What: Leading retailers unlock massive growth potential through personalized experiences while majority struggle to meet consumer expectations.

Why it is important:  With 70% of shoppers preferring personalized experiences but only one-third of retailers delivering them, this represents both an urgent challenge and unprecedented opportunity for the retail industry.

BCG's comprehensive analysis reveals a significant transformation in retail as personalization becomes a key driver of growth, with potential incremental gains of $570 billion for industry leaders. The study highlights a striking disparity between consumer expectations and retail execution, where returns on personalized promotions significantly outperform traditional mass marketing approaches. Despite the clear benefits, most retailers are still investing less than 5% of promotional spending in personalization, indicating substantial untapped potential. The retail media advertising business, growing at 25% annually, provides a crucial funding mechanism for necessary technological investments. Success stories from industry leaders demonstrate the impact of well-executed personalization strategies, from enhanced customer engagement to improved operational efficiency. The study outlines a structured approach to implementation, emphasizing the importance of aligning technical capabilities with business objectives and building the right ecosystem for sustainable growth. 

IADS Notes: Recent market evidence demonstrates the powerful impact of personalization in retail through several notable success stories. Sephora's Beauty Insider program  shows how data-driven personalization directly drives sales and retention through tailored communications and offers. The Mall Group's innovative approach  has proven successful with personalized services like "chat and shop," significantly improving customer engagement and sales conversion. Most impressively, Ulta Beauty's case study  reveals their personalized loyalty program drives 96% of sales through 43.3 million active members, demonstrating the substantial returns possible when personalization is effectively implemented. These examples validate that personalized approaches can deliver significantly higher returns than traditional mass marketing strategies, while highlighting the untapped potential still available in the market.

The great personalization divide in retail

What: AI is transforming retail operations by streamlining processes, improving decision-making, and reducing reliance on outdated tools like Excel.

Why it is important: As retailers face shrinking margins and increased competition, AI-driven solutions offer a way to enhance efficiency, reduce errors, and optimise inventory management, ultimately improving profitability.

Retailers are increasingly turning to artificial intelligence (AI) to modernise their operations and move away from manual processes like Excel-based planning. Companies such as 7thonline are leading this shift by offering AI-powered tools that enhance merchandise planning, demand forecasting, and supply chain management. These solutions help retailers align inventory with consumer demand in real-time, reducing excess stock and waste while improving profitability. The use of AI also enables retailers to make smarter, faster decisions, particularly for seasonal products where pre-season guesses often lead to unprofitable outcomes. By embracing AI, retailers can respond dynamically to market trends and consumer behaviour, ultimately boosting margins and reinvesting in technology for future growth

AI drives retail efficiency, leaving 'excel hell' behind

Printable version

Artificial intelligence (AI) is revolutionising retail, impacting everything from customer service to supply chain management. Yet, as outlined in our recent IADS Exclusive titled "AI in retail: why culture, values, and strategic goals matter more than tech," successful AI adoption involves more than simply implementing new tools. It requires deep alignment with an organisation's broader mission, culture, and values. This exclusive further addresses one of the most critical challenges in AI deployment—the "black box" problem, which refers to the challenge of interpreting or explaining how complex AI models arrive at their decisions. This piece explores how retail leaders can ensure transparency, accountability, and ethical use. Retailers can fully harness AI's potential by focusing on governance, explainability, and innovation while avoiding the risks of opaque decision-making systems. A lack of clarity can impact both customers and employees, undermining trust and creating potential issues with compliance and fairness. Our focus here is on bridging AI's capabilities with clear, human-centred governance by prioritising transparency and informed oversight to channel AI’s potential for people-first innovation.

Beyond the “black box”: accountability, explainability, and transparency

Cracking open the black box

AI’s promise lies in its ability to make decisions faster and more efficiently than humans. However, many AI systems operate in ways that even their developers cannot fully explain, creating what is known as the "black box" problem. AI algorithms work by analysing vast amounts of data through multiple layers of complex calculations, where each layer transforms the data in ways that are difficult to track. Although developers set the initial parameters, the system's learning process often results in decision paths that are nearly impossible to map or interpret in clear, human-understandable terms. This issue becomes especially risky in retail, where decisions like product recommendations, dynamic pricing, or hiring must be accurate and fair. Unlike industries where AI operates behind the scenes, retail relies on customer- and employee-facing decisions that are immediately visible, impacting trust, satisfaction, and loyalty among both groups. As a result, explainability and fairness in AI outcomes are fundamental concerns, they are vital to maintaining competitive advantage and retention.

Retail leaders must prioritise transparency at every stage of AI development and implementation to overcome this. Documenting data sources, algorithmic logic, and decision-making processes allows businesses to provide clear explanations when needed. Unlike in traditional systems, where a clear set of rules may guide a process, AI often uses complex, data-driven models that can be harder to interpret. This opacity raises concerns not only for internal governance but also for customer trust and regulatory compliance.

Retailers must ensure their AI systems are explainable to stakeholders at all levels, from customers and employees to regulators and internal governance teams. By documenting and understanding each decision made by AI systems, companies can avoid the risks of operating in the dark.

Human oversight in AI 

As discussed in "AI in retail: why culture, values, and strategic goals matter more than tech," AI is not a stand-alone solution. Its success hinges on alignment with human oversight and strategic goals. AI-driven systems require ongoing human accountability to ensure they function as intended.

Leaders in retail need to establish clear governance structures for AI deployment, designating dedicated teams to oversee AI systems and address potential issues, safeguarding the interests of both employees and customers. This was seen in Tesco's pilot program for AI-driven dynamic pricing, where IT teams and department heads collaborated closely to integrate AI without compromising existing business processes. Such coordinated efforts are critical for ensuring that AI-driven decisions align with operational goals and ethical considerations.

Keeping in mind that AI cannot operate effectively without human oversight, retail leaders should set up dedicated governance teams to monitor decisions made with the use of AI, ensuring they are both accurate and ethical.

Building trust through transparency 

Retailers can no longer rely on opaque AI systems, especially as customers, employees and regulators demand greater transparency. In today's marketplace, trust is currency and ensuring that AI tools operate transparently is vital to maintaining it. Regular audits and assessments, such as Data Protection Impact Assessments (DPIAs) and conformity assessments, can ensure that AI systems meet legal requirements and uphold responsible practices throughout their lifecycle.

Marks & Spencer, for instance, conducts ongoing assessments of its AI systems to ensure they align with both customer expectations and ethical standards. These practices help maintain transparency and foster trust across stakeholders.

Regular, transparent assessments of AI systems, paired with continuous monitoring, ensure that AI tools remain aligned with business goals, legal standards, and customer expectations.

Positioning AI as a creative partner in personalisation and innovation

While AI has traditionally been associated with operational efficiency, its potential as a creative and inclusive tool is equally significant. AI agents have revolutionised customer interactions, offering personalised product recommendations and real-time customer support through chatbots and virtual assistants3. Retailers have the opportunity to use AI not just to improve processes but to drive innovation in areas like product design and customer engagement, fostering a more inclusive and sustainable future for retail. For example, some AI-powered digital labs are demonstrating innovative uses of AI creatively to generate custom visuals and personalised content, offering valuable strategies to amplify brand identity and foster impactful customer engagement. Additionally, AI platforms in custom jewellery create unique pieces tailored to individual specifications, blending luxury with personalisation on a scalable level. There is also untapped potential in applying AI to refine employee experiences, aligning training and support with personal strengths and brand values.

