What: The midyear 2026 global economic update forecasts slower growth, persistent inflation, and regional divergence, with major implications for consumer spending and retail strategy.

Why it is important: Persistent inflation and regional divergence require retailers to rethink pricing, sourcing, and investment strategies to sustain growth and profitability.

Euromonitor’s midyear 2026 global economic update points to a challenging macroeconomic environment for retailers worldwide. Slower growth, ongoing inflation, and significant divergence between advanced and emerging markets are reshaping consumer spending patterns and retail demand. Currency volatility, supply chain disruptions, and geopolitical risks continue to pressure pricing and profitability, forcing retailers to adapt sourcing and investment strategies. As real income growth and consumer confidence fluctuate, value-seeking and cautious spending are becoming more pronounced, particularly in discretionary categories. Retailers are responding by balancing digital and physical channels, accelerating omnichannel innovation, and focusing on operational efficiency to maintain resilience. The outlook highlights the need for agile leadership, robust scenario planning, and a willingness to innovate in order to navigate uncertainty and capture growth opportunities in a fragmented global market.

IADS Notes: Euromonitor (December 2025) highlights that the 2026 global economic outlook is marked by persistent uncertainty, inflation, and regional divergence, requiring retailers to balance digital and physical channels to sustain growth. The Robin Report (April 2026) emphasizes that consumer power, technology, and new business models are reshaping retail, with operational agility and innovation becoming critical as retailers navigate a slower, more volatile macroeconomic environment. MBS (January 2026) underscores the importance of agile leadership, systematic upskilling, and balanced AI-human integration, noting that only 10% of retailers have successfully scaled holistic, cross-functional digital strategies in response to macroeconomic pressures. McMillanDoolittle’s Retail Innovations Report 2026 (May 2026) points to digital transformation, operational agility, and purpose-driven strategies as essential for resilience and sustainable growth in a complex retail landscape. The Retail Bulletin (March 2026) documents how Danish retailers like Magasin du Nord and Salling are adapting to evolving consumer expectations and macroeconomic headwinds through omnichannel innovation, experiential formats, and investment in local brands. Collectively, these sources illustrate that the global retail sector’s outlook for 2026 is defined by the need for agility, innovation, and a balanced approach to investment and channel strategy in the face of ongoing economic uncertainty and shifting consumer behavior.

2026 global economic mid-year update

What: The comeback of legacy retailers like HMV, Topshop, and Barneys often fails when driven by nostalgia rather than genuine innovation and relevance for today’s consumers.

Why it is important: Successful retail comebacks require more than nostalgia—they demand innovation, thoughtful curation, and a focus on relevance for today’s consumers.

The return of legacy retailers such as HMV, Topshop, and Barneys highlights the risks of nostalgia-driven strategies that fail to address the realities of a saturated, rapidly evolving retail landscape. While these brands evoke fond memories among older shoppers, their comebacks often lack the innovation, curation, and experiential value needed to engage new generations. The market is now dominated by fast fashion giants, digital-first brands, and smaller, thoughtfully curated multi-brand concepts that offer unique experiences and community engagement. Department stores and heritage brands must move beyond recreating the past and instead design distinct, ambitious formats that deliver what shoppers can’t find elsewhere. Without a clear value proposition and relevance to contemporary consumer expectations, nostalgic relaunches risk being forgettable and commercially unsustainable. The future of retail belongs to those who blend tradition with innovation, ensuring that physical and digital experiences are meaningful, differentiated, and forward-looking.

IADS Notes: Retail Week (August 2025) highlights that, despite the closure of many department stores, the format remains relevant when executed with strong operations, engaging environments, and superior service standards. BoF (September 2025) documents the resurgence of specialty boutiques and curated department stores, as the decline of large multi-brand retailers drives a renewed focus on personalized, community-driven retail and experiential offerings. Emarketer (April 2026) notes that department stores are evolving their definition and success metrics, prioritizing curation, experience, and digital engagement over traditional mall-anchored, multi-category formats. John Ryan Newstores (December 2025) confirms a robust resurgence and transformation of physical retail, with innovative store concepts and flagship investments redefining sector relevance and attracting new generations of shoppers. Fashion Network (August 2025) details Topshop’s return to physical retail through partnerships with Magasin du Nord and Le Printemps, illustrating how heritage brands can successfully re-enter the market by balancing digital presence with carefully selected physical retail collaborations. BoF (December 2025) further underscores the sector’s pivot toward agility, curation, and customer experience, as multibrand retailers restructure and relaunch to address ongoing financial and operational challenges. Collectively, these sources illustrate that successful retail comebacks require more than nostalgia—they demand innovation, thoughtful curation, and a focus on relevance for today’s consumers.

Should some retailers just be left to die?

What: Nearly three-quarters of frontline employees now use AI regularly, but most organisations have not adapted workflows or leadership strategies to fully capture its value.

Why it is important: The findings highlight that only retailers with comprehensive AI integration and strategic leadership are achieving sustained growth, while most still face challenges in scaling and workforce adaptation.

BCG's fourth annual AI at Work survey, based on nearly 12,000 workers across 14 markets, finds that 74% of frontline employees now use AI regularly — up 23 percentage points year-over-year. Nearly half report spending more time managing and directing AI than performing traditional tasks, and 72% say skill expectations in their roles have already changed considerably. While two-thirds of regular AI users report higher job satisfaction, 41% also report increased cognitive load: a "joy paradox" in which AI makes work both more rewarding and more demanding at the same time. The efficiency gains are substantial — 42% of regular frontline users save at least a full workday per week — yet 66% receive limited or no guidance on what to do with the hours they save. BCG's central finding is that strategic clarity lifts measurable business impact by 25 percentage points, compared with only five points for access to better tools alone. As AI agents enter more workflows — now present in 30% of organisations, double last year's figure — the gap between adoption and governance is widening, with half of respondents citing unclear accountability as a primary concern.

IADS Notes: BCG's findings sit within a broader pattern visible across recent retail industry analyses. Writing in the Harvard Business Review in March 2026, researchers documented how rapid AI adoption in retail is intensifying cognitive demands among frontline and entry-level employees — a direct parallel to BCG's "joy paradox" — and called for structured upskilling and leadership engagement to prevent burnout from eroding efficiency gains. Forbes, in May 2026, confirmed that AI is automating routine retail tasks at pace, but found that the most resilient retailers are those investing in human capability rather than simply reducing headcount. BCG's own February 2026 retail analysis showed that only organisations pursuing comprehensive AI integration with deliberate strategic investment are achieving sustained growth, while most continue to struggle with workforce adaptation and scaling. An April 2026 BCG report on retail merchandising illustrated how AI agents are shifting decision-making from human buyers to autonomous systems, creating urgent demand for data governance frameworks and operating model redesign. The Financial Times, writing in May 2026, placed the governance gap in the sharpest relief: despite 71–72% of retail employees using AI weekly, only one in ten retailers has successfully scaled agentic AI, with success closely correlated to clear governance structures, training investment, and sustained human oversight.

AI at work: Strategy matters more than tools

AI at work: Strategy matters more than tools - slideshow

AI is reshaping jobs faster than companies are reshaping work - press release

What: Retail media networks risk missing out on brand budgets by focusing on ad activation and formats rather than integrated, data-driven campaigns tied to brand objectives and full-funnel planning.

Why it is important: The shift toward curated, transparent, and strategically planned retail media is critical for building advertiser trust, optimizing ROI, and unlocking new revenue streams for retailers.

Many retail media networks are struggling to capture brand budgets because they prioritize selling individual ad formats and short-term activations over building integrated, data-driven campaigns that align with broader marketing objectives. This fragmented approach often fails to leverage the unique value of first-party shopper data for audience segmentation and targeting, limiting retail media’s ability to deliver both immediate conversion and long-term brand growth. As budgets tighten and competition with traditional media intensifies, the lack of unified planning and robust measurement makes it difficult for retail media to prove its effectiveness and secure a larger share of brand investment. The future of retail media depends on moving beyond ad-ops and activation to embrace joined-up planning, where onsite, offsite, and in-store campaigns are coordinated and measured alongside other channels. By adopting curated, transparent, and strategically planned retail media, networks can build advertiser trust, optimize ROI, and unlock new revenue streams, positioning themselves as essential partners in the evolving media landscape.

IADS Notes: Internet Retailing (June 2026) highlights the transformation of retail media from a niche digital channel to a central pillar of media planning, with first-party data and omnichannel touchpoints delivering measurable results and new revenue streams. The sector’s maturation is marked by a shift from volume-driven aggregation to curated, high-quality inventory and transparent supply paths, as detailed in Internet Retailing (December 2025). MBS (July 2025) notes that retail media’s evolution is fundamentally changing retail business models, with data monetization and advertising capabilities becoming essential for profitability and growth. Retail Detail (June 2025) demonstrates how Delhaize’s integration of loyalty data and standardized KPIs delivers measurable brand lift and sales growth, setting new benchmarks for performance. Retail Touchpoints (March 2026) documents Meta’s rise as a foundational offsite retail media infrastructure, moving influence and measurement beyond retailer-owned environments and emphasizing the need for robust measurement and value-driven outcomes. Media Post (July 2025) and the Interactive Advertising Bureau forecast $74 billion in retail commerce media ad spend by 2026, validating the sector’s emergence as a crucial revenue stream. Harvard Business Review (October 2025) underscores the importance of trust, transparency, and effective measurement for sustaining the momentum and credibility of retail media networks. Collectively, these sources illustrate that the future of retail media depends on integrated planning, robust measurement, and a shift from ad activation to strategic, data-driven campaigns that deliver value for both brands and retailers.

Why retail media needs to become part of media planning

What: Gen Z's scepticism toward AI in the workplace highlights concerns about skill development, leadership transparency, and the risks of over-automation.

Why it is important: Addressing Gen Z's concerns is essential for sustaining talent pipelines, workforce resilience, and long-term organisational trust in an AI-driven environment.

Gen Z's response to AI in the workplace goes beyond job anxiety. The deeper concern is that automation may erode the developmental work that builds expertise: first drafts, low-risk mistakes, iterative feedback, and the gradual accumulation of judgement. Research on AI coding assistance found that junior developers using AI while learning showed weaker understanding of underlying processes afterwards. Speed and learning are not the same thing. If AI absorbs entry-level tasks, organisations risk producing workers who execute faster but understand less, with consequences for leadership pipelines down the line. The authors challenge the standard "just upskill" response, arguing that expertise requires time and the freedom to learn from mistakes. Their proposed frame, "human in the lead," places people in authority over judgement, pace, and work design, and calls for leaders to communicate honestly about the trade-offs of AI adoption.

IADS Notes: Futurism and The Robin Report in April 2026 highlight Gen Z's scepticism toward AI, rooted in concerns about job security, authenticity, and the erosion of human judgement. Harvard Business Review in March 2026 warns that automating entry-level roles threatens talent pipelines and long-term organisational health, while generative AI can undermine skill development if not paired with robust human training. BCG in September 2025 and Harvard Business Review in March 2026 note that only a minority of workers feel prepared for AI-driven change, with cognitive fatigue emerging as a risk when upskilling is not intentional or well-supported. ESG Dive in December 2025 and Harvard Business Review in February 2026 underline the importance of transparency, as employees prefer human oversight in critical decisions and cite organisational barriers as a key reason for stalled AI adoption. Stanford Digital Economy Lab and Inside Retail in September 2025 emphasise that the most resilient organisations use AI to augment rather than replace their workforce, retaining human judgement as the foundation of long-term capability.

Gen Z can hear what leaders won’t say about AI

What: Recurring digital accessibility flaws, including missing alternative text, poor site structure, and insufficient contrast, continue to drive customer abandonment and lost sales in e-commerce.

Why it is important: Persistent accessibility barriers directly impact conversion rates, customer satisfaction, and brand reputation, making inclusive design a strategic imperative.

