reputational risks, with substantial financial losses resulting from AI vulnerabilities. Responsible AI practices, particularly those emphasizing privacy and auditability, are increasingly recognized as essential, yet most managers feel unprepared to implement them (March 2025). The sector’s experience underscores that human oversight and structured governance are critical for sustainable, trustworthy AI adoption (September 2025).
Why AI hiring tools can put recruiting leaders in the hot seat

What: Retail sales teams are evolving as AI agents automate tasks, allowing human sellers to focus on strategy, oversight, and customer relationships.

Why it is important: The balance between AI autonomy and human oversight is critical for successful implementation, supporting sustainable growth and workforce development.

Retail sales teams are undergoing a profound transformation as AI agents increasingly automate routine tasks, freeing human sellers to concentrate on strategic decision-making, oversight, and cultivating customer relationships. This shift is enabling retailers to extend high-touch, personalised service to a broader range of customers, including mid-market and long-tail segments that were previously underserved due to resource constraints. The integration of agentic AI is not only boosting operational efficiency—with many companies reporting 15-30% improvements in service metrics—but also reshaping workforce roles, requiring new skills and comprehensive training. Trust, data quality, and structured oversight have emerged as essential components, as only a minority of employees feel fully prepared for AI-driven change. Rather than replacing junior talent, AI is augmenting their roles, accelerating onboarding and supporting long-term development. The industry’s ability to balance technological innovation with human expertise will determine its resilience and success in an increasingly AI-augmented retail landscape.

IADS Notes: The transformation described in the article is strongly reflected in recent retail industry developments, as documented in Journal du Net (July 2025), Forbes (February 2025), and BCG (September 2025). Agentic AI is rapidly reshaping sales strategies, customer engagement, and workforce dynamics, with 71% of retail employees using AI weekly and companies reporting 15-30% improvements in service efficiency. This technological evolution enables retailers to extend high-touch service to previously underserved segments, including both mass and luxury markets, as highlighted by Forbes and BCG. Organizationally, human sellers are increasingly orchestrating digital AI agents, which demands new skills and comprehensive training, a trend emphasised by Journal du Net and BCG. The importance of trust, data quality, and structured oversight is paramount, as only 36% of employees feel adequately prepared for AI integration, and successful implementation depends on balancing AI autonomy with human judgment, as discussed in Harvard Business Review (January 2025) and One Useful Thing (September 2025). The evolution of junior roles is particularly notable, with AI augmenting rather than replacing talent, accelerating training and supporting long-term workforce development, as shown in Stanford Digital Economy Lab (September 2025) and BCG. These trends underscore the urgent need for retailers to blend technological innovation with human expertise to ensure operational excellence, customer satisfaction, and sustainable growth in an AI-augmented future.

Imagine this... AI agents and the “everywhere all at once” sales team

What: Cambodia’s new Techo International Airport showcases Asia’s growing focus on airport retail as a driver of tourism and economic growth, though service gaps remain.

Why it is important: Asia’s airport retail boom demonstrates how travel hubs can anchor regional tourism and retail expansion, though seamless service delivery is essential to realise their full potential.

Cambodia’s Techo International Airport exemplifies the region’s ambition to transform airports into vibrant retail and lifestyle destinations, moving beyond their traditional role as transit points. The airport offers a curated mix of international and local brands, including Aelia Duty Free, Gallery in Phnom Penh, and Artisans Angkor, alongside a variety of food and beverage options that create a mall-like atmosphere for travellers. This approach mirrors successful models in Singapore and India, where airport retail has become a key growth driver, attracting millions of visitors and delivering robust sales growth. However, Techo’s shortcomings in essential services—such as banking, telecom, and baggage handling—highlight the operational challenges that can undermine the overall traveller experience. As airports across Asia increasingly compete to capture tourism and retail spending, the ability to deliver both a compelling retail mix and seamless services will determine their long-term impact on regional economic development and brand reputation.

IADS Notes: The evolution of airport retail in Asia, as seen with Cambodia’s new Techo International Airport, reflects a broader regional trend where travel hubs are becoming sophisticated retail and lifestyle destinations. Jewel Changi in Singapore set a benchmark in January 2025 by attracting 80 million visitors and delivering 5% sales growth through a strategic mix of global brands and experiential retail (Inside Retail, January 2025). India’s Shoppers Stop followed suit in August 2025, opening the country’s largest airport department store at Delhi Airport, underscoring the strategic value of travel retail in capturing high-value consumer segments (India Retailing, August 2025). The rise of “goods getaways,” where travellers choose destinations for unique shopping experiences, has driven the global travel retail market toward a projected $121.09 billion by 2029 (Visa, February 2025). Airports now account for over 8% of global luxury retail revenue, with terminals increasingly designed for immersive, experiential shopping (The Robin Report, January 2025). Takashimaya’s April 2025 results further highlight how flagship stores in tourist destinations can drive up to 80% of sales, but also reveal the operational vulnerabilities tied to fluctuating travel patterns (Inside Retail, April 2025).

Travel retail as a growth driver: How Asia’s new international airport stacks up