AI for inclusive fashion design 

Fashion has historically struggled to cater to all body types and physical needs, but AI offers a pathway to change that. By analysing consumer data such as body measurements, feedback, and preferences, AI can help create clothing with a more inclusive fit. In the bra industry, for example, AI-driven platforms are transforming design by offering custom-made options tailored to each individual's unique measurements, promising a "perfect fit" that addresses both comfort and support. This technology not only enhances comfort but also addresses long-standing challenges in fit, design, and accessibility. As previously mentioned, parallel advancements in AI-driven customisation tools for jewellery mirror this trend, allowing customers to design pieces that reflect their personal style and requirements. Moreover, AI empowers designers to balance aesthetics with accessibility, supporting the creation of inclusive pieces that retain quality and appeal. This approach can be transformative, ensuring that new products meet functional needs and offer greater comfort and accessibility.

AI as a catalyst for sustainability 

Sustainability is an area where AI can make a profound impact. Beyond optimising supply chains, AI can help discover new eco-friendly materials, minimise waste, and predict customer demand more accurately to prevent overproduction. IKEA, for instance, uses AI to track real-time customer preferences, allowing it to fine-tune inventory and reduce excess stock, thereby cutting waste. Additionally, some digital content labs employ sustainable practices by reducing waste in production, and AI-powered augmented reality (AR) shopping solutions help consumers make more precise purchase decisions through virtual try-ons, which decreases returns and supports more sustainable consumption.

Moreover, AI can simulate the environmental impact of materials and operational decisions, guiding retailers toward more sustainable practices. By integrating sustainability into AI-driven innovation, retailers can meet both customer demands and environmental goals, positioning themselves as leaders in responsible technology use. Overall, AI remains a powerful tool for driving sustainability in retail, from optimising supply chains to minimising waste and promoting eco-friendly choices.

The future of retail spaces: creating the "third place” 

AI can help retailers move beyond traditional shopping experiences by designing spaces that function as "third places"—spaces where customers can shop, relax, and engage with their community. AI tools that analyse foot traffic and customer behaviour enable retailers to create environments that cater to families, young professionals, and other demographics. For example, Nordstrom uses AI to enhance customer service and design spaces that foster interaction and loyalty. Retailers can use similar insights to create experiences that go beyond transactions and resonate emotionally with customers.

Increasingly, retailers are integrating extended reality (XR) technologies—comprising augmented reality (AR), virtual reality (VR), and mixed reality (MR)—to transform in-store experiences further. Each of these technologies provides unique enhancements: augmented reality overlays digital elements onto the real world, virtual reality immerses customers in fully digital environments, and mixed reality combines the two, allowing for real-time interaction between physical and virtual elements. With these tools, customers can try on products virtually, explore gamified store layouts, or engage with product details in 3D, adding new layers of interaction that make shopping both dynamic and memorable.

Moreover, gamification strategies supported by AI and XR deepen these connections by transforming shopping into an interactive journey. AI-driven rewards, achievements, and challenges motivate customers to engage more fully, creating a dynamic and memorable in-store experience. This gamified approach not only draws customers back but also shifts the retail experience from a routine task to an enjoyable, impactful activity. Together, these innovations create an atmosphere where shopping is functional, immersive, and personally engaging.

Multigenerational workforce: Millennials, Gen Z, and Gen Alpha bridging the AI gap

The rise of AI in retail is not happening in isolation. It is unfolding in an era where the workforce is becoming more multigenerational than ever before, spanning Boomers, Gen X, Millennials, Gen Z, and, in the coming years, Gen Alpha. The younger generations—Millennials, Gen Z, and soon Gen Alpha—are not only shaping consumer trends but are also at the forefront of AI adoption in the workforce. Their digital fluency allows them to bridge the gap between traditional retail practices and AI-driven innovations.

Millennials and Gen Z: leading the charge

Millennials and Gen Z employees bring a unique set of skills to the table, particularly in understanding how AI can enhance customer and employee experiences.5 These generations are digital natives, comfortable with using AI tools to create more personalised and efficient shopping experiences, ranging from tailored customer interactions to streamlined employee training and support systems. Their affinity for innovation makes them ideal candidates for roles that involve AI governance, strategy, and implementation. In many organisations, these generations are the bridge between leadership’s vision and the practical application of AI solutions on the ground. In some organisations, interns play a crucial role in advancing AI initiatives by experimenting with AI tools innovatively. This open approach allows retailers to test and refine straightforward, adaptable solutions, often achieving quick wins and practical insights into AI’s application in retail environments.

Gen Alpha: the future of AI in retail

Looking ahead, Gen Alpha—those born after 2010—will be the most AI-native generation yet. As they enter the workforce in the coming years, their expectations for seamless, tech-driven environments will push retailers even further toward AI adoption. Retailers must prepare now by fostering a culture of continuous learning and adaptability.  Unlike previous generations, Gen Alpha is growing up in an environment where AI, XR, and interactive digital interfaces are the norm. This digital immersion will likely lead them to prioritise seamless, personalised, and ethically aligned AI applications as they enter professional roles.

Gen Alpha’s digital-native perspective positions them to lead retail innovations, especially in personalisation, transparency, and sustainability. As this generation enters retail roles, their advanced tech skills and commitment to socially conscious, transparent practices will further push the industry toward robust AI adoption and integration. Preparing for this workforce shift involves fostering a culture of continuous learning, with Gen Z and Millennials guiding Gen Alpha as they begin taking on leadership roles.

Governance done right: legal and ethical compliance

AI in retail must adhere not only to business goals but also to legal and ethical frameworks. Retailers need to recognise that while AI can enhance operations, it must operate within the confines of privacy laws, consumer protection standards, and intellectual property rights. Effective AI governance requires a solid grasp of multiple disciplines, including AI, data science, law, risk management, and ethical standards. Given the rapid evolution of this field, governance frameworks and policies developed today will likely require updates and adaptations in the near future. Pragmatism is essential, as well as understanding that not using AI can pose greater risks than using it responsibly.

Staying ahead of the regulatory curve

As AI evolves faster than the law, retailers must be proactive in understanding and complying with existing legal frameworks. For instance, AI systems used for hiring or pricing must adhere to anti-discrimination laws and consumer protection standards. The U.S. Federal Trade Commission (FTC) has made it clear that AI tools cannot violate existing regulations, and failure to comply can result in significant penalties. Implementing governance frameworks like the EU AI Act or ISO 42001 can provide structure, but governance professionals must remain adaptable to navigate the changing legal landscape effectively.

Successful AI governance is not limited to enforcing rules but involves fostering a culture of ethical responsibility. This requires a mindset that balances risk with opportunity. Companies must work closely with legal teams to ensure that AI systems do not inadvertently breach regulations. This requires continuous legal oversight, particularly as AI evolves and new use cases emerge. Being proportionate in AI governance, focusing on high-risk areas and scalable oversight, is critical to effectively balancing AI’s benefits against potential risks. Retailers need to ensure that AI systems comply with existing laws and regulations, working closely with legal departments to mitigate potential risks, protecting both customer data and employee rights in the process.

Navigating intellectual property challenges

As AI supports the creation of new designs, marketing strategies, and other innovations, intellectual property (IP) issues will become increasingly important. For example, recent rulings on AI-generated content raise questions about ownership rights. Retailers need clear policies regarding IP ownership for AI-driven innovations, ensuring they are legally protected while avoiding conflicts with third-party rights. This challenge requires AI governance professionals to understand not only the technology but also the intersections of IP law, ethical standards, and commercial pressures. A perceptive approach to AI governance (building a shared language around AI and data science) facilitates mutual understanding and credibility, strengthening governance practices across the organisation.

Continuous governance for continuous innovation

AI governance is not a one-time effort but a continuous process that requires regular updates and audits, as well as alignment with organisational values. This is particularly important when addressing dimensions such as bias, data privacy, and fairness. Retailers must adopt governance frameworks like ISO 31000:2018 Risk Management Guidelines or the NIST AI Risk Management Framework to ensure AI systems comply with legal and ethical standards. Regular audits will help navigate the complexities of AI and maintain responsible use.