Jerry Journo, writing in the Journal du Net, argues that digital accessibility is not primarily a compliance or inclusion question for e-commerce retailers; it is a revenue question. One in three abandoned shopping carts in France is already linked to accessibility failures, and three recurring technical flaws account for much of the damage: missing alternative text on product images, keyboard navigation barriers caused by drop-down menus and pop-ups, and insufficient colour contrast driven by minimalist design choices. Each carries a direct commercial cost. A product image without ALT text is invisible to screen readers and unindexed by search engines; a site that cannot be navigated by keyboard loses users before they reach checkout; low-contrast text raises bounce rates across all users, not only those with visual impairments. Semrush data cited in the article quantifies the upside: accessible sites record 23% more organic traffic, 27% higher average keyword rankings, and a 19% increase in Authority Score. Addressing these flaws is, on this evidence, as much an SEO and conversion decision as it is a design one.

IADS Notes: Recent industry research confirms that digital accessibility remains a persistent commercial blind spot for retailers despite its measurable impact on sales and loyalty. Internet Retailing, in April 2026, reported a sharp rise in accessibility errors on retail websites, averaging 71 errors per page and running 27% above the cross-sector average, with missing alternative text, poor navigation structure, and insufficient contrast among the most common failures. The Harvard Business Review, in February 2026, argued that designing with disability in mind consistently produces features that benefit all users, driving innovation and mainstream commercial advantage across sectors. Forbes, in July 2025, placed the problem in quantitative terms: 65% of disabled consumers encounter barriers in retail environments, and targeted accessibility initiatives have been shown to improve performance metrics by 56% and reduce employee sick days by 75%. The Journal du Net's own June 2026 analysis of the three recurring flaws confirms the same failure modes as central to customer frustration and commercial loss. The Digital Capability Index, in March 2026, found that most retailers still fall short of rising consumer expectations for seamless and inclusive online experiences, identifying accessibility as a factor in customer loyalty, regulatory compliance, and long-term competitiveness.

E-commerce: the three recurring digital accessibility flaws that continue to cause customers to lose 

What: Brands and retailers must move beyond age-based segmentation, using behavioural and transactional insights to personalise retail media and build lasting customer relationships.

Why it is important: Recognising the limits of demographic targeting enables brands to deliver more relevant, service-oriented experiences that foster loyalty across generations.

Retail media has grown in targeting precision, but a persistent blind spot remains: it can identify who a shopper is, but not how they have learnt to shop. Age-based segmentation stops at date of birth. What shapes purchasing behaviour is habit, accumulated experience, and a relationship with brands and advertising built up over time. Transactional data addresses this gap. Records of what shoppers buy, how often, and in what context offer a richer foundation for personalisation than demographic or declarative data. Analysed at scale, this data reveals which signals each profile responds to, when a shopper is likely to switch to a competitor, and how to reach them in a way that feels relevant rather than intrusive. Different generations tolerate advertising differently, but the driver is habit and exposure rather than age alone. Retail media strategies that prove most durable will be those that build brand preference over time, not those that simply trigger a purchase. 

IADS Notes: Forbes in January 2026 and BCG/WWD in October 2025 had already identified the limits of demographic targeting, noting that cross-generational shopping patterns are eroding the value of age-based segmentation. The case for transactional data is well supported by practice: MBS in July 2025 and Retail Detail in June 2025 documented retailers using loyalty and purchase histories to deliver personalised campaigns with measurable results. McKinsey in June 2025 and Inside Retail in December 2025 found that advertising tolerance is shaped more by experience with digital formats than by generational identity, with Gen Z particularly attuned to relevance and authenticity. Internet Retailing in June and December 2025 tracked the sector's move from broad activation toward curated, integrated campaigns designed to build brand value over time. Journal du Net in April 2026 and Retail Detail in June 2025 reinforce the argument that retail media performs best when it functions as a service rather than an interruption. 

Reconsidering the generational experience in retail media

What: Mix-and-match forecasting combines multiple models and automates their selection to improve supply chain reliability and reduce manual intervention.

Why it is important: Adopting automated, context-aware forecasting models allows retailers to balance cost control with agility, a priority highlighted in recent sector analyses.

Supply chain forecasting in retail faces growing uncertainty due to volatile demand, product diversity, and shifting market conditions. The mix-and-match approach assembles a repertoire of forecasting models (statistical, machine learning, and deep learning), each suited to specific scenarios, then automates selection of the best-performing one for each forecast cycle. This reduces manual adjustments and improves reliability without locking planners into a single method. Models are evaluated by context, data quality, and operational priorities, aligning forecasts more closely with real-world constraints. The framework increases forecast accuracy, simplifies planning processes, and makes the selection logic transparent enough to build team confidence in outputs. Successful implementation requires attention to data quality, performance monitoring, and a gradual start with a defined set of models. In an environment where AI is often discussed in abstract terms, mix-and-match forecasting stands out for its pragmatism and measurable impact on supply chain resilience.

IADS Notes: The Robin Report in March 2026 and September 2025 documented how geopolitical instability and policy shifts are forcing retailers to invest in scenario planning and more adaptive supply chain tools. Retail Touchpoints and BCG, writing in January and February 2026, tracked the sector's move from generic AI toward domain-specific models, with model diversity and structured evaluation now seen as prerequisites for reliable forecasting. BCG in April 2026 and Zebra in October 2025 found that AI deployment across pricing, procurement, and operations is delivering measurable margin gains while reducing manual workload. Retail Touchpoints and BCG in early 2026 further confirmed that models trained on proprietary data outperform generic alternatives in accuracy and adaptability. Journal du Net in January 2026 and Harvard Business Review in March 2026 noted that scalable implementation depends on operational simplicity, modular architecture, and sustained attention to data quality.

"Mix-and-match" forecasting: a strategic approach to improving supply chain reliability

What: API-first and headless architectures are becoming critical for enabling AI-driven agents to access, compare, and transact across product catalogues, shifting operational priorities across retail.

Why it is important: The emergence of agentic commerce makes clear that structured data, interoperability, and open standards are now prerequisites for commercial success and operational agility in retail.

Writing in the Journal du Net, Hugues Leproux argues that competitive advantage in e-commerce is moving from the quality of the user interface to the architecture of the platform underneath it. As intelligent agents become capable of querying product catalogues, comparing prices, and executing transactions without human navigation, a platform's ability to expose its data and services through APIs and modular, headless systems becomes a structural differentiator. The commercial logic is straightforward: agents cannot navigate a website the way a human can; they require structured data, programmatic access, and well-defined transactional capabilities. Traditional platforms built around page display and conversion optimisation were not designed for this. Platforms built on API-first, headless architectures, by contrast, are. Leproux points specifically to solutions like Sylius as examples of commerce infrastructure designed for multi-channel consumption, including autonomous agents. The broader implication for retailers is an architectural question that now sits alongside commercial strategy: which platforms allow agents to interact most effectively with commerce?

IADS Notes: The shift the author describes is visible in the detail of recent retail industry reporting. Inside Retail, in April 2026, found that agentic commerce is already setting new standards for discoverability and customer relationship management, with data governance and agent-ready APIs identified as baseline commercial requirements. The Journal du Net, in March 2026, examined how agent-based commerce and the Universal Commerce Protocol are enabling AI-driven transactions across platforms, making structured data and interoperability central to competitive positioning. Forbes, in May 2026, analysed Google's Universal Cart, which centralises multi-retailer transactions through a single AI interface, tightening the challenges retailers face around brand visibility, pricing autonomy, and data privacy as technology platforms increasingly control the point of discovery. McKinsey's November 2025 report projected that agentic commerce could generate up to $5 trillion in global retail revenue by 2030, identifying agent-ready APIs and clear governance standards as the infrastructure requirements for reaching that scale. The Journal du Net, writing in January 2026, sounded an earlier warning: many e-commerce retailers remain focused on traditional website experience while the shift toward AI-mediated journeys accelerates, with the risk that discoverability and relevance migrate to platforms already optimised for autonomous agents.

Agentic commerce: why the architecture of e-commerce platforms could become the decisive advantage

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Every year, Gallup surveys more than 150,000 employed adults across 160 countries and territories to produce the State of the Global Workplace report, the most comprehensive ongoing study of employee engagement, wellbeing, and job market perceptions. The survey uses Gallup's Q12 employee engagement instrument, a twelve-item assessment developed from decades of workplace research, which classifies employees into three groups: engaged (psychologically committed and contributing at full capacity), not engaged (present but psychologically absent), and actively disengaged (working, in Gallup's framing, against the aims of the organisation). The 2025 edition draws on data collected throughout 2024 and marks the seventeenth consecutive year of this global tracking. The  2026 edition, released this April, extends the dataset to 2025 and introduces a new analytical focus: the intersection of engagement with enterprise AI adoption. Both reports are referenced throughout, with data attributed to the year of publication rather than the year of collection.

Global employee engagement has fallen for two consecutive years. Enterprise AI investment has reached $40 billion with negligible returns on productivity. The Gallup 2025 and 2026 State of the Global Workplace reports trace back to the same cause: organisations have consistently underinvested in supporting and developing their managers.

For retail and department store organisations, these reports carry a direct operational message. 70% of team engagement is attributable to the manager, a finding from Gallup's own longitudinal research confirmed across both reports. In a department store, that figure describes whether floor teams build customer relationships or merely complete transactions, whether a new technology reaches the team or stalls at the briefing room door, whether new colleagues develop or leave quietly within 90 days.

A two-year structural decline

The 2025 edition documented the first year of the fall: in 2024, global engagement declined from its 2022 peak of 23% to 21%. The 2026 edition extends the record to 2025, where engagement fell again to 20%, a pattern without precedent in Gallup's data, and with no region of the world moving in the opposite direction.
Low engagement cost the global economy $438 billion in lost productivity in 2024, per the 2025 report. The 2026 report estimates that figure grew to approximately $10 trillion in 2025, or 9% of global GDP, measured as the potential output gap against a fully engaged global workforce.
The 2025 report framed its findings as equal in magnitude to the COVID-19 lockdown drop. The 2026 report updates that picture with a second consecutive decline, this time in an environment where AI investment has made the quality and support of management the central variable in whether organisations see productivity returns

The manager crisis

The 2025 report identified manager engagement as the primary driver of the global decline, documenting a fall in 2024, from 30% to 27%, against individual contributor engagement that held flat at 18%. The burden was unevenly distributed: managers under 35 dropped five points; female managers dropped seven. Individual contributor engagement declined in no comparable sub-cohort. The 2026 report extends this picture to 2025, and what it shows is acceleration rather than correction. Since 2022, manager engagement has fallen from 31% to 22%; the largest single-year drop occurred between 2024 and 2025, going from 27% to 22%. Managers, at 22%, now sit within reach of individual contributors at 19%. In 2022, that gap was close to double digits. It has narrowed to the point where engaged management behaviours are present in fewer than one in four managers globally.

The motivation that historically accompanied management responsibility, the connection to authority, the development opportunity, and the sense of organisational purpose have narrowed to near parity, and their consequences extend beyond managers themselves. Gallup's longitudinal research establishes that countries with less engaged managers are measurably more likely to have less engaged individual contributors; each disengaged manager carries a team's worth of individual contributor engagement down with them, and the trajectory across both reports confirms the mechanism is active and accelerating. The 2026 report's CEO letter is direct on the cause: the data has pointed to the answer for years, and the corporate world has largely chosen to ignore it. Manager disengagement at this scale is the direct output of organisational decisions about training, development, autonomy, and investment in the people who lead frontline teams.

The European baseline

For IADS members operating across European markets, these reports place this dynamic against a structurally unfavourable baseline. The 2025 report recorded European engagement at 13% in 2024, with 73% of the region's workforce in the not-engaged category and 30% intending to leave their employer within the next 12 months. Not engaged, in a customer-facing retail context, carries a specific operational meaning: these employees are present, follow procedure, and complete transactions, but withhold the discretionary effort that distinguishes a service relationship from a service transaction. The 2026 report records a further decline to 12% in 2025, the lowest regional figure globally. For a sector whose competitive differentiation depends on the quality of human interaction, every investment the sector is currently making in AI or customer experience depends on that workforce to deliver it.

The best practice gap

The 2026 report documents best-practice organisations, those that have embedded engagement as a long-term strategic priority and applied science-based management practices, at 79% manager engagement in 2025, nearly quadruple the global average, reproduced across every region and industry in the Gallup dataset. The 57-point gap between the global average and this benchmark is a measure of the decisions that have been made or deferred. In retail, the IADS White Paper Middle Managers: remnants from the past or tomorrow's unicorns? traced exactly which decisions those were: decades of centralisation that progressively stripped in-store managers of meaningful decision-making authority, restructuring programmes that repeatedly targeted the management layer as a cost reduction lever, and development budgets systematically applied elsewhere.

The management layer and AI returns

AI and the manager bottleneck

Between the two reports, the framing of AI changes: where the 2025 report discussed it as an approaching disruption, the 2026 report treats it as a current operational reality with measurable consequences. Despite approximately $40 billion in enterprise AI investment, 95% of organisations have seen no measurable impact on profits, according to MIT Project NANDA data cited in the 2026 report. A National Bureau of Economic Research survey of nearly 6,000 executives across the US, UK, Germany, and Australia, also cited in the 2026 report, finds that 89% report no impact of AI on their company's labour productivity in the past three years. In Gallup's own 2025 workforce data, only 12% of employees in AI-implementing organisations strongly agree that AI has transformed how work gets done.

Where the technology has delivered, Gallup's Q1 2026 data consistently identifies the manager as the determining factor: employees who strongly agree their manager actively supports their team's AI use are 98.7 times as likely to agree that AI has transformed how work gets done, and 97.4 times as likely to say AI gives them more opportunities to do their best work. Yet fewer than one-third of US employees in AI-implementing organisations strongly agree their manager actively supports the technology (21% in Germany, per Gallup’s 2026 dataset).

The IADS White Paper documents the mechanism. Our research noted that 49% of managerial work, including drafting job postings, integrating performance feedback, and routine reporting, can be automated by generative AI, freeing managers for the relationship-intensive leadership work that determines whether their teams adopt and use new tools effectively. The White Paper also details five specific roles middle managers play in this process: applying human judgment and empathy, managing risk, reimagining roles and work processes, leveraging real-time team performance insights, and freeing leadership capacity through task automation. At 22% global manager engagement, those functions are active in fewer than one in four managers globally. Organisations investing in AI without simultaneously investing in manager capability are funding a multiplier they have not yet built the conditions to use.

The $10 trillion productivity gap documented in the 2026 Gallup report and the AI investment failure are the same problem viewed from different vantage points. Both trace to a management layer that, at 22% engaged globally, is operating below the level at which either productivity or technology returns are reliably produced.

Training and the 79% benchmark

Both reports point to the same course of action, and the 2026 CEO letter frames the employer's choice plainly: equip managers with the resources to excel, offer development opportunities, and reconnect teams to a shared mission. The 2025 report establishes what committing to that produces: engagement gains of up to 22% among participants, up to 18% in their teams, and manager performance improvements of 20 to 28% within nine to eighteen months, with effects confirmed as durable. Training alone increases manager thriving from 28% to 34%; adding active organisational development encouragement raises it to 50%, according to that report. That the findings hold across pharmaceutical manufacturing, luxury hotels, and technology firms as consistently as they do in department stores matters specifically for retail leaders: the gap between 22% and 79% closes regardless of sector, and its determinant is investment decisions.

In retail, the IADS White Paper established why the deficit runs deeper than the global average suggests. The sector has operated for decades on an inversion that most organisations have never named: middle management is 80% leadership and only 20% management, while line management runs the opposite ratio. Yet promotion decisions across retail have historically rewarded management performance, producing a management layer selected for the 20% and left to discover the 80% on the job, without training, without frameworks, and frequently without support. A McKinsey survey of 700 middle managers across industries found that 42% were unsure, or actively disagreed, that their organisation had set them up to succeed as people managers. Those same managers reported spending more time on individual contributor work than on any other activity, a pattern the White Paper describes as particularly acute in retail, given the sector's promotion culture. The pandemic made the cost of this visible directly: when organisations needed managers to lead through unique conditions, many could not, because no one had developed that capacity in them.

The productivity stakes

McKinsey's 2024 research on frontline workforce retention in retail found that having an inspiring leader was cited as the seventh reason employees left their jobs in 2022; by 2023, it had risen to third. That two-year movement tracks the time during which manager engagement fell fastest across these Gallup reports. Most of the managers who struggle to inspire their teams were promoted into roles whose leadership demands were never part of the job description they were evaluated against, and were given no tools to develop them once there.

Bloom, Sadun, and Van Reenen’s Management as a Technology? research book, established that differences in management practices account for approximately 30% of the variation in total factor productivity, the standard measure of technology's impact on output. In the AI era, that relationship has grown more consequential: the same management practices that determine whether teams perform also determine whether technology investments deliver returns. Organisations operating with undertrained managers are forfeiting a quantifiable share of the productivity gains their technology investments are designed to produce.

Middle-out in practice

Carrefour France's restructuring under CEO Rami Baitieh, documented in the IADS White Paper as the defining retail case study of the 'middle-out' approach, inverted the traditional management hierarchy, placing customers at the top and the CEO at the bottom, and flattening the structure from five layers to three. Middle managers were placed at the centre of a real-time customer feedback loop: cashiers recorded comments daily, sorted by middle management teams via WhatsApp and reported directly to the CEO and HQ. Within six months, Carrefour France reached its highest Net Promoter Score on record. What produced those results was managers given purpose, equipped with the right tools, and trusted with meaningful commercial responsibility, with no new technology platform and no restructuring programme beyond the decision to place management at the centre of the operation.

Engagement as a human investment

Half of employees who are engaged at work are thriving in life overall, compared with only a third of those who are not, per Gallup's 2025 data. The engagement-wellbeing relationship runs in both directions, with managers at the hinge. The 2026 report adds a further dimension: when managers are engaged, they report all negative daily emotions at lower rates than individual contributors and are 14 points more likely to be thriving overall than the average leader. Improving manager engagement is simultaneously a business intervention and a human one; across both reports, these two goals converge rather than compete.

For retail, the argument does not stop at the data. These reports provide a documented path forward: the training and development investments that reverse manager disengagement are established and reproducible across every sector and region in the Gallup dataset. Manager development has long been treated as a cost incurred after the real investments are made; these reports establish that the investment determines whether the others deliver at all.

Two consecutive years of declining engagement across every region of the world is a structural pattern Gallup has not previously recorded. Structural patterns call for structural responses, not wait-and-see quarters or survey cycles filed as HR metrics. That response means investing in the leadership capacity the sector has historically failed to develop and restoring the autonomy and purpose that made the role meaningful. The organisations that realise AI's returns are those whose managers are equipped, supported, and genuinely committed to the teams they lead.

Credits: Maya Sankoh

What: Generative AI adoption in 2026 is transforming retail operations, customer engagement, workforce dynamics, and regulatory practices.

Why it is important: These developments underscore the challenges and opportunities of scaling AI, requiring new strategies for workforce readiness, customer trust, and operational agility.

The third edition of this study reveals that generative AI has become deeply embedded in both consumer and business practices by 2026, with the retail sector experiencing profound changes. Retailers are increasingly deploying AI to optimise supply chains, streamline operations, and enhance customer service, resulting in measurable revenue and productivity gains for early adopters. AI-driven personalisation is now a core expectation among consumers, prompting retailers to invest in upskilling their workforce to deliver more tailored and engaging experiences. However, this technological shift is also reshaping job roles, automating routine tasks, and highlighting a gap in workforce preparedness for AI-driven transformation. At the same time, the rapid evolution of AI is forcing retailers to rethink their business models, investment priorities, and approaches to data governance. Ethical and regulatory concerns, particularly around personalised pricing and consumer privacy, are prompting new transparency laws and a renewed focus on responsible AI use to maintain trust.

IADS Notes:
The widespread adoption of generative AI in 2026 is fundamentally transforming the retail industry, as detailed by BCG in September 2025, where retailers reported significant revenue and productivity gains from AI-driven supplier negotiations, despite challenges in scaling these solutions. WWD in May 2026 highlighted that AI-driven personalisation has become central to customer engagement, with a majority of consumers expecting tailored experiences and retailers investing in workforce upskilling. Forbes in May 2026 examined how AI integration is automating routine retail tasks and shifting workforce dynamics, while many employees remain unprepared for these changes. BCG in February 2026 analysed the comprehensive redesign of retail business models and investment priorities driven by AI adoption. Meanwhile, the Financial Times in May 2026 discussed the ethical and regulatory challenges of AI-driven personalised pricing, noting consumer backlash and the introduction of new transparency laws, emphasising the need for responsible data governance to maintain trust.

How people are really using AI in 2026

What: Organisations are increasingly using AI-driven synthetic panels to simulate consumer behaviour, optimise product launches, and refine marketing strategies.

Why it is important: The integration of AI-powered panels highlights the need for organisations to invest in technology, workforce upskilling, and data governance to fully realise the benefits of accelerated innovation cycles.

Synthetic panels — GenAI tools that simulate consumer responses through defined demographic and psychographic personas — are giving organisations a faster, lower-cost alternative to traditional market research. A recent BCG conjoint study found synthetic panels predicted real-world consumer choices for a new beverage with 92% accuracy, a figure that improves with iterative fine-tuning. Their applications span early concept screening, product attribute assessment, and pricing and promotional analysis, enabling companies to test a wider range of variables at lower cost and greater speed.These tools are not a wholesale replacement for traditional research. They perform best in low- and medium-risk decisions — ideation, attribute selection, packaging — and should remain subordinate to human testing for regulated claims and forecasting. Model bias, confirmation effects, and outdated training data remain genuine risks. Organisations that capture the full value of synthetic panels will be those that invest equally in governance, researcher training, and clear standards for how synthetic data is used and disclosed.

IADS Notes: The acceleration of synthetic panel adoption reflects a broader shift in how organisations approach the economics of innovation. Evidence from the past year suggests this shift is already well advanced: leading organisations are using AI-generated audiences and models to optimise product launches, test messaging continuously, and compress creative production cycles (May 2026). Industry analyses confirm that domain-specific AI solutions are generating measurable gains in efficiency and revenue growth across multiple sectors (September 2025, February 2026). A January 2026 study found that 71% of retail employees were already using AI tools on a weekly basis — reflecting adoption at operational depth, not merely strategic intent (Retail Touchpoints, January 2026). The constraint, as the BCG article makes clear, is not access to the technology but the quality of governance, researcher capability, and institutional oversight surrounding it. Organisations that invest in those foundations — governance frameworks, paired validation studies, vendor scrutiny, and researcher training — will be better positioned to use synthetic panels as a reliable complement to, rather than a shortcut around, human research.

Want consumer insights faster? AI can help.

What: Personalisation is shifting from marketer-driven journeys to AI agent-orchestrated actions, requiring new modular and agent-ready infrastructures.

Why it is important: The stakes are concrete: BCG frames the next 12 to 18 months as the window in which organisations will determine which side of a self-reinforcing competitive divide they fall on.