As retailers face the complexities of AI deployment, they must prioritise thoughtful planning, structured governance, and continuous adaptation to ensure successful outcomes. Here are the key practical steps for integrating AI, which serve as essential takeaways:

• Conduct a formal needs assessment: Start by understanding where AI can add the most value, ensuring alignment with both operational challenges and broader business objectives.
• Align AI with organisational goals: AI must not operate in isolation. Leadership should set a clear vision and develop a roadmap with prioritised use cases that target strategic impact.
• Develop proof of concept and pilot programmes: Test AI through controlled pilots, refine based on real-world data, and involve key stakeholders across departments to ensure AI integrates smoothly with existing systems.
• Iterate and improve before full-scale deployment: Do not rush into full implementation. Learn from pilot results, iterate, and document decisions to create a responsible and transparent AI framework.
• Plan thoroughly for full-scale deployment: Ensure detailed planning, resource allocation, and ongoing performance monitoring to mitigate risks and avoid AI becoming a “black box.”

Beyond technical steps, continuous adaptation and monitoring are necessary to keep AI systems aligned with business objectives and ethical guidelines. By continuously evaluating and refining AI systems, retailers can unlock AI’s potential as a strategic asset that drives innovation, inclusivity, and sustainability. At its best, AI governance becomes a key enabler of long-term value. Retailers who embrace governance frameworks and standards, coupled with transparent, accountable practices, will be well-positioned to succeed and thrive in a future shaped by AI, ultimately benefiting both employees and customers with a responsible, human-centred approach.

The "black box" challenge highlights the dual impact of AI in retail: AI systems shape customer experiences in areas like personalised shopping and dynamic pricing, and they influence employee-related decisions, such as hiring and resource allocation. Yet, these systems must themselves be shaped and guided by human oversight. This interdependence calls for transparency and accountability, ensuring that AI-driven decisions are effective and aligned with the core values and needs of employees and customers. AI operates as a "socio-technical system"—meaning it blends both technical processes and human influence. This requires a strong foundation of ethical, human-centred governance where AI complements company culture by prioritising people and data integrity over purely algorithmic outcomes.

AI is best used as a tool to support, rather than replace, human judgment, helping decision-makers make informed choices through simulated insights. Such a foundation ensures that AI complements organisational culture, expanding possibilities while adhering to human-centred values. A purpose-driven approach to AI integration paves the way for sustainable growth and innovation, allowing technology to amplify human values and propel the retail industry toward a future rich with meaning and resilience.

Credits: IADS (Maya Sankoh)

Printable version here

Check out the pictures here

Last October, Manor gathered its business partners to introduce them to its new Men’s and Women’s fashion concept, unveiled in the newly refurbished Basel store and supported by a press release issued the same day. It was the first time that Manor conducted such an event, which reminded of what Boyner does to keep connected with its local suppliers and partners in Turkey./nbsp]

For Manor, an IADS member since 1968, it was, however, an excuse for a much more comprehensive update about every category, the company itself, and where the CEO, Roland Armbruster, sees it in the coming years. This is why the format took the shape of a keynote, modelled after tech companies, with Armbruster, CMO Sandra Kottenauer and CFO Thomas Stocklin, taking the stage solo one after another to discuss product strategy, omnichannel updates, belief in more stores, retail media, and enhanced cooperation with brands and suppliers. The session ended with a Q&A with the three top executives, moderated by Sandra Kanzig, Communications and Marketing Director.

The grand event was complete with a staged visit to the revamped Basel store, so the audience could discover the new ground floor (cosmetics, perfumes and accessories) and the first and second floors (men’s and women’s fashion).

In the aim to become Switzerland’s fashion destination, Manor goes lifestyle

As Manor seeks to solidify its role as a compelling brand within Switzerland's retail landscape, it emphasises fashion, a key driver of the retailer’s brand identity. Over the next three years, Manor will invest in refurbishing its top 12 stores’ fashion areas, i.e. 20,000 sqm (which account for over 50% of the company's turnover), to create a consistent, nationwide brand image, particularly through enhanced lighting concepts.

A critical aspect of this strategy involves clearer segmentation of Manor's fashion offerings, moving from a disorganised shopping experience to a well-defined lifestyle segmentation, focusing on classic, contemporary, and casual styles. This shift acknowledges the evolving nature of consumer preferences, where lifestyle takes precedence over age in fashion choices. To support this, Manor is introducing 20 new brands tailored to regional preferences, reflecting the diverse fashion tastes across Switzerland, sometimes in exclusivity (in Basel, American Vintage, Someday, Hugo, Michael Kors, Liu Jo, G-Lab or Ted Baker were not represented before). The accessories segment is also receiving significant attention, to offer consumers a complete lifestyle experience.

Manor's private label will align with these segments, ensuring coherence and appeal alongside premium international brands through astute in-store positioning. This strategic alignment extends into digital realms, where Manor is poised to take significant strides in retail media, leveraging digital assets to enhance brand communication and consumer engagement.

In the beauty sector, where Manor holds a strong market position, the focus remains on innovation and customer experience. Manor aims to maintain its leadership by continuously introducing new brands and services, particularly in emerging wellness and green beauty areas. Deeper collaborations with brands like Rituals and Sephora exemplify Manor's commitment to co-creating unique in-store experiences that cannot be replicated online, emphasising the value of personal service and exclusive offerings.

In the non-food categories, Manor is strategically refining its sports and toys offerings, focusing on key areas that align with customer interests. By concentrating on training and outdoor apparel instead of bulky items like skis, Manor adapts to the logistical realities of city centre locations. In toys, the opportunity lies in creating interactive, experience-driven spaces that serve as family-friendly destinations, enhancing in-store engagement and online growth.

The food sector remains a pivotal traffic driver for Manor's physical stores, distinguished by a market-like atmosphere offering personalised service and ultra-fresh, homemade products. This unique positioning helps attract a steady flow of customers, benefiting all store categories. Significant investments are planned for Manor's supermarkets and restaurants, particularly in major locations like Geneva, which will undergo refurbishments to enhance the food shopping experience further.

Marketing efforts are also being revamped, with a new centralized team and a fresh visual identity to deliver consistent brand expression across all channels. Manor is embracing a more modern, approachable aesthetic and plans to leverage brand ambassadors like Olympic champion Wendy Holdener to enhance local relevance and trust. Regarding technology, new investments in CRM have already bolstered customer acquisition by over 20% annually. Now, the focus shifts to customer activation, leveraging data to enhance basket sizes and customer engagement through targeted marketing based on purchase affinities. This approach is expected to double the value of CRM-linked customers.

Manor's strategic transformation: a call for enhanced partnership models

Manor is leveraging its unique market position to drive increased footfall in urban centres while enhancing brand value across physical and digital platforms. A 200+ million Swiss franc investment backs this strategic initiative to optimise its value proposition, including major store refurbishments in Basel and Lausanne (2024), followed by Lugano, Vevey, and Geneva (2025).

The strategy presents a compelling mutual benefit proposition: through co-investment, both Manor and its partners stand to maximise returns. While selective store closures are occurring in underperforming regions like Ticino, Manor's commitment to physical retail remains robust with over 50 locations maintained and enhanced. A cornerstone of this commitment is the planned 13,000 sqm flagship store in Zurich, set to open by 2027, featuring innovative concepts across fashion, home, beauty, and dining segments.

Manor also plans to invest in its sales teams, enhancing customer service skills and brand knowledge, provided partners play the game and decide to move in with new models (such as concessions) at Manor. This aligns with broader retail trends where transitioning from wholesale to concession models has shown a  25-30% sales increase. This is why Manor’s top brass tactically emphasised the importance of a collaborative approach, inviting partners to contribute meaningfully across three main pillars, offerings, story, and operations:

• Offerings improvement: ensuring premium product assortment in urban locations and digital platforms, primarily through concession models designed to optimise partner offerings,
• Brand storytelling: enhancing brand visibility across all touchpoints to strengthen consumer mindshare,
• Operational excellence: implementing seamless operations that showcase innovation while delivering powerful joint marketing messages through Manor's new Retail Media platform.