The article traces the evolution of personalisation from marketer-orchestrated journeys to a model where AI agents autonomously select, sequence, and compose customer interactions in real time. This evolution requires organisations to develop four interconnected capabilities: a composable shelf of modular assets, agent architecture, modular tools with persistent state management, and continuous learning and optimisation. The marketer's role is redefined from designing fixed journeys to curating content and setting objectives for AI agents, who then dynamically assemble personalised experiences. This shift promises substantial efficiency gains, such as faster campaign cycles and increased addressable revenue, while also demanding a modular, API-first infrastructure to support agent autonomy. Organisations that delay adopting these agentic approaches risk falling behind competitors who can deliver more relevant, timely, and adaptive customer experiences. The next 12 to 18 months will determine which organisations lead in agent-native personalisation and which fall permanently behind.

IADS Notes: The case for agent-native infrastructure does not rest on a single report. Four recent analyses — from BCG, Inside Retail, and Bain — document the same convergence from different angles: operating model redesign, modular infrastructure, and competitive timing. In May 2026, BCG highlighted how brands are deploying AI-driven agents and new store formats to enhance customer engagement, emphasising the importance of connecting digital and physical experiences while maintaining trust. BCG's April 2026 analysis documented the shift in merchandising to a continuous, data-driven model, stressing that operational agility and modular infrastructure are now critical, with delays in adaptation posing significant competitive risks. Also in April 2026, Inside Retail reported that agentic commerce is rapidly establishing new standards for discoverability and customer relationship management, urging investment in agent-ready APIs and modular systems. BCG's February 2026 analysis argued that technology adoption alone is insufficient — business models and workforce structures require parallel redesign. Finally, Bain & Company in May 2026 examined how AI-generated buyers and synthetic customers are accelerating product innovation and operational agility, necessitating new approaches to data governance and organisational change.

The agentic era of next-best action

What: Companies are increasingly appointing Chief Resilience Officers to address complex disruptions and strengthen organisational adaptability.

Why it is important: The trend highlights the urgent need for agile leadership and robust crisis planning, building on lessons from recent cyber and geopolitical disruptions.

The evolving landscape of the retail industry has made resilience a strategic imperative, prompting leading organisations to consider the appointment of Chief Resilience Officers. This role is designed to address the growing complexity of risks facing retailers, from sophisticated cyber threats to geopolitical shocks that disrupt supply chains and erode consumer confidence. As digital transformation accelerates and global events introduce new vulnerabilities, traditional risk management approaches are proving inadequate. Instead, retailers are recognising the necessity of integrated, cross-functional strategies that combine proactive scenario planning, transparent communication, and rapid crisis response. Effective leadership is now defined by the ability to unite visionary strategy with operational discipline, fostering organisational agility and stakeholder trust. The Chief Resilience Officer emerges as a pivotal figure, tasked with embedding resilience into the core of business operations and ensuring continuity amid uncertainty. This shift not only reflects the sector’s response to recent crises but also sets a new standard for competitive advantage and long-term value creation in retail.

IADS Notes: The case for hiring a Chief Resilience Officer in retail is reinforced by recent industry insights. In February 2026, Harvard Business Review highlighted how retailers are moving beyond isolated prevention strategies, focusing on collective resilience and industry-wide collaboration to counter escalating cyber threats and maintain business continuity. Inside Retail and The Robin Report, both in March 2026, detailed how geopolitical conflicts like the Iran war have compelled retail leaders to adapt supply chains swiftly, engage in robust scenario planning, and communicate transparently to uphold stakeholder trust. These events have revealed the shortcomings of traditional risk management, emphasising the need for agile leadership and operational discipline. The RH-ISAC CISO Benchmark Report from April 2026 confirmed that the growing complexity of cyber threats requires integrated, cross-functional security strategies, while The Robin Report in April 2026 underscored that only visionary, hands-on leaders can deliver the resilience and value creation necessary to navigate today’s volatile retail environment.

The case for hiring a Chief Resilience Officer

PRINTABLE VERSION HERE 

For at least fifteen years, department stores have been navigating a structural decline. Footfall in city centres has fallen in every measured year since 2009. Spending on fashion, department stores’ core category, has contracted. And the pandemic accelerated a migration to online shopping, compressing a decade of change into two years.

The industry’s initial response was to bolt e-commerce onto the existing model. What started as a modest add-on — often an experiment operated on the same principles as the traditional stores — soon grew into a parallel business with fundamentally different cost structures. Against in-store conversion ratios of 25% or more, online hovered at 1–2%. Against sales per square metre, online invoked profit per transaction. Against expectations of bottom-line profit, online demanded years of loss-funded growth. Department store companies found themselves running two business models simultaneously: one built on real estate and people, the other requiring heavy investment in systems, fulfilment, and digital marketing. Integration proved expensive, profitability remained elusive — even for the pure players — and the admittedly complex model of the traditional department store proved inadequate for a truly omnichannel operation.

The IADS Academy 2021 cohort framed this situation in scientific terms: the existing paradigm can no longer solve the problems. The question is no longer whether to become omnichannel, but how to move beyond integration into something more deliberate, precise, and profitable. The answer lies in four interconnected shifts:

• From channel ubiquity to journey optimisation,
• From channel-based P&Ls to customer-centric financial architecture,
• From uniform store networks to precision-engineered physical assets,
•  From inherited commercial models to purpose-built omnichannel ecosystems.

The article below reviews five years of IADS research, the current state of academic knowledge and the latest business articles on the topic, including research by Dr Christopher Knee, Honorary Advisor of the Association, and Professor Robert Rooderkerk, Academic Advisor of the Association.

From ubiquity to optimisation: steering journeys, not channels

The maturity gap

The term “omnichannel” is often misunderstood. As Robert Rooderkerk, Associate Professor at Erasmus University Rotterdam and academic advisor to the IADS, emphasises, 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.

In contrast to multichannel retail where channels coexist without coordination, omnichannel combines expansion into different channels with integration to facilitate seamless customer journeys. Yet as research argues, the usual tension between the market’s desire to offer a seamless experience and operations’ desire to maximise efficiency is particularly pronounced in omnichannel retail. Balancing the advantages of seamless integration with the cost of seamlessness is a standard operations management trade-off — but one that most department stores have yet to master.

To illustrate this, Rooderkerk has outlined a maturity model that most companies are currently moving through. The journey typically begins in a fragmented, multichannel phase, where online and offline channels are siloed. This setup fell short during the pandemic, when retailers rushed to stand up click-and-collect using manual workarounds and disconnected systems — the “experimentation” stage. As retailers progressed, they moved into a “ramping up” phase — scaling services like same-day click-and-collect, expanding geographic reach, and increasing speed. Most companies today remain stuck here, or in the next stage: “channel integration,” focused on order orchestration through centralised systems that choose the best fulfilment nodes based on stock availability, distance, and efficiency.

Yet many organisations are still held back by internal silos between digital and physical teams, leading to “tribal” conflicts over budgets, authority, and strategy. The move from a channel-led to a customer-led organisation requires what Rooderkerk terms customer-journey segmentation: identifying and investing in the most valuable or frequent journeys based on transaction volume or customer value. Instead of trying to optimise every possible journey, it’s all about focusing on those with the greatest return potential.

From supporting journeys to shaping them

The most advanced retailers do not just support these journeys — they shape them. Such maturity, which Rooderkerk calls “omnichannel optimisation,” is about steering customers toward the channels and touchpoints that improve profitability or customer equity, rather than fixating on perfectly seamless customer journeys that do not generate revenue.

The levers available to retailers are more varied than commonly assumed. Holland & Barrett, for instance, uses market-specific nudges to influence channel selection: in the UK, customers are prompted to choose click-and-collect with a prominent “free” message; in the Netherlands, the highlighted benefit is sustainability. Swatch demonstrates how simple, inventory-aware rules can avoid waste: when the stock of a particular watch is low, the reservation option disappears from the site, preventing high no-show rates that tie up valuable inventory. At Coolblue, a Dutch consumer electronics retailer, the physical placement of click-and-collect points meaningfully affects cross-sell potential. In LATAM, 50% of Falabella’s online orders are collected in-store, and these visits drive a 16% increase in gross sales from cross-sales at pick-up. However, before achieving such results, they went through a learning curve, observing that click-and-collect services located at the store entrance consumed premium square metres without NPS payback and created congestion, also preventing cross-selling opportunities.

Fulfilment as a strategic lever, not an operational afterthought

The taxonomy of omnichannel fulfilment models is richer than most department stores realise. These models span the forward supply chain (buy online, pickup in-store, reserve online, pickup in-store, buy in-store, ship to home), the reverse supply chain (buy online, return in-store, buy in-store, return online), and supporting models (ship-to-store, ship-from-store). Each carries distinct trade-offs between customer benefits and operational complexity, and each represents a potential lever for journey optimisation — not merely a service to be offered.

What makes these decisions strategic rather than merely operational is the downstream impact on customer behaviour. Failing to deliver an online order not only causes direct revenue loss but also reduces future customer spending. A study shows that when missing products were reimbursed, customers delayed their next order by almost 24 hours and spent approximately one euro less. When products were substituted — a strategy most retailers assume softens the blow — the delay nearly doubled. These effects compound over the year: the total revenue loss from fulfilment failures exceeded 12% of annual revenue, nearly double the 7% direct cost of reimbursing for missing items. The strategic implication is clear: fulfilment failures may be operational in nature, but their consequences are deeply strategic.

The incentive gap

Among the levers of optimisation, incentives are key. Rooderkerk identifies a worrying 7% to 10% order-cancellation rate for ship-from-store orders, driven by insufficient inventory data or a lack of store compliance. Without financial incentives, stores may deprioritise e-commerce orders or even cancel them to conserve inventory for walk-in customers. Companies like Adidas have responded with reward-based routing, sending orders to stores with strong compliance and fulfilment performance. Walmart and Target rely on real-time inventory accuracy as a key routing factor — Target, after a $3 billion investment, now fulfils 95% of online orders through nearly 2,000 stores. Optimisation requires aligning technology with human incentives.

For department stores specifically, this represents both a challenge and an opportunity. The department store’s distinctive asset — its large, centrally located, multi-category physical space — becomes a powerful fulfilment and experience node only if its organisation can operate as a unified entity rather than a collection of competing channels.

Measuring differently: the omnichannel P&L and the omni-cluster

Why existing instruments fail

In 2021, the IADS Academy was tasked with addressing this precise problem: what would a truly omnichannel P&L look like, and which KPIs would support it? Their diagnosis was blunt: as long as the business consisted of stores, and even stores with a small separate online channel, the traditional model held up. Since cross-channel and multi-channel started impacting the core business, attractiveness and profitability have plummeted.

A key reason for this failure is the persistence of separate P&Ls for stores and for online. Various efforts have been made in the past to credit online sales to stores, but these have been artificial. The fundamental problem is that employees are assessed on KPIs which discourage an omnichannel approach, while data is unavailable to track customers, inventory, and fulfilment in sufficiently granular form to allow appropriate attribution.

Traditional KPIs are backwards-looking and channel-specific. Traffic, conversion rate, sales per square metre — these tell what happened in a single channel yesterday. They cannot evaluate the complex drivers of customer decisions that span multiple touchpoints over time. The shift from a product-based model to a customer-based model means that customer KPIs must become financial KPIs.

The omni-cluster: a customer-centric financial architecture

The IADS Academy’s central proposal was the concept of the “omni-cluster”: clusters of stores and online based on customers, whatever their channel. An omni-cluster is, at its core, a group of customers. All revenues, returns, and costs associated with a customer belong to that omni-cluster. The only rule is that any customer can belong to only one omni-cluster, even if they occasionally shop, return, or collect in several physical stores.

Dr Christopher Knee from IADS subsequently developed this concept further. In its simplest configuration, an omni-cluster consists of one or more stores and the online customers who reside around those stores — a model favoured by Magasin du Nord, for example. Where customer behaviour is more complex — say, when online customers prefer a distant flagship store — a mixed omni-cluster might include a store, its geographically close online customers, and online customers who are geographically closer to another store. This may occur when stores are clustered by size, as at Manor. For businesses with a large tourist clientèle and franchised operations, still more complex configurations may apply — as might be the case at Galeries Lafayette.

The criteria for omni-cluster membership are flexible and vary according to the company’s history, organisation, and market. The aim is to group revenues and costs into a number of omnichannel P&Ls which cover total operations of a cluster, which can serve to manage operations through related KPIs, and which can be consolidated into a total business P&L. Three key consolidated measures were proposed: Customer Lifetime Value (CLV), which is by definition forward-looking and allows the identification of profitable customers; sales per employee across all employees in a given cluster irrespective of channel; and cost of returns as a proportion of total sales, covering costs incurred by all channels.

An irreversible strategic choice

Once established, an omni-cluster ecosystem can no longer be dismantled and split up into its original component parts. It competes as a whole, not as a multi-channel entity. The data architecture is not a separate workstream — it is the foundation on which the entire omni-cluster edifice rests, which makes it quasi-impossible to spin off the e-commerce part of the business, as HBC has done with Saks Fifth Avenue and Saks.com, with the results we now know. The integrated omnichannel route is a different bet: a smaller omnichannel department store following it will be capitalising on its unique status as what Bain & Company has called a “regional gem.” The commitment is no less risky than the spin-off route — but it is a fundamentally different vision of what a department store is.

Note: The question that remains largely unanswered however is what a transition phase towards omni-cluster P&L would look like. Who should guide the transition?

The store as a precision instrument: format, network, and category logic

Deconstructing the halo effect

The much-discussed “halo effect” — the idea that opening a store lifts nearby online sales — is often exaggerated: researchers found that store openings reduced online sales. Online net revenue declined by approximately 8–10% across both large- and small-format openings. However, the large, experience-centric stores more than compensated for this cannibalisation, generating a net revenue uplift of 27.5% in the longer term. The small, convenience-centric store, by contrast, cannibalised online sales without producing compensating gains.

These results held even when the analysis was restricted to categories, suggesting that it is the store experience — not assortment breadth — that accounts for most of the performance differences. Large experience-centric stores create value through how they sell, not just what they sell. Their immersive environments and expert service effectively activate both new and existing customers — benefits not replicable in the smaller format.

The physical department store, with its large footprint, broad breadth of categories, and tradition of service, is structurally well-suited to the experience-centric model. But this advantage is not automatic — it requires deliberate investment in the quality of in-store experiences, expert staffing, and sensory engagement. A department store that merely occupies a large space without delivering distinctive in-store utility risks the same outcome as the small convenience format: cannibalisation without compensation.

Not all categories are created equal

Perhaps the most consequential finding for department store executives lies at the category level. Research reveals substantial variation in revenue uplift across 22 product categories following a store opening. Some categories more than doubled their sales, while over 40% showed no significant uplift.

The answer lies in what the researchers call “perceived in-store utility“ — the value customers expect from experiencing a product in a physical store rather than online. This utility was measured across three stages of the customer journey: information search (sensory experience and expert advice), fulfilment (instant gratification), and returns (ease of processing). The results are striking: a one-standard-deviation increase in perceived information-search utility is associated with a 23.6-percentage-point increase in net revenue uplift for destination categories. A similar increase in fulfilment utility yields a 14.6-percentage-point rise. Return utility, by contrast, showed no significant effect — suggesting that experience-centric stores create value primarily by providing information and fulfilment benefits, not by serving as efficient return sites.

Crucially, these effects apply only to destination categories — high-involvement products that independently drive store visits. Accessory categories showed no utility-driven uplift, but several experienced substantial revenue gains, likely driven by cross-buying and bundling with their destination anchors.

Asymmetric assortment integration: a framework for cross-channel allocation

The question of which categories to put where is not merely intuitive — it requires “asymmetric integration“18. In the most common configuration, the online assortment contains the offline assortment plus more — reflecting the long-tail effect and the lower marginal cost of carrying additional products online. But other configurations may be strategically preferable: certain products may belong exclusively in the physical store, while others may be online-only (when physical space constraints or low in-store utility make floor presence uneconomic).

For department stores, this framework is particularly powerful because of the breadth and heterogeneity of their assortment. Fashion, beauty, homeware, and technology do not all create the same in-store value, and within these broad domains, subcategories will vary enormously. A haute couture dress and a basic white t-shirt, a perfume counter and a shampoo display, a curated furniture showroom and a commodity storage solution — each carries a different utility profile across information, fulfilment, and returns. Retailers can survey customers on perceived in-store utilities and use the results to guide assortment planning, space allocation, staffing decisions, and the design of experiential elements. Categories with high information utility warrant deeper assortments, immersive sensory experiences, and more expert staffing. Categories that score primarily on fulfilment may not need floor presence at all — they can be stocked in inventory and surfaced through efficient click-and-collect or virtual aisles. Accessories should be strategically positioned near their destination anchors or bundled into cohesive solutions.

The role of each channel in the customer journey must be explicitly acknowledged when planning assortments. A product with low in-store conversion but high showrooming value may be essential to the store even if it scores poorly on sales per square metre. Conversely, a product with many online views but low conversion — and where webrooming can be ruled out — might benefit from more prominent physical presence, where salespeople can address the uncertainty that holds customers back. This kind of cross-channel intelligence requires integrating data across all channels and touchpoints and rethinking metrics designed for a single-channel world.

Rethinking the network: densification and role-based formats

Beyond format and assortment, Rooderkerk proposes a wider framework for store network strategy that includes expansion, downsizing, relocation, and densification. Densification — adding smaller stores closer to high-density customer segments — is becoming a strategic frontier. Smaller formats can serve two distinct models. The first focuses on specific touchpoints in the journey, offering services such as advice, pickup, or returns without maintaining full inventory (e.g., Nordstrom Local, IKEA’s “Plan & Order“ stores). The second model supports the full journey within a smaller footprint (Galeries Lafayette’s store in Nimes), which, although much smaller than the flagship, offers a curated yet comprehensive assortment tailored to local customers.

For department stores, this suggests that the traditional model of a single large flagship, supplemented by near-replicas, may give way to a differentiated network in which each node plays a distinct role in the ecosystem. The flagship remains the experience-centric anchor; smaller formats serve as gateways to the broader offer, equipped with endless-aisle capabilities to access online inventory. But each store should be judged not only on its own sales per square metre, but also on how it supports customer experience, delivery efficiency, and brand visibility across all channels. In this respect, the Bloomie’s experiment in the U.S. conducted by Bloomingdale’s is highly interesting.

Rethinking the commercial architecture: who owns what in an omnichannel ecosystem?

The inherited model under pressure

The shifts described above — journey optimisation, customer-centric P&L, precision-engineered stores — all presuppose a commercial architecture capable of supporting them. Yet the dominant commercial models of the department store were designed for a different era.

Department stores have traditionally operated across a spectrum of commercial relationships. Each model carries different implications for the levers of omnichannel optimisation. In a conventional model, the retailer controls the stock and can therefore orchestrate fulfilment — routing orders from store or warehouse, offering ship-from-store, managing returns centrally. In a concession model, the brand controls its own supply chain all the way into the store, which creates friction when the retailer wants to use that inventory for e-commerce fulfilment or cross-channel services. The question of “who owns the stock” becomes operationally critical when a store is expected to function simultaneously as a selling floor, a fulfilment node, and a data collection point.

The digital extension: marketplace and e-concession

These tensions are amplified in the digital domain. The online equivalent of concession is the marketplace or e-concession model, where brands use the retailer’s platform to sell directly, with fulfilment handled either by the brand (drop-shipping) or by the retailer. The marketplace model allows department stores to dramatically expand their online assortment without taking on inventory risk, but it also dilutes control over the customer experience and, critically, over customer data.

For an omnichannel department store pursuing the omni-cluster model, this raises questions. If a customer’s journey involves a concession-operated in-store experience, a marketplace-fulfilled online purchase, and a return handled by the retailer’s own staff, to which omni-cluster do the revenues and costs belong? Who holds the unified customer data? How are the KPIs — CLV, sales per employee, cost of returns — calculated when the employees, inventory, and fulfilment processes belong to different entities?

Unbundling and rebundling

The IADS has suggested that a degree of “unbundling” will be necessary to evaluate the costs attributable to an omni-cluster. When that exercise is pursued, it becomes possible to find potentially more appropriate, more efficient, or more effective solutions before rebundling these into an omni-cluster ecosystem. This is the essence of the challenge: the department store of the future must decompose its inherited commercial functions — buying, stocking, selling, fulfilling, servicing, and relating to the customer — and reassemble them into configurations that serve omnichannel logic.

This may mean, for example, that conventional buying is retained for destination categories where the retailer’s curation and expertise add value and where control over inventory enables fulfilment optimisation; that marketplace is used for long-tail categories where breadth matters more than in-store experience; and that concession is reserved for brands whose in-store presence and expertise genuinely enhance the customer experience in ways the retailer cannot replicate. Each model would need to be evaluated not only on its margin contribution but on its compatibility with the broader omnichannel ecosystem — its impact on data availability, fulfilment flexibility, and customer journey coherence.

No single commercial model will suit every category, brand, or market. But the current patchwork — where the choice between conventional, consignment, and concession is often the product of historical negotiation rather than strategic design — is poorly suited to the precision required by omnichannel optimisation. Department stores that undertake this unbundling exercise deliberately will have a structural advantage over those that allow their commercial architecture to evolve by inertia.

Conclusion: from omnichannel to ecosystem — and beyond

The trajectory outlined, from channel integration to journey optimisation, from channel-based P&Ls to customer-centric omni-clusters, from uniform store networks to precision-engineered physical assets, from inherited commercial models to purpose-built architectures, points toward a destination that transcends the notion of “omnichannel” altogether. What emerges is the concept of an ecosystem: a retail business in which every component — the store, the digital platform, the data infrastructure, the commercial model, the category strategy — is orchestrated in function of its contribution to customer value and profitability.

The IADS Academy 2021 anticipated this evolution, mapping the industry’s trajectory from the single store, through e-commerce, cross-channel, and omnichannel, toward what it called the “ecosystem” stage. Five years on, the contours of that ecosystem are becoming clearer.

But there is an additional dimension that most omnichannel strategies have yet to address: the upstream impact on product development itself. Research argues that companies thriving in an omnichannel world are rethinking how they identify opportunities, design, test, and launch new products. The omnichannel environment creates both unprecedented access to consumer data — through clickstream analysis, DTC channels, online communities, and co-creation platforms — and new operational constraints that must be embedded early in the NPD process. Procter & Gamble’s Tide Eco-Box, designed from the outset for e-commerce fulfilment (less packaging, less plastic, optimised for delivery trucks and letter boxes), exemplifies a product conceived for the operational realities of a specific channel. Alibaba’s Tmall Innovation Centre partnered with Mars to develop Spicy Snickers based on platform data revealing that chocolate buyers also liked spicy snacks — compressing a 36-month development window into less than a year.

As Rooderkerk has noted, leveraging retailer data and sharing it with manufacturers could lead to much better innovations. This represents a shift from the traditional push model of innovation — where manufacturers develop products and retailers stock them — toward what might be called collaborative product innovation, where the retailer’s data on customer behaviour, channel preferences, and operational constraints feeds directly into the development process. For department stores, which sit at the intersection of thousands of brands and millions of customer interactions, this is a largely untapped strategic asset. The department store of the future may not only sell and fulfil — it may co-create the products it sells, using its omnichannel data as the currency of partnership with brands and manufacturers.

This is what the ecosystem stage ultimately means. It is one where optimising customer journey and reinventing the store network are not parallel projects but interdependent levers of transformation. Where the measurement system reflects the reality of how customers actually behave rather than how channels are organisationally structured. Where each store is judged on its contribution to the whole, each commercial relationship is assessed on its compatibility with an integrated logic, and each product is developed with the full omnichannel journey in mind.