These collaborative initiatives are designed to maximise in-store and online opportunities for suppliers, streamlining the supply chain to enhance consumer-facing value. By ensuring high-quality products are delivered on time and optimising digital data exchanges, Manor aims to minimise time-to-store and reduce warehouse durations. This improves stock flow and accelerates product availability across all sales channels, leading to increased full-price sales and decreased discounts through shared inventory risk management.

Furthermore, they insisted that Manor is a solvent partner, facilitating sustainable investments in the retail sector. Unlike the market average payment period of 50 days, Manor has reduced this to just 25 days. Together with their parent company, Maus Frères, they have introduced a supplier financing option poised to enhance financial flexibility for partners further. That was also a way to kill the tenacious rumours that have spread for years suggesting that the company was for sale.

How is the Basel store delivering its promises?

The Basel location serves as a prototype for Manor's transformation under new artistic director Volker Kächele, who joined in February 2024. His 360° approach ensures brand consistency across all customer touchpoints—from store windows to digital platforms—creating a unified, customer-centric experience. Everything has been de-siloed: he also supervised the brand revamping, which is visible at the cash desks. The dynamic and relaxed seasonal campaign, displayed on kakemonos and in-store screens, also caught the eye.

Consequently, the first answer is yes, the promises are delivered. The new atmosphere is immediately felt when entering the store, thanks to the overall colours, the lighting, and how the new Manor brand identity is subtly present everywhere.

It also gives much more space for third-party brands to express themselves through 2 approaches:

• Either by maximising the visibility that concessions allow, as exemplified on the ground floor by the massive presence in entry-price jewellery given to  Phantasya, Pandora and Swarovski, or, in the cosmetics section, the hard-to-miss Sephora stand.
• Or through the work done with all furniture suppliers to rethink the display units, with lower, more accessible and perspective-friendly units that focus on products and brands.

Consequently, the gaze runs freely on all floors, and visitors feel that the space is clear, with visible and identifiable sections.

Some elements are thought out in detail and show to what extent Manor aims to be a place to visit and live, not only a place to purchase. For instance, the watch stand, operated with Hirsch, a watch strap manufacturer, is also a service point where customers can have their items revised, repaired, or customised. It also sells accessories, such as electric storage boxes for automatic watches, fully representing the watch universe.

Another point that caught the attention during the visit was the notion of partnership that Manor’s top management was calling for during the presentation. Some brands are already playing the game, such as Saint Laurent, which offers its “Vestiaire Olfactif” exclusive collection on the ground floor, in addition to the more commercial lines. For now, it is the only luxury brand to present its high-fragrance line, but it clearly shows the shift that Manor is making.

Finally, while Manor’s CMO tackled the topic without deep-dive into it, Manor’s private labels’ upgrade is also very visible now, not only through their increased coherence with the general store environment but also through astute zoning: for instance, Manor’s contemporary line is adjacent to Levi’s, while in sportswear, it is near Nike. The idea is clear: Manor’s private labels are not by-products or second thoughts but a desirable component of the store's offer.

Under Roland Armbruster's leadership, Manor is executing a rapid and comprehensive transformation that defies stereotypes about Swiss conservatism. The pace and scope of change demonstrate a bold vision for retail innovation, setting new standards in the Swiss market.

In the coming weeks, Manor will engage partners individually to explore transformation opportunities and review contributions. This means that the Basel and Lausanne renovations mark just the beginning of Manor's ambitious journey toward retail excellence, and more changes should be expected in every aspect of the business in the coming months and years. Stay tuned for news from Switzerland!

Credits: IADS (Selvane Mohandas du Ménil)

printable version

Singapore, officially known as the Republic of Singapore, is a member of the world’s exclusive club of city-states, along with Vatican City and Monaco. Singapore was even identified in 2015 by the Financial Times as “the world’s only fully functioning city-state”, with its currency, a large airport acting as a worldwide hub, one of the busiest maritime ports, and fully fledged armed forces (a feature that the other two do not have). Singapore’s numbers are astonishing: it was the 4th most competitive economy in the world in 2023, one of the world’s very few countries to be rated AAA by S&P, Moody’s and Fitch altogether (and the only one in Asia), the second densest city in the world after Monaco, the second country in the world in terms of being a business-friendly place. 100% of its citizens are equipped with smartphones (a feature that even South Korea, an ultra-connected market, does not reach).

Singapore’s reputation in terms of productivity is well-established. Still, combined with tourism (Singapore is the 5th most visited city in the world and the second in Asia, thanks to its “City in Nature” positioning promoting sustainable tourism), it becomes a natural destination for anyone versed in retail. The state in its current form is 107 years younger than the first department store to have opened there, Robinsons in 1858, when Singapore’s population was 80,000, of which 50% were Chinese.

Today, retail represents 3% of the national workforce and 1.4% of Singapore’s GDP, serving nearly 6m inhabitants. Most of its iconic department stores are located on Orchard Road, which gives visitors the feeling of seeing double, given the ubiquity of luxury and fashion labels there. This situation raises some serious questions regarding the still-operating department stores (Robinson’s closed for good in 2021): how are they differentiating? What is up-and-coming in such a competitive retail landscape?

Are department stores in Singapore a disconcerting picture of the past?

Strolling down the 2.2 km-long Orchard Road is an authentic luxury experience, in a literal way: the whole location and its street furniture were revamped in 2010 for a total of $40m, to be on par with the retail tenants: more than 50 luxury flagship stores, 5,000 fashion and retail lifestyle stores, 800 restaurants, bars and cafés, and at least 4 department stores, all over more than 8m sqft of retail space. It is a culture of plenty, and one might see the same logos repeatedly, from Louis Vuitton to Gucci, Chanel or Dior. Every retailer preempts as much visual space as possible to be louder and more attractive than its competitors, including luxury brands.

It is stunning to see so many different department stores in such a small area, in a densest way than in other international shopping hubs such as New York, Paris or London: customers have the choice between 4 different department stores, all located less than 3 minutes from each other. Differentiation is, therefore, key to making sure they stand out, and, in earnest, the mission is not accomplished: even though Tangs, the now-oldest Orchard Road department store, has implemented some very nice ideas to create loyalty and a sense of belonging, it is difficult to feel excited by the department store scene.

Among foreign operators, Indonesia-based Metro Department Stores is the oldest in Singapore. It opened in 1957 to sell overseas labels to wealthy housewives. The first store on Orchard Road opened in 1965 and relocated when the Paragon Mall (in front of the first location) opened in 1987. After having up to six stores in the 2000s, Metro now only operates the Orchard Road flagship and the suburban location of Causeway Point. It focuses on private labels to complete an international offering.

The Paragon Mall was refurbished in 2008 for $82m, including opening new retail spaces. This allowed it to go upmarket and attract luxury brands such as Tod’s, Prada, Miu Miu, and Gucci, as well as Marks & Spencer and Toys”R”Us. It offers upscale dining options such as the Imperial Treasure Peking Duck, a supermarket, and the expected array of services in such a location: concierge, free Wi-Fi, members’ lounge, and EV and phone charging./nbsp]

In such a context, anyone would expect an upscale experience when visiting the anchor department store, which is far from the case. A major issue comes from Metro's location within the mall, at the back and up one floor, forcing customers to use escalators to visit a store that lacks both efficient in-mall frontage and outside views and windows. Consequently, the department store has low visibility and cannot entice international visitors without prior knowledge of the mall to come in and visit.

The store is developed on three floors in a very classical manner: cosmetics, fragrances, and women’s shoes on the first floor, women’s and men’s apparel and accessories, and services on the second, while home, kids, and lifestyle can be found on the last floor.