Credits: IADS (Selvane Mohandas)

What: RetailDNA is a holistic framework that maps retail performance across four interwoven value chains—customer, product, operations, and capital—enabling leaders to optimize for sustainable, board-level outcomes.

Why it is important: By focusing on board-level metrics and cross-functional collaboration, the framework enables leaders to identify and address performance constraints, maximizing resource allocation and profitability.

RetailDNA, also known as CommerceDNA, offers a unified structure for understanding and optimizing retail performance by mapping the business across four interdependent value chains: customer, product, operations, and capital. Each chain has its own logic, leadership, and primary metric—profit per customer, realized margin, cost per operation, and return on capital employed—ensuring that all business functions contribute to overall profitability and resilience. The framework addresses a common industry challenge: sub-optimization, where isolated improvements fail to deliver sustainable growth because they are not aligned across the organization. Instead, RetailDNA emphasizes board-level ownership, cross-functional collaboration, and a focus on identifying and managing binding constraints to maximize resource allocation and commercial outcomes. Its adaptability across sectors—from retail to hospitality, media, and subscription businesses—demonstrates its relevance for any consumer-facing enterprise navigating digital disruption and evolving customer expectations. By providing a common language and performance architecture, RetailDNA empowers leaders to drive holistic, sustainable growth and long-term value creation.

IADS Notes: Retail Innovations Report 2026 (McMillanDoolittle, May 2026) highlights how leading retailers are embracing digital transformation, operational agility, and purpose-driven strategies, confirming that holistic, metrics-driven frameworks—integrating customer, product, operational, and capital value chains—are essential for sustainable performance in today’s complex retail landscape. The Digital Capability Index 2026 (Retail Week, March 2026) provides a comprehensive overview of how top retailers are responding to shifting consumer expectations, emphasizing the need for unified performance management, omnichannel excellence, and data-driven decision-making across all business functions. MBS’s “10 predictions for 2026 retail leaders should look at” (January 2026) underscores the importance of agile leadership, systematic upskilling, and balanced AI-human integration, with only 10% of retailers successfully scaling holistic, cross-functional digital strategies. The Robin Report’s “12 emerging rules and predictions for retail” (April 2026) details how consumer power, trust, technology, and new business models are reshaping retail, highlighting the urgency for integrated, board-level frameworks that align all value chains for competitive advantage. BCG’s “Winning codes for retail 2035” (February 2026) emphasizes the need for strategic adaptation, technology adoption, and holistic management of customer, product, operational, and capital resources to drive long-term growth. Collectively, these sources illustrate that the RetailDNA/CommerceDNA framework’s focus on integrated value chains, board-level ownership, and performance metrics is increasingly recognized as a best practice for driving resilience, innovation, and sustainable growth in the global retail sector.

9 retail KPIs to consider at board level

What: The shift from centralized oversight to embedded, real-time governance is transforming how organizations manage compliance, risk, and operational control in AI-driven environments.

Why it is important: The move toward runtime governance aligns with industry findings that only tailored oversight and upskilling can unlock the full value of agentic AI.

As autonomous AI systems increasingly make real-time decisions in sensitive domains, the need for effective governance at the moment of action has become paramount. Traditional governance tools, designed for deterministic software, are inadequate for modern, context-sensitive AI, which can take countless unpredictable paths to achieve its goals. Centralized oversight platforms fail to enforce rules precisely when decisions are made, especially as AI agents proliferate across distributed environments and jurisdictions. The article highlights the concept of runtime governance—a layer that travels with the AI agent, providing executable rules and instant escalation, ensuring continuous compliance and generating audit trails without heavy infrastructure. This approach shifts accountability from external reviews to intrinsic system properties, allowing agents to evaluate constraints and act responsibly in real time. As multi-agent systems become more widespread, this embedded governance model is positioned as the only scalable solution for maintaining control, compliance, and accountability in increasingly autonomous and distributed AI networks. 

IADS Notes: The emergence of runtime governance for autonomous AI agents, as described in the article, directly echoes recent industry transformations, where agentic AI now orchestrates complex operations in real time. BCG’s April 2026 analysis confirms a shift from human-driven processes to agent-led decision-making, making robust data governance and agent-ready APIs commercial imperatives. However, this rapid adoption is not without risk. Both RH-ISAC and Harvard Business Review in April 2026 highlight that traditional cybersecurity frameworks are proving inadequate, as autonomous agents introduce vulnerabilities and demand adaptive, real-time oversight. Further, domain-specific, agentic models are driving operational gains, but only when paired with tailored governance and upskilling. The debate around advanced AI management tools, covered by McMillanDoolittle in May 2026, underscores the struggle to balance automation with human oversight and workforce readiness. Collectively, these developments demonstrate that scalable, accountable autonomy requires not just technological innovation, but a fundamental rethinking of governance, compliance, and risk management at every level.

Governing AI that actually listens

What: Most organizations fail to realize AI’s potential because they underestimate the central role of people and culture in driving successful transformation.

Why it is important: Emphasizing people and culture in AI initiatives reflects a proven strategy for bridging the gap between technology investment and operational impact.

Despite significant investments in artificial intelligence, most organizations struggle to unlock its transformative potential, with only a small fraction achieving substantial value. The article argues that the root cause of this shortfall is not technological, but human: successful AI-driven change depends on placing people at the center of every decision. Drawing on behavioral science, the authors outline seven principles for effective transformation, including achieving true alignment among leaders, empowering managers with agency, and addressing the skills gap through sustained, role-specific learning. The text highlights the importance of understanding employee emotions, using structured rituals to maintain focus, and leveraging storytelling to motivate change. Celebrating small wins and building momentum are also emphasized as essential for sustaining engagement. Ultimately, the article contends that AI’s full potential can only be realized when leaders prioritize culture, communication, and continuous upskilling, ensuring that employees are both prepared and motivated to embrace new ways of working. 

IADS Notes: The article’s perspective is strongly supported by recent research from BCG and Modern Retail, which consistently finds that organizational culture, leadership engagement, and systematic upskilling are decisive for success. BCG’s analyses from April 2026, September 2025, June 2025, and November 2025 emphasize the need for human-centric transformation, transparent leadership, and the celebration of small wins to bridge the gap between AI adoption and value realization. Modern Retail’s March 2026 insights further highlight that robust data quality, organizational alignment, and leadership commitment are critical for translating AI investments into operational and commercial advantages, reinforcing the article’s call to place people at the heart of every AI-driven change.

Why AI change is actually a people change

What: New research shows that remote work, rather than generative AI, is the primary driver behind the decline in junior hiring and entry-level job ads across retail and other sectors.

Why it is important: Distinguishing between the effects of AI and remote work enables more targeted workforce planning, ensuring that retailers invest in the right areas for sustainable growth and resilience.

Recent large-scale studies across the US, UK, Canada, and Australia reveal that the decline in junior hiring and entry-level job postings is more closely linked to the rise of remote work than to generative AI adoption. While both AI and WFH are correlated with reduced early-career opportunities, robust statistical analysis shows that the impact of remote work remains significant even when controlling for AI exposure, while the effect of AI often becomes statistically negligible. This finding challenges the prevailing narrative that automation is the main threat to entry-level jobs, highlighting instead how post-pandemic changes in workplace structure are reshaping talent pipelines and job requirements. For retailers, this means that workforce development, recruitment, and onboarding strategies must be adapted to address the realities of remote work, ensuring that early-career employees receive the mentorship, training, and experience needed for long-term success. By distinguishing between technological and organizational drivers of labor market change, retailers can make more informed decisions about where to invest for sustainable growth and future leadership development.

IADS Notes: Stanford Digital Economy Lab in September 2025 finds that generative AI adoption is driving significant changes in retail employment, particularly impacting entry-level roles and prompting a shift toward workforce augmentation rather than replacement. The most successful retailers are those who leverage AI to enhance, not replace, their workforce—enabling employees to focus on higher-value tasks and supporting long-term talent development. Strada in June 2026 reports that, despite fears of automation, most employers expect AI to increase entry-level hiring in 2026, but the nature of these roles is changing, with greater emphasis on critical thinking, adaptability, and real-world experience. Harvard Business Review in March 2026 warns that aggressive AI automation in entry-level retail positions threatens long-term business sustainability by undermining talent development, institutional knowledge, and customer relationships. The Economist in May 2026 and BCG in September 2025 both emphasize that AI and automation are fundamentally reshaping job roles, skill requirements, and workforce strategies, highlighting the need for systematic upskilling, balanced AI-human integration, and robust governance. Collectively, these sources illustrate that while both AI and remote work are transforming entry-level hiring and job requirements, the most resilient retailers are those who balance technological innovation with human capital investment, upskilling, and the preservation of talent pipelines and customer relationships.

Entry-level hiring is more at risk due to remote work than AI

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In an industry defined by scale, the single-location department store is an anomaly, as conventional retail logic relentlessly pushes toward expansion: more doors, more markets, more revenue. Yet some of the world's most iconic department stores have only a single store and have not only survived but grown precisely because of it. This article explores Liberty and Harrods in London, Bergdorf Goodman on NYC’s Fifth Avenue and Le Bon Marché on Paris' left bank, but TSUM Kyiv would also have been interesting examples.

These department stores are not waiting to grow. They are institutions. And their singularity is not a limitation they have worked around, but rather the foundation of their competitive advantage. Single-location department store assets cannot be standardised across a chain or reproduced in a new market. They are deeply specific, historically grounded and impossible to copy at scale. But singularity carries its own risks. The same uniqueness that creates a destination can become a trap

Architecture: the destination factor

Liberty’s unmatched architectural identity 

Some of the most enduring single department stores share a defining trait: their architecture is the brand. Liberty is perhaps the clearest example. Its iconic Tudor Revival façade, designed in 1924, was constructed from the timbers of two ancient Royal Navy three-decker battle ships. More than 680 cubic metres of ship timbers were used, including their decks, which now form the shop's hardwood floors. The result is a store that feels both ancient and theatrical, unlike anything else in the retail world. Designed to feel like a home rather than a commercial space, its 7,400 sqm are arranged around three atriums, each surrounded by smaller rooms originally complete with fireplaces and furnishings. The building is now a heritage-listed London icon, carefully preserved and among the city's most recognisable architectural icons.

In 2025, Liberty reported 6% year-on-year sales growth and 61% increase over pre-COVID levels, validating a retail strategy that prioritises unique curation and local market focus over global standardisation.

Harrods: when scale becomes a landmark 

Liberty and Harrods both function as cultural landmarks and tourist destinations, though at different scales. Where Liberty is intimate, Harrods is palatial. At approximately 100,000 sqm, the size of the Knightsbridge building has always been a spectacle in its own right. For example, its façade has been illuminated by 12,000 electric light bulbs since 1959, attracting visitors early on for that specific reason. Today, around 100,000 people reportedly visit the store every day, rising to 300,000 in the run-up to Christmas, and approximately 15 million a year in total (2023 estimates). The store continues to increase dwell time and sales through spatial reinvention, such as its most ambitious renovation and architectural project to date, creating a two-story watches and jewellery department featuring innovative vertical boutiques and Europe's first curved escalators. This type of elevated design is not just qualitative, but measurable. Reports show that the best retail destinations across architecture, interiors, and experience achieve $15,000-$17,000 per sqm, around 70% above average. By contrast, the good stores generate less than half that performance.

Becoming inseparable from the city's identity, both Liberty and Harrods create a "pilgrimage" effect, driving people to visit them beyond their retail essence. They are cultural and architectural monuments, functioning as much as national institutions as they do as shops. The architecture of Liberty and Harrods carries the brand, the history and the commercial proposition simultaneously. It is an asset that cannot be franchised or reproduced.

Art experiences: when retail becomes a museum

Le Bon Marché: art programming as a commercial engine

One of the competitive advantages a single-location department store enjoys is the ability to take creative risks that chains could not standardise. From its earliest days, the department store has been a spectacle. Le Bon Marché has taken that idea further than any other global competitor, building an ambitious cultural programme that it would be impossible to replicate elsewhere. That, precisely, is the point.