When arriving in the store, the experience in the cosmetics and fragrances area is luxurious and efficient, with branded counters without walls, allowing a sense of space. The shoe area is similarly wide open, providing perspectives and a sense of plenty. The apparel floor feels less luxurious, as fewer luxury labels and many more mid-market names are displayed in a generic setting, therefore not providing a memorable experience. The feeling gets more present on the last floor, where the purpose is clearly to sell products rather than propose a special experience. Some decisions are surprising:

• The store is offering suitcases on every floor, even though they are officially displayed on the last one according to the floor maps,
• Similarly, the transitions between categories can sometimes be unsettling, such as the second floor, where lingerie is mixed with luggage and men’s apparel on sale.
• Lego is advertised on the floor plans and suggests a significant shop in the shop with a branded display, while in fact, the products are on shelves near other brands without a specific effort to promote the brand.

Traffic was satisfying at the time of visit, which suggested that the department store succeeds in attracting a crowd of loyal locals. However, it is difficult to understand Metro’s selling point to international customers apart from discounts and rebates.

Japanese department store Isetan entered Singapore in 1983 with a store on Parkway Parade (the store was closed in 2022), in Wisma Atria on Orchard Road in 1986 (Isetan closed the store in 2015 and converted it into rental units keeping the Isetan umbrella name), in Orchard Road’s Shaw House in 1993 (the current flagship), as well as in 2 other suburban locations in 1995 and 2010. Today Isetan operates 3 locations in Singapore.

The Shaw House was built in 1993 on the old Lido Cinema and sits at the crossroads of Orchard Road and Scotts Road, leading some locals to dub it “Isetan Scotts”. The store is expanded on 5 floors: a basement with a supermarket and gourmet restaurants, the first floor dedicated to cosmetics, beauty and jewellery, the second floor dedicated to women’s apparel and accessories, the third floor dedicated to “lifestyle” including men’s fashion and gadgets, as well as golf apparel, and the last floor devoted to home and kids. Like in the Shinjuku location in Tokyo, each floor offers food and beverages, which encourages spending time in the store.

Overall, the feeling is extremely luxurious, and the highlights are the spectacular grocery store in the basement (which could easily compare to the Isetan Tokyo experience or Le Bon Marché’s Grande Epicerie in Paris) and the atrium on the ground floor (first floor), which structures the whole building.

The first floor, dedicated to cosmetics and fragrances, is beautiful but empty at the time of the visit. However, the only moment when a salesperson initiated contact was on this floor, while it did not happen at any point in any other store visited on the same day. Store execution is spectacular, and a “Café de Muse” coffee shop completes the product offering.

This overlap of food and retail is also felt at the second floor and is quite effective. However, women’s fashion offerings are toned down by the fact that brands are not visible, creating a strange experience in which the food points stand up. The same feeling takes place at the third floor where the Sushiro restaurant feels almost part of the Bang & Olufsen stand and is almost too visible, shadowing interesting spaces such as the one dedicated to golf. Finally, the fourth floor (technically the fifth as there is an intermediary floor operated by another retailer and not accessible from within the store) displays kids and home. It gives access to the McDonald’s restaurant and the cinema.

While the overall experience was clearly more luxurious than in Metro, and the effort to provide a series of food options during the visit was notable, the feeling, here again, was that this store was selling products rather than experience, questioning the very reason why one would come specifically to Isetan and not another department store.

Its Nippon competitor Takashimaya entered Singapore in 1988 when they signed a joint venture deal with real estate developer Ngee Ann Kongsi, which opened the two-towers-strong Ngee Ann City building in 1993 on what used to be a cemetery. Takashimaya occupies 37,000 sqm in Tower B and used to compete with Tangs in Tower A until it closed for poor results and was replaced by a series of luxury flagship concessions.

The store is structured according to Japanese retailers’ playbook: a basement with a Japanese supermarket and a food hall, a ground floor dedicated to cosmetics and accessories, international designers on the first floor, ladies’ and men’s apparel and accessories on the second floor, then kids on the third, and home appliances on the top floor./nbsp]

The second basement, which includes Japanese food and restaurants, was bustling when visited at 3 p.m. on a weekday, suggesting that the place is recognised as a meeting point and a landmark for locals. A selection of international and Japanese food labels completed the offering and gave a sense of elevated shopping despite the noise, excitement and intense crowd. The first basement, dedicated to homeware, home appliances and kitchenware, offered a stark contrast, as the traffic was lower and the experience poorer: just like at Metro, products are stacked rather than desirably displayed.

The first floor (ground floor) is Japanese department store retail at its best, with a series of international luxury cosmetic brands alternating closed-wall units and open ones, all surrounded at the periphery of the floor by mid-market accessories brands shop-in-shops such as Kate Spade, Coach, Bally or Marc Jacobs. Luxury names can be found on the second floor, where the likes of Bottega Veneta and Manolo Blahnik neighbour Issey Miyake, Ba&sh, Ganni and Kenzo, and regional names such as Bora Aksy and Maryling. A section was under refurbishment at the time of the visit, with Mulberry and Burberry due to open and the Hermès space temporarily relocated to the third floor.  The first floor also houses a Club 21 multi-label boutique, a legendary name in Singapore regarding fashion, with 7 locations in the city, including a second one on Orchard Road.

The third floor is dedicated to women’s and men’s fashion, accessories, a selection of tech, and luggage. The space is much more fragmented regarding retail units and feels more crowded. While the women’s section could claim to be the most agreeable experience, thanks to a mix of international brand stores (Maje, Sandro, the temporary Hermès unit), the floor felt overall rather poor in terms of experiences, with a strange floor plan, locating customer services near lingerie and men’s gadgets, and a very significant and unappealing luggage area near the escalators in a very high-traffic zone. The service area (which includes the VAT refund) works with a ticket system, and customers wait on tired seats, making the experience unappealing.

The fourth floor is dedicated to sports, kids, and restaurants. Toys are appealing (all units are branded), childrenswear does not stand out (most brands are in generic display), and the sports section is spectacular, thanks to a space operated under ‘Sports Central’. Again, some store zoning choices are questionable, such as the fitting rooms near the lifts. The shopping options are completed with the top floor offering home appliances sold by a business partner, “Best”, under different branding.

The experience at Takashimaya ranges from exciting and bustling at the food level to classical and “déjà-vu” on the ground floor and disappointing on the top floors.

The notable exception of Tangs…

Tangs, an iconic name often compared by locals to Bloomingdale’s and Selfridges, was founded by C.K. Tang, a Chinese national, in 1932 on a first location in Singapore. He was one of the first to identify the potential of Orchard Road, from an old dirt road to a major traffic magnet. He relocated there in 1950, opening his store in front of what used to be a cemetery and initiating a spectacular real estate boom in that part of the city. Today, the group also operates a 7,900 sqm unit in another mall, VivoCity, that opened in 2006 and was fully renovated in 2022.

The Orchard Road location, which spans five floors and more than 15,000 sqm, was renovated in 2012 for $35m and is currently undergoing a new set of renovations announced last July, starting with the basement. The store is modelled after the Chinese Imperial Palace and is flanked by a tower, the Tang Plaza, which was purchased in 1982 and houses a Marriott hotel.

The basement is dedicated to home, wellness and gifts, while the first floor (ground floor) accommodates beauty, the second floor women’s and kids, the third floor homeware, gadgets, tech and men’s, and the fourth floor beauty services. Food options are available across the building except for the third floor.

The basement, while not dedicated to gourmet food like in its Japanese competitors, feels very luxurious regarding how products are displayed, with an effort given to VM and product visibility. Consequently, brands seem more desirable because they have more space for expression, such as Miele or the large Dyson space in front of the escalators. The atmosphere is quiet, without music, which allows operators to diffuse promotional advertising without being too oppressive. What also stands out is the TANGS-branded space dedicated to glassware, tableware and appliances, emphasising the notion of curation and selection.

The first floor (ground floor) feels extremely luxurious and quiet during the visit, despite the passing crowd in front of the store (and even when compared to the traffic in the basement). Brands are organised by semi-closed units, creating perspectives but avoiding giving the visitor a sense of the (relatively) small surface of the store. A bakery producing croissants on site is available, and interestingly, it is completely glass-walled to allow visitors to see but avoid spreading smells in the store.

The second floor is dedicated to women and kids. Again, the presentation is extremely luxurious. Similarly to the basement, a TANGS-branded space proposes a curated offer with exclusive brands such as Suncoo or By Malene Birger. It is strategically located near the food point, allowing here again to create synergies. Messaging is all about caring for the community: wall advertising mentions that “TANGS loves local” and promotes Singaporean-based fashion.

The third floor is well executed, especially regarding homeware and beds. Some product zonings are surprising (men’s underwear is located between luggage and beds). Still, overall, the feeling of luxury remains present, even if the visitor is now on the higher floors. A large Sunglass Hut stand and an overrepresentation of luggage also stand out on this floor. The shoe concept is very coherent, and when it comes to sports, it makes it obvious that Tangs has managed to maintain its partnership with Adidas but lost Nike. A common point to the second and third floors is that Tangs seemingly focuses on mid-market brands, which are often private labels or new and unknown names when it comes to fashion.

The fourth floor is dedicated to beauty salons, including a Chanel Privé, and a “museum,” which is a wall displaying historical pictures of C.K. Tangs, his belongings, the company's history, and repeating the company’s commitment to serving the local community.

There is a clearer path towards more experience at Tangs. It does not go only through the offering of many food and beverage points but also through the expression of the retailer’s name in a very specific (and desirable) way from the point of view of the community, emphasising its local commitments and rooting, as well as real attention given to details and execution at all floors of the store. It is therefore telling that a new round of upgrades is starting to increase the level of experience during the visit even more.

…but wait, there is more!

In Singapore, department stores might not be the ones writing the future of the retail experience, as they are entangled in a competition to retail the best brands (which are otherwise tempted to go solo), in a declining market (retail sales decreased by 2.3% in July 2024 and department stores slid by -11%), where customers are strangled with inflation and ask for more promotions, while leases and rents are increasing. As a consequence, innovation is coming from unexpected places.

In the Isetan Wisma Atria mall, on Orchard Road, a bank, OCBC, has opened a remarkable space worth visiting. The OCBC space is a whole retail unit, accessible both from the atrium (connected with the food court) and the escalators, and is special in the sense that it is much more than a bank.

While customers have access to a series of ATMs at the entrance and dedicated desks for all customer tiers (from personal to private and “premier” banking), as well as a customer service desk, OCBC offers them to spend more time on-site by offering retail activities:

• A visually appealing and functional spectacular library allows people to spend time reading books. They can also purchase them, which echoes OCBC’s cultural positioning since the bank also offers to view a part of their private art collection in a gallery next to the library.
• A café is based in the library space, where customers can enjoy vegan food,
• A retail space offering sustainable and locally produced items allows to shop from a variety of categories, from tableware to gadgets or clothing,
• Finally, a sushi restaurant is also available.

Interestingly, OCBC is very clear about the notion of customer data: every credit card holder has priority over other customers for all categories and a 10% discount, while non-holders, including foreign ones, are invited to choose between either opening a bank account on the spot or simply apply to the loyalty programme. The space overall stands out in terms of experience and creates a true attraction: during the visit, many bank customers were coming from all parts of the mall to settle a bank question and stayed there, having a snack or reading a book, in a relatively quiet, relaxing and welcoming environment. Isetan owns the space: leasing it to OCBC is a smart way for a retailer with a non-productive space to rent it to a new operator, bringing a fresh perspective on the retail experience.

At the Singapore Changi airport, another approach was taken at the Jewel Airport mall to generate interest and curiosity. This mall is not just another airport mall: it was clear since its opening in 2019 that, to be profitable, the 137,000 sqm-large, $1.2 bn-worth mall should address local customers first, well before tourists: the plan involved having 60% of local customers and 40% of international ones. In 2023, footfall increased 26% over 2022, and 70% of it was from local customers. The Jewel is extremely special as a mall:

• The mall focuses on new-to-market brands, such as the first Shake Shack, Burger & Lobster, Pokemon, or Make Hero, a Japanese make-up brand, stores and restaurants.
• Also, well-known brands are invited to display a distinctive experience: Apple has developed a store centred around photography, given the picturesque, inverted fountain that has become The Jewel’s most famous picture. Bacha Coffee, a new coffee chain, has developed a truly experiential store, while Bengawan Solo, a Singapore-based bakery, has opened its largest store (out of more than 50) in the airport. Overall, local brands are invited to show off and are given prime locations in order to showcase Singapore to the world.
• The Jewel has also managed to become a landmark thanks to their Rain Vortez and Forest Valley, which have become places to visit when staying in Singapore in the same way that tourists want to come and see the world-famous Gardens by the Bay. The Jewel has become more famous than the Gardens by the Bay and Universal Studios.

In addition to these retail essentials, The Jewel offers a double reward programme through a collaboration with CapitaStars: both travelers and local residents can capitalize on points and enjoy benefits that can differ according to the population: travellers are offered early check-in, baggage storage or access to the lounge, while locals can enjoy attractions such as the Changi Experience Studio, the Canopy park, or even behind-the-scenes experiences such as Backstage, which explains how the airport works.

Singapore's department store scene on Orchard Road presents a paradoxical landscape. While the area boasts an impressive concentration of luxury retail and diverse shopping options, the department stores struggle to provide truly differentiated experiences. Despite their long-standing presence, Metro, Isetan, and Takashimaya face challenges in creating memorable shopping environments beyond their ground floors. They often fall into the trap of merely selling products rather than curating experiences, with inconsistent zoning and a lack of cohesive brand narratives throughout their multi-level spaces. Tangs emerges as a notable exception, demonstrating a clearer path towards experiential retail. Its focus on local community engagement, curated offerings, and attention to detail across all floors sets it apart. The ongoing renovations at Tangs suggest a commitment to further enhancing the customer experience.

However, the future of retail experiences in Singapore may not lie within traditional department stores. Innovative concepts like OCBC's multifunctional space in the Isetan Wisma Atria mall and The Jewel at Changi Airport are redefining customer engagement. Both sides of the same coin give access to the future: retail spaces can be redesigned to bring something new and unexpected to customers while not often having to go with a decrease in direct revenue (however, the nature of the revenue will change). In the same manner, even in a 100% concession model such as an airport, brand curation, rooting in the local ecosystem and being able to provide distinct privileges to both locals and tourists remain key to being attractive and interesting.

Department stores have always excelled at those activities, so there is no reason for them not to catch the train while it is still there. Singapore is, in that sense, the perfect reminder that, while it is possible to be swamped by the “business as usual” and the necessity to be profitable today, the mere idea of still being around tomorrow requires a strong vision and will to move the lines in a very significant manner. The path forward for department stores involves reimagining their roles as curators of unique experiences rather than mere product sellers.

Credits: IADS (Selvane Mohandas du Ménil)

What: Brands like Valentino Beauty, Shiseido, and Vogue are integrating metaverse technologies such as virtual and augmented reality, smart mirrors, and immersive screens into physical retail spaces to create more engaging and memorable experiences.

Why it is important: This blend of physical and digital elements helps brands overcome the limitations of purely virtual experiences, increasing dwell time, brand engagement, and conversion rates, while catering to consumers' desire for in-person interactions.