Le Bon Marché's engagement with art is rooted in its own history. Its founder, Aristide Boucicault, organised painting exhibitions in the store in the nineteenth century. Today, the store holds a permanent collection of over 80 works of contemporary art and design and operates as a museum would: visitors can take guided visits of the store as a cultural destination in its own right for €20 during the day or €45 after closing hours.

More importantly, since 2016, the store has commissioned annual museum-grade installations by internationally acclaimed artists, transforming it into an immersive art gallery with monumental works suspended from the ceiling and pop-up spaces turned into art venues. Each January, when the store's calendar is dominated by sales and the traditional Le Blanc linen promotions, these exhibitions draw a significant additional, distinct audience. Since the praised Ai Weiwei's inaugural exhibition in 2016, they have become genuine cultural events in Paris. Chiharu Shiota, Leandro Erlich, Joana Vasconcelos, Subodh Gupta and Daniel Buren are among the artists featured. Over the years, this art programming has established Le Bon Marché as a legitimate cultural venue where art, commerce and daily life meet.

Finally, in 2022, Le Bon Marché went further still, launching its first after-hours theatre production and reinventing the store as a live performance space. The inaugural show was an immersive adaptation of Émile Zola's Au Bonheur des Dames, itself inspired by the birth of the department store. Audiences moved through the floors while actors performed around them. A second production, co-created with Cirque Le Roux, converted the ground floor into a circus venue, complete with a stage including a gigantic wall construction. Combining acrobatics and drama, the most recent production, Babel by Compagnie Käfig, required the building of an eight-metre-tall structure. All shows ran every Thursday, Friday and Saturday evening from September 2025 through December 2026, with tickets priced between €50 and €75.

This programming is not cultural philanthropy but a commercial engine. Evening performances attract during hours when the store would otherwise be closed, introduce audiences who may not yet be shoppers, and generate specific editorial coverage that no media budget could replicate. More fundamentally, none of it could be reproduced across a portfolio of stores. The scale of investment makes sense only because there is one Le Bon Marché. The singularity of the location is what makes the ambition viable.

Bergdorf Goodman windows: a New York institution

Few things in retail have achieved the cultural permanence of Bergdorf Goodman's windows. In the 1930s, they carried a surrealist sensibility. By the 1950s, they reflected the postwar appetite for glamour. The 1970s brought street theatre. Each decade left a distinct mark, and today the windows synthesise all of these periods, blending high and low culture, art, science and nature into a deliberately maximalist vision. Overloaded with detail, they are designed to allow multiple readings: from across the street, from a passing car, and up close, where hidden details and in-jokes reward the attentive viewer. Over the decades, the store has collaborated with independent artists and major cultural institutions, including the New-York Historical Society. The subject of several books, Bergdorf Goodman windows are a form of public art that has shaped New York's visual identity.

The commercial logic is equally clear. The windows function as advertising, a cultural statement, and a brand anchor simultaneously. They generate earned media, drive foot traffic and reaffirm the store’s position as the definitive luxury fashion address in New York. As with Le Bon Marché's art programme, the commitment these windows require is justified and made possible by the fact that there is only one Bergdorf Goodman.

The art of being a merchant: the luxury magnitude

Harrods’ total luxury ecosystem

What sets Harrods apart is the sheer concentration and depth of its luxury-brand offering. Home to over 3,000 brands, the store is more than a question of square footage; it is defined by the model through which those brands are presented. Harrods has developed a Superbrands format, dedicating entire rooms and floor sections to the world's foremost luxury houses, including Chanel, Dior, Hermès, Prada, Loro Piana, Harry Winston and more, giving each the spatial presence and editorial control of a standalone boutique, within a single building. For many of these houses, their Harrods space is the most significant concession they operate outside their own flagships. Exclusive products, designed or sourced specifically for Harrods and unavailable anywhere else, reinforce the store's position as a destination that cannot be replicated elsewhere. The result is a store that functions simultaneously as a multi-brand retailer and as a curated collection of the world's most prestigious brand environments, an experience that no other department store, anywhere, replicates in full.

The services ecosystem is equally without parallel. Harrods operates more than 26 eat-in options. Research by Harrods in 2023 shows that when customers engage with restaurants and bars, they spend twice as long in the building and twice as much money. Compared with the pre-pandemic period, this represents a turnover up +49% vs. 2019. Also, a tiered personal shopping programme ranges from an accessible in-store consultation to an invitation-only private shopping suite at The Penthouse, reserved exclusively for the highest-tier Harrods Rewards clients.

Harrods made a bold move in 2017 by opening a closed-door, appointment-only Wellness Clinic, a significant shift in how luxury department stores were beginning to think about beauty and exclusive services for their wealthy customer base. Spanning almost 1,000 sqm, the space was never intended to be a traditional spa or beauty salon. Instead, the Wellness Clinic was conceived as a high-end, results-driven clinic offering a curated selection of treatments. The space was designed to offer an unusually wide range of services for a department store. Harrods assembled a multidisciplinary team covering everything from injectables and body contouring to cryotherapy, DNA-based personalised skincare, IV vitamin infusions, dental services, osteopathy, podiatry and physiotherapy. A dedicated partnership with a wellness expert brought daily personal training and nutritional coaching on-site. Taken together, the concentration of luxury through brands, services and dining creates an unmatched gravitational pull.

Yet Harrods is structurally vulnerable due to over-reliance on tourism. Sensitivity to international travel cycles, currency swings, visa regimes, geopolitical shocks, and economic decisions, such as the discontinuation of tax-free shopping in the UK, can stimulate or depress luxury shopping.

Bergdorf Goodman’s unparalleled curation

Where Harrods commands through scale, Bergdorf Goodman commands through editorial precision. That distinction is deliberate and structural, based on scarcity, craftsmanship and belonging. Across eight floors of the women's store, in a Beaux Arts building erected in 1928 on the former site of the Cornelius Vanderbilt II mansion, the store houses highly directional selections with an intentionality that goes beyond buying. The house's online magazine, the BG Edit, extends this curatorial voice into editorial territory, positioning the store as a taste authority.

The store's curatorial identity is also embodied in its leadership. Linda Fargo, SVP Fashion and Store Presentation Director since 2006, occupies a role with no true equivalent at any other department store: her personal edit has its own dedicated space within the building, her aesthetic sets the tone for the store's visual identity, and her presence at fashion weeks carries the authority of an institution. That level of human curatorial investment, rooted in decades of relationship-building with designers, is itself a form of product offer that cannot be replicated.

Private labels becoming global brands

Liberty prints: woven into the business model

The story of Liberty's fabric business is, in many ways, the story of Liberty itself. When Arthur Lasenby Liberty opened on Regent Street in 1875, textiles were at the heart of his vision. He had made his reputation importing fine silks, Japanese kimono fabrics and printed Indian cottons, and it was not long before he began commissioning original designs. By the 1880s, Liberty was working with British artists and craftspeople aligned with the Arts and Crafts movement. Collaborations with figures such as William Morris helped establish the brand as a pioneer of Art Nouveau. In 1884, Liberty acquired the Merton Abbey Print Works, taking direct control of its fabric production for the first time. By the 1890s, Liberty fabrics had become synonymous with the finest avant-garde textile design, its floral, paisley and abstract patterns recognised across Europe. Central to the entire print business is a single extraordinary material: Tana Lawn cotton, which remains the most iconic and commercially important fabric Liberty produces. In the early 1920s, Liberty sourced ultra-fine long-staple cotton fibres. The result was a revolutionary textile, fine, breathable and durable, with a silk-like lustre and fluidity that no other cotton has matched. It became the store's best-selling textile almost immediately.

Today, Liberty holds an archive of 45,000 original designs. Its fabrics are sold in-store, online and through a wholesale network spanning 32 countries. In 2019, the fabrics business grew at 15% year over year, making it the largest contributor to the Liberty Group, with combined in-store and online growth of 37% from 2018 to 2019. To serve its expanding international wholesale market, Liberty launched a dedicated B2B platform, www.libertyfabric.com, in 2019, making its archive accessible to trade buyers globally for the first time. The fabric business also enables Liberty to collaborate with brands as varied as Uniqlo, Loewe, Nike, Supreme and the Bridgerton series, reaching additional customers. The company has also used its fabric platform to support emerging designers through the Liberty Discovers programme, developed with the London College of Fashion, offering access to the archive, mentorship from the buying team, and exposure through the store's communications. Richard Quinn's early career is one example of what the programme has produced.

What the Liberty print business represents is rare and structurally significant: a proprietary creative asset that generates value simultaneously across retail, wholesale, licensing and collaboration. As the brand's design director noted in 2019, "Through the Liberty London store we are curators; through our fabrics business we are makers." That combination is unique among global department stores. The fabric business also solves a structural challenge specific to the single-location model: how to generate revenue from customers who may never visit the store. Liberty in-house brand now accounts for 30% of the company's turnover.

The label is the product: Harrods' food and gifting business

Charles Henry Harrod opened his first venture in 1834, a grocery business in London's East End. By 1849, he had relocated to Knightsbridge, occupying a single room at 105 Brompton Road, and was already dispatching hampers of preserves and teas. Food has therefore been at the very core of the Harrods brand since before the current store existed.

The iconic Food Halls opened in their current form in 1905, featuring elaborate Arts and Crafts tiled interiors. The store's motto, Omnia Omnibus Ubique, "all things for all people, everywhere," captures the ambition. The Harrods own-brand food range, bearing the store's name on tea, coffee, preserves, biscuits, chocolate, gift sets and hampers, is now one of the most recognisable luxury private labels in global retail. Sold in-store, online and through a dedicated Corporate Service division for business gifting, it operates at significant scale. Personalised hampers can be built by individual customers and corporate clients alike, with bespoke packaging, custom branding, thematic curation and coordinated global delivery available for large-volume orders.

The Harrods name is not a generic private label but functions as a signal of luxury and provenance. Own-brand food products are sold as souvenirs and gifts, not commodity alternatives. Harrods controls the full value chain: product development, in-house manufacturing of chocolates and baked goods, curation, packaging, corporate sales and international fulfilment. Each gifting season, from Christmas to Eid to Easter to corporate year-end, is anchored by new collections designed to sustain that cycle of demand.

Like Liberty's fabric business, the Harrods food and gifting operation extends the store's commercial reach far beyond its Knightsbridge address. A hamper dispatched to Calcutta or Boston in 1849 carried exactly the same logic as one delivered to Tokyo or Dubai today. The store has one location. The brand has no geographic limits.

The limits of singularity: Samaritaine, a store looking for its customers

 When uniqueness is not enough   

La Samaritaine was founded in 1870 by Etienne Cognacq and Marie-Louise Jaÿ, two people from modest backgrounds who built one of Paris's most celebrated retail institutions. Growing steadily over six decades, they assembled a complex of four buildings completed in 1932. LVMH, which had acquired Le Bon Marché in 1984, bought La Samaritaine in 2000, envisioning the two stores as complementary flagships with distinct identities on each bank of the Seine.

The store closed in 2005 due to safety concerns. What followed was sixteen years of closure, legal disputes, contested designs and repeatedly deferred reopening dates. When it finally reopened as Samaritaine in June 2021, the total investment was estimated at €750 million.

The renovation, led by Pritzker Prize-winning studio SANAA in collaboration with heritage specialists, was a remarkable achievement. The Art Nouveau features, cast-iron signs, ceramic decorations, enamel-tile facades and decorative pillars were meticulously restored. The Art Deco façade overlooking the Seine, the glass-roofed atrium, and the famous peacock fresco on the upper floor were restored to their original condition. The new undulating glass curtain wall on the Rue de Rivoli, a shimmering wave echoing the rhythm of the Haussmann-era streetscape, was widely praised as a feat of contemporary architecture.