This approach can also be applied to department stores, enabling them to offer interactive and immersive sections across various product categories. In a post-pandemic shift, metaverse technologies are enhancing customer experiences. Valentino Beauty used a smart mirror at a New York pop-up to allow visitors to digitally try on lipstick, attracting 1,500 people over two days and boosting sales. Shiseido's 360-degree pod at Macy’s Herald Square transported customers to Japan to experience the Future Solution LX product line, combining physical sensations with virtual reality. Vogue is set to unveil an immersive exhibit, "Inventing the Runway," which will take visitors through a 50-minute archival runway journey using massive video projections. These hybrid experiences are designed to be accessible and engaging, requiring no prior familiarity with new technologies. These initiatives highlight the importance of in-person connections and shared experiences. By mixing physical and digital elements, brands can create richer, more memorable experiences that cater to consumers' nostalgia for simpler, offline interactions while leveraging advanced technologie

Why the metaverse is moving into physical retail

What: BCG's AI Maturity Matrix reveals only five economies are fully AI-ready, highlighting urgent need for global retail industry transformation as AI spending projected to reach USD 632 billion by 2028.

Why it is important: This comprehensive assessment of 73 economies' AI readiness provides crucial insights for retail industry investments, market entry strategies, and technological infrastructure development, while identifying critical gaps in global AI preparedness that could impact retail transformation.

BCG's groundbreaking AI Maturity Matrix assessment of 73 global economies reveals a stark divide in AI readiness, with only five nations - Canada, Mainland China, Singapore, the UK, and the US - achieving pioneer status. The study introduces the ASPIRE framework, evaluating economies across six crucial dimensions: Ambition, Skills, Policy and regulation, Investment, Research and innovation, and Ecosystem. The findings show that over 70% of assessed economies score below the halfway mark in critical areas such as ecosystem participation, skills, and R&D. The research projects worldwide AI spending to reach USD 632 billion by 2028, indicating massive transformation potential. The matrix identifies six distinct adoption archetypes, from AI pioneers to emergents, providing a comprehensive roadmap for economic development and technological integration. This stratification has significant implications for global retail operations, market entry strategies, and technological investment decisions, particularly as economies work to bridge the gap between AI exposure and readiness.

IADS Notes:

Recent retail industry developments align closely with BCG's findings. In October 2024, Walmart's implementation of AI-powered personalised homepages  exemplified how AI pioneers are leveraging their technological advantage. This mirrors the broader industry transformation noted in January 2024, where retail entered a new paradigm with three significant trends: Perceptive AI, Consumer Guardianship, and Eco-Stewardship . The economic impact is substantial, with global online retail sales projected to reach USD 6.8 trillion by 2028. The competitive landscape continues to evolve, as evidenced by emerging market dynamics in Southeast Asia  and Chinese brands moving from low-cost to premium products. These developments underscore BCG's assertion that AI readiness will increasingly determine economic competitiveness and market leadership.

BCG report: The AI Maturity Matrix

70% of economies are underprepared for AI Disruption, BCG Press Release

What: Thailand is rapidly becoming a key player in the global luxury retail market, driven by major developments like the USD 3.2 billion One Bangkok project and a booming domestic demand for high-end goods.

Why it is important: Thailand's strategic location, growing ultra-high-net-worth population, and ambitious tourism goals are positioning the country as a leading hub for luxury consumption in Southeast Asia, attracting both international brands and affluent shoppers.

Thailand is emerging as a significant luxury retail destination, with developments like the One Bangkok project, which features Thailand's first high-street-style luxury boulevard, and expansions in existing malls such as Siam Paragon and IconSiam. The country's luxury market is expected to grow at a compound annual growth rate (CAGR) of 9 percent, reaching USD 3.6 billion by 2029. While international tourists play a crucial role in driving sales, there has been notable growth in domestic demand from affluent Thais and expatriates. Additionally, Thailand’s ultra-high-net-worth individual (UHNWI) population is projected to increase by 14.7 percent by 2028. The rise of Thai celebrities on the global stage is also boosting the country’s appeal as a luxury shopping destination.

Thailand’s rise as a luxury retail powerhouse

What: A retail technology pioneer is revolutionizing merchandise planning by replacing traditional Excel-based systems with AI-powered solutions that enhance profitability and operational efficiency.

Why it is important: This evolution in retail technology marks a pivotal advancement in how retailers approach inventory management and demand forecasting, offering a solution to the widespread challenge of operational silos and inefficient planning processes.

7thonline's journey from a wholesale planning tool startup to a global leader in omnichannel merchandise solutions exemplifies the transformation of retail technology. The company has evolved by integrating advanced data science with over 25 years of business expertise, serving major brands like Patagonia and Calvin Klein. The company's mission extends beyond mere efficiency improvements, aiming to create time for innovation by freeing retail professionals from manual processes. Their platform leverages AI and machine learning to revolutionize merchandise planning and allocation, with a particular focus on breaking down operational silos and enhancing cross-channel inventory planning. The technology enables granular, real-time demand insights at the SKU level for each store location and selling week, helping businesses align inventory with localised demand. Their success is evidenced by clients achieving ROI within the first year, demonstrating the tangible benefits of replacing traditional Excel-based systems with sophisticated AI-driven solutions.

IADS Notes: The retail industry's urgent need for digital transformation is highlighted by Coresight Research's findings in November 2024, revealing that retailers lose 4.5% of gross sales due to merchandising inefficiencies . This aligns with 7thonline's mission, as October 2024 research demonstrates how AI-powered demand forecasting is delivering significant improvements in speed and accuracy . The market's trajectory supports this direction, with the global retail pricing optimization software market projected to reach USD 1.6 billion in 2024 , indicating strong demand for solutions that can effectively integrate AI into retail planning and operations.

How fashion is shaking up its global sourcing strategies

What: Department store foot traffic analysis reveals predictable seasonal patterns and varying performance across brands, with Nordstrom and Nordstrom Rack showing solid YoY growth of 1.4% and 5.0% respectively in Q3 2024, while Macy's and Bloomingdale's outperform the broader category.

Why it is important: The analysis reveals how department stores are navigating post-pandemic recovery through varied strategies, with performance metrics indicating the success of different approaches to format optimisation and customer engagement.

Analysis of department store visit patterns reveals consistent seasonal trends, with major spikes during key shopping periods like Valentine's Day, Mother's Day, and back-to-school season, before peaking during Black Friday week and pre-Christmas. Nordstrom's performance has been particularly notable, with both its traditional stores and Rack format showing sustained growth since April 2024. The off-price Rack division, currently in expansion mode, has outperformed traditional stores through September, though this trend slightly reversed in October. Similarly, Macy's and Bloomingdale's have shown resilience, with Bloomingdale's achieving slight YoY increases in Q2 and Q3 2024. Despite broader category challenges, these retailers appear well-positioned for the holiday season, with historical data suggesting significant upcoming foot traffic increases. The success of varied formats and strategies indicates the sector's ability to adapt to changing consumer preferences while maintaining traditional seasonal strengths.

IADS Notes: The latest foot traffic data aligns with broader department store transformation trends observed throughout 2024. AI-driven insights from November 2024 show Nordstrom and Nordstrom Rack achieving positive year-over-year growth of 1.4% and 5.0% respectively, though this contrasts with the broader sector's holiday season challenges noted in December 2023. The success of off-price formats is particularly evident, as shown by Nordstrom Rack's continued outperformance of traditional stores. This trend occurs amid significant strategic shifts, with Macy's "Bold New Chapter" transformation plan demonstrating how major players are adapting their formats and operations. Coresight Research's analysis reveals changing consumer preferences driving these adaptations, while WWD's industry overview highlights the importance of balancing traditional retail strengths with modern innovations. These developments collectively suggest a sector actively evolving its business model while leveraging seasonal patterns to maintain market relevance.