But the renovation, however admired, was not the commercial strategy. The store was conceived and operated as a luxury destination, managed by DFS, LVMH's Hong Kong-based duty-free subsidiary, with an explicit ambition: to capture affluent international tourists, and above all, Chinese luxury shoppers. The assortment, the operating model, and the entire commercial logic were calibrated for that one customer, leaving. Parisian locals were not the target, and the store's offer made that evident. Samaritaine reopened at the height of the post-COVID travel shutdown, with no international tourism. And when travel resumed, the anticipated wave of Chinese luxury spending never materialised. The store was left without its intended customer, and, having never courted a local one, without a viable alternative.

In search of the right commercial proposition

The virtues of the single-location model are real, but they are not unconditional. They depend entirely on the coherence of the underlying commercial proposition. When architecture becomes the destination without a sustainable customer base to support it, uniqueness alone cannot save it. Curious visitors come for the building, mostly for the peacock fresco, but they do not come to shop. Samaritaine has become, in effect, a cultural monument with a retail floor inside it. The lesson is that no amount of architectural magnificence can compensate for a missed customer strategy.

In 2025, LVMH extracted Samaritaine from DFS Group to reposition the department store for individual shoppers rather than Chinese tour groups, creating a new governance structure with Le Bon Marché and Samaritaine under single leadership. This reorganisation signalled a strategic shift, moving from travel retail toward a more sustainable, locally relevant business model. Shifting away from its previous focus on Chinese tour groups, the move aims to leverage the complementary strengths of both properties: Samaritaine's exceptional location and Le Bon Marché's established Parisian identity, combining creativity with professional execution.

The stores examined in this article have little in common at first glance. Yet they share the same strategic truth: one location mastered is more valuable than multiple locations, and what cannot be reproduced cannot easily be threatened. The single-location department store is not a relic of a pre-expansion era. It is a model that, when built on genuine and irreplicable assets, whether a heritage building, a proprietary product or a deeply local identity, is among the most defensible positions in retail. The cautionary tale of Samaritaine does not undermine this conclusion. It sharpens it. Singularity is not inherently an advantage, but it becomes one when it is backed by a coherent commercial proposition and a customer base broad enough to sustain it. In an industry that has spent decades chasing scale, these stores are a reminder that some things gain value precisely because they cannot be everywhere.

Credits: IADS (Christine Montard)

What: As AI adoption accelerates, uneven access to training and oversight risks deepening workplace inequalities and eroding trust among employees.

Why it is important: Effective AI integration depends on transparent oversight and equitable training, aligning with findings that trust and inclusion are critical for organizational resilience.

The EAB Inclusion Leader Playbook for the Next Phase of AI underscores that as artificial intelligence moves beyond pilot projects and becomes embedded in everyday work, it is fundamentally altering how opportunity, evaluation, and advancement are distributed within organizations. While many employers focus on productivity gains, the report warns that the real challenge lies in ensuring AI is experienced as fair and trustworthy by all employees. Recent research shows that only a small fraction of US workers have received AI-related training, with access and encouragement particularly lacking for women and underrepresented groups. This uneven learning curve threatens to widen existing disparities, as those with early exposure and support build capability faster, leaving others behind. The report calls for inclusion leaders to embed themselves in AI governance, advocate for transparent policies, and define clear human accountability, especially as AI increasingly influences hiring, promotion, and pay. Ultimately, the playbook argues that inclusion is not a constraint on AI innovation but a prerequisite for building trust, widening participation, and ensuring that AI-driven transformation benefits the entire workforce. 

IADS Notes: The challenges and opportunities outlined in the EAB Inclusion Leader Playbook for AI are echoed across recent industry analyses. As Seramount noted in February 2026, inclusion leaders are increasingly vital in ensuring that rapid AI adoption supports fairness, trust, and equitable access to training, especially as automation risks leaving underrepresented groups behind. BCG’s September 2025 research underscores that only 36% of workers feel prepared for AI-driven change, highlighting a critical gap in upskilling and the need for balanced integration of human and technological capabilities. The persistent trust gap, as reported by ESG Dive in December 2025, reveals that most US employees remain wary of AI-driven decisions in hiring and performance, demanding transparency and human oversight. ERE Media’s July 2025 coverage of the Mobley v. Workday lawsuit further illustrates how unchecked AI hiring tools can perpetuate discrimination, reinforcing the necessity for robust ethical validation and human involvement. Finally, The Robin Report in April 2026 documents the widening “AI encouragement gap,” particularly affecting Gen Z and women, as economic pressures and limited support threaten to deepen inequalities and stifle innovation. Together, these findings confirm that the future of AI transformation will depend on organizations’ ability to embed inclusion, trust, and human accountability at every stage.

An inclusion leader playbook for the next phase of AI

What: Despite continued corporate commitment to DEI in the US, the rollback of flexible work policies is undermining inclusion and worsening outcomes for underrepresented groups.

Why it is important: The US experience demonstrates that effective inclusion relies on systemic workplace support, not just formal DEI programs, reinforcing findings from recent sector analyses.

Recent research from Catalyst and New York University’s School of Law reveals that while 80% of surveyed US companies claim ongoing commitment to diversity, equity, and inclusion (DEI), the rollback of flexible workplace policies is eroding real progress for women and minorities. The study highlights that flexible arrangements such as family leave and adaptable scheduling have been more successful in diversifying management than traditional DEI programs. However, as companies revert to more rigid, command-and-control models, these gains are at risk. The employment rate for Black women has seen one of its steepest declines in 25 years, and the unemployment rate for Black workers continues to outpace the general population. Many organizations, under political and regulatory pressure, are shifting away from explicit DEI language and programs, yet the infrastructure that enabled broader participation is being dismantled. This shift threatens to reverse advancements in workplace diversity and inclusion, particularly in sectors like retail, where operational resilience and talent retention depend on inclusive practices.

IADS Notes: The current debate over the future of DEI in corporate America, as highlighted by the recent Catalyst and NYU study, closely mirrors the retail sector’s experience over the past year. As detailed by Harvard Business Review in February 2026, retailers have faced mounting legal and political pressures, prompting many to rebrand or scale back explicit DEI initiatives while maintaining a focus on inclusion and belonging. This shift is evident in the widespread adoption of frameworks like FAIR, which prioritize fairness, access, inclusion, and representation, allowing companies to balance compliance with authentic workplace culture. According to ESG Dive in July 2025, 20% of companies dismantled DEI programs, leading to decreased morale and increased turnover, yet most retailers, as noted by HR Dive in October 2025 and ESG Dive in May 2025, have opted for nuanced adjustments rather than wholesale abandonment of inclusion efforts. The sector’s response underscores the operational and reputational risks of inconsistent DEI values, as seen in Target’s significant losses compared to Walmart’s successful adaptation, a trend also reported by ESG Dive in January 2026. As regulatory scrutiny intensifies, the imperative for systemic, measurable inclusion remains central to talent retention, business resilience, and stakeholder trust, even as the language and structure of DEI programs evolve.

DEI isn’t dead. But it’s not really alive, either

What: Customer participation is reshaping retail, as brands leverage co-creation, community-driven events, and experiential strategies to build loyalty and cultural relevance.

Why it is important: The evolution toward customer participation and collaboration is redefining retail success, making emotional connection and shared ownership central to brand strategy.

Retailers are moving beyond traditional personalization to embrace participatory models that invite customers to co-create products, experiences, and even brand narratives. Initiatives like Magasin du Nord’s community-driven beauty awards, LEGO Ideas, and Glossier’s community-led product development illustrate how brands are empowering their audiences to shape offerings and foster a sense of ownership. Collective rituals—such as Spotify Wrapped or Share a Coke—turn individual engagement into viral, shared experiences, amplifying brand reach and emotional resonance. Physical retail is also evolving, with experiential events, collaborative workshops, and design-led environments transforming stores into destinations for community and creativity. This participatory approach not only strengthens loyalty and advocacy but also positions brands to respond more nimbly to changing consumer desires. As the boundaries between brand and consumer blur, the most successful retailers are those that create frameworks for collaboration, enabling customers to leave their mark and feel genuinely included in the brand’s story.

IADS Notes: Magasin du Nord’s community-driven beauty award (Via Ritzau, September 2025) exemplifies how empowering customers as co-creators strengthens loyalty and authenticity, blending in-store experiences with digital engagement to foster community and brand relevance. BeautyMatter’s April 2026 report on experiential retail in Shanghai and Singapore demonstrates that Gen Z’s demand for authenticity, personalization, and emotional connection is pushing retailers to close the gap between brand promise and lived experience, with co-creation and multi-sensory environments building lasting loyalty. Breuninger’s Fashion & Food festival in Freiburg (Freiburger Wochenbericht, September 2025) and World Retail Congress insights (Fashion Network, May 2025) confirm that collaborative, event-driven strategies and community-focused loyalty programs are redefining customer engagement, balancing technology with genuine human connection. Inside Retail in September 2025 highlights the shift from mass-market strategies to community-driven engagement, with brands leveraging cultural fluency and exclusivity to foster belonging and outperform traditional competitors. John Ryan Newstores in December 2025 underscores that experiential, design-led, and digitally integrated store concepts are attracting new generations of shoppers and fostering ongoing brand relationships. Collectively, these sources show that the future of retail success lies in participatory, community-centric models that blend personalization, collaboration, and experience to create deeper, more meaningful connections between brands and consumers.

What does customer participation look like in the consumer-facing sectors?

What: The rise of mass automation and AI is forcing policymakers to rethink how prosperity is shared, with new tax strategies and ownership models emerging to address potential job losses and inequality.

Why it is important: This shift highlights the urgent need for new fiscal and social policies to ensure economic resilience and equity as AI-driven automation transforms the labor market.

As artificial intelligence and automation advance, traditional models of taxation and redistribution are coming under pressure. With the prospect of mass job displacement and a shrinking labor share of income, governments in developed economies face the challenge of funding social safety nets and maintaining economic stability. Proposals such as robot taxes, targeted consumption taxes, and capital levies are gaining traction, while more radical ideas—like giving workers direct stakes in AI-driven companies through share ownership or sovereign wealth funds—are being debated as ways to redistribute the gains from automation. The concentration of wealth among technology and AI firms could exacerbate inequality, making it critical for policymakers to act before entrenched interests make reform more difficult. For the retail sector, these changes will shape the future of employment, consumer demand, and the broader economic environment, underscoring the need for proactive adaptation and strategic planning in an era of rapid technological disruption.

IADS Notes: The Economist in May 2026 explores the risk that rapid AI-driven automation could erode the labor share of income, disrupt the tax base, and force governments to rethink how they fund social safety nets, with new forms of taxation and direct worker ownership in AI-driven companies emerging as possible solutions. Citrini Research in February 2026 envisions a future where AI-driven automation and agentic commerce reshape the retail industry, leading to widespread job displacement, business model disruption, and changes in consumer spending and payment systems, with the risk that job losses and wage compression could erode the consumer base underpinning retail demand. Le Monde in October 2025 documents how major US retailers are restructuring and redefining roles as AI accelerates automation, with only 36% of retail workers feeling prepared for AI-driven change, highlighting the need for balancing technological innovation with human capital investment and robust governance. BCG’s 2026 Retail Predictions emphasize that AI and automation are transforming retail store operations and workforce roles, driving productivity gains but requiring robust governance and upskilling to ensure sustainable growth. ERE Media in June 2025 warns that aggressive AI automation in entry-level retail positions threatens long-term business sustainability by undermining talent development, institutional knowledge, and customer relationships. Collectively, these sources illustrate that the future of retail work and fiscal policy will depend on balancing technological advancement with human capital investment, robust governance, and innovative approaches to taxation and redistribution to ensure resilience, equity, and sustained consumer demand in an AI-driven economy.

How to share the AI windfall