Checking in with department stores: Nordstrom and Macy’s

What: GenAI is reshaping Black Friday shopping behavior, with 38% of global consumers leveraging AI tools to hunt for deals and make informed purchase decisions across nine countries.

Why it is important: This trend highlights the growing sophistication of consumer shopping strategies, as shoppers leverage AI tools to maximize value during promotional periods, compelling retailers to evolve their pricing and promotional approaches.

A comprehensive BCG survey spanning nine countries across Europe, North America and Australasia reveals a significant shift in holiday shopping behavior, with GenAI emerging as a crucial tool for deal-hunting consumers. The study shows that 38% of shoppers have either already used or plan to use GenAI during major sales events like Black Friday, Cyber Monday, and Singles' Day.

Consumers are primarily utilizing AI to locate optimal deals, conduct product research, and compare different items. Some are even employing it for more sophisticated tasks such as generating shopping lists and brainstorming budget-conscious gift ideas. The positive reception is notable, with 80% of users finding the technology helpful and nearly 40% planning to increase their usage. This trend is particularly pronounced among younger consumers. With shoppers planning to spend a minimum of GBP 310 during sales events, retailers must adapt their strategies to meet these tech-savvy consumers' expectations, particularly as ongoing cost-of-living concerns drive increased interest in discounts.

IADS Notes: The BCG survey's findings about GenAI adoption in Black Friday shopping align with broader industry trends observed throughout 2024. As noted in March 2024, Adobe's research revealed that 58% of consumers were already embracing AI-enhanced shopping experiences, setting the stage for the current holiday season's shopping patterns. This consumer openness to AI has prompted major retailers to respond decisively, as evidenced in October 2024 when Walmart launched its innovative AI-powered personalized homepage initiative.

The economic context is particularly significant, with retailers adopting sophisticated AI pricing strategies in November 2024 to navigate inflation pressures, directly addressing the cost-of-living concerns highlighted in the BCG survey. This technological shift represents more than just a temporary trend; as observed in January 2024, it marks a fundamental paradigm shift in retail, where AI is reshaping everything from consumer behavior to operational strategies, suggesting that the 38% of consumers currently using GenAI for holiday shopping may be just the beginning of a broader transformation in retail.

Smart shoppers embrace AI for Black Friday bargain hunting

What: Euromonitor’s Top Global Consumer Trends 2025 Report analyses consumer trends across sectors.

Why it is important: The new report outlines insights for evolving lifestyle habits and purchase motivations among consumers.

Key insights:

• Loyalty programmes: 48% of brands incorporated experiential rewards in their loyalty programmes as of Q2 2024. 3 in 5 millenials paid for a loyalty programme subscription in 2024 compared with half of generation Z and less than one third of baby boomers.

• Brands: Private label brands across several consumer goods sectors saw some of the largest retail sales gains compared with other category players in recent years.

• Sustainability: 63% of consumers tried to have a positive impact on the environment through their everyday actions. 5 million number of online SKUs with sustainability claims across 11 FMCG industries and 25 countries as of Q2 2024.

• Attention and artificial intelligence: 67% of consumers looked for ways to simplify their lives in 2024. 52% of consumers said ease of use was the reason they used a digital wallet in the past year. 42% of consumers made purchases via livestreaming because product or service features were easier to understand through this channel. 65% of professionals said their company plans to invest in generative AI in the next five years.

• Beauty and personal care: Retail sales growth of premium goods outpaces mass alternatives. 46% of online beauty and personal care products used a sustainability claim in 2023— the highest share of digital shelf among industries.

• Health: A new view of ageing is on the rise. People don’t just want to live longer (lifespan); they want to feel better for longer (healthspan). There has been a consistent increase in the usage of smart devices or apps to track fitness and health across generations, especially Gen Z and millenials.

• Personal finance: 57% of consumers extensively researched the products and services they consumed in 2024. Only 18% said they often made impulse purchases in 2024.

Top global consumer trends 2025

What: Bain's research identifies five design principles for deploying generative AI in the customer journey.

Why it is important: Retail customers are optimistic about generative AI: about half of those surveyed see great potential in these new tools.

Customers value passive generative AI features such as summarising reviews integrated into their journeys—sometimes even more than they value standalone generative AI features. Online shoppers understand the potential for personalisation with generative AI, and they seem more willing to share personal data than they might in other contexts. In retail, generative AI can help deliver great customer service more efficiently, especially in parts of the journey that have proven more difficult to reach.

Generative AI’s Potential to Improve Customer Experience

What: In a new report, Transformers Foundation claims that suppliers are being sidelined within collective initiatives.

Why it is important: Multi-Stakeholder Initiatives must include supplier engagement to make the process fair and inclusive.

The report found that suppliers face resource constraints that hinder their participation in collective activities. In comparison, the report argues, brands and retailers often have large teams and dedicated finances to engage and have the upper hand in decision-making processes. For suppliers in the Global South in particular, there are cultural biases and logistical hurdles that inhibit their participation — ranging from inconvenient meeting schedules to racism and a lack of diverse representation. In essence, suppliers feel disconnected and burnt out from what the industry has labelled ‘collective processes’. This means they also feel absent from how strategic solutions are developed, which is limiting the entire sector’s sustainability agenda.

The report focused on voluntary multi-stakeholder initiatives (MSIs), which are central to fashion’s sustainability progress and are usually created to solve complex global challenges, ideally by fostering collaboration. But by sidelining suppliers, change only serves brands and retailers. The authors argue for a fairer process than what the industry has relied on, and outline what that could look like.

Suppliers are still being excluded from fashion’s sustainability decisions

What: With a new mobile-only shopping platform, Amazon is leaning into haul culture in what’s widely seen as a bid to compete with Shein and Temu.

Why it is important: Social media hauls are widely credited with accelerating the rise of both ultra-fast fashion and a culture of overconsumption driven by low-cost, high volume shopping.

The platform, launched in beta, sells products including fashion with “ultra-low prices”. The model is largely similar to Shein and Temu - ship products directly from China with typical delivery times of one to two weeks. This will also allow Amazon to make use of the ‘de minimus’ shipping regulation that allows companies to ship packages valued at less than USD 800 into the US duty-free and with less scrutiny from customs.

Amazon says that it will continue to focus on its goal of net-zero carbon emissions by 2040. It reported reaching its goal of 100 per cent renewable energy, seven years ahead of its 2030 target; that includes global operations such as energy-intensive data centres, but not supply chain (Scope 3) emissions — which is where most of a garment’s carbon footprint is generated.

Amazon confirms fashion hauls aren’t going anywhere

What: Organisations that master both AI and organisational learning gain unprecedented advantages in managing retail uncertainty and complexity.

Why it is important: "With retailers losing 4.5% of gross sales due to inefficiencies, and only 15% of organisations effectively combining AI with organisational learning, this represents both an urgent challenge and massive opportunity for the retail industry.

The MIT/BCG study reveals a critical transformation in how organisations learn and adapt through AI integration. While only 15% of organisations qualify as "Augmented Learners," these leaders demonstrate significantly better capabilities in managing uncertainty and driving performance. The research shows that companies combining organisational learning with AI-specific learning are 1.6 to 2.2 times more likely to effectively manage various types of uncertainties.

The study emphasises three key areas of enhancement: knowledge capture, synthesis, and dissemination, with particular focus on how AI can transform tacit knowledge into actionable insights. Organisations must simultaneously improve both organisational and AI-specific learning capabilities, choosing projects that promote exploration over mere efficiency gains. The findings highlight the importance of responsible learning practices, ensuring that knowledge capture and dissemination align with established learning principles and values.

IADS Notes: Recent retail industry data powerfully demonstrates the article's findings about the transformative potential of combined AI and organisational learning capabilities. A June 2024 study revealed that the retail sector is leading AI deployment across industries, with nearly half of retailers already seeing increased revenue from their AI initiatives. However, a November 2024 report highlighted that retailers still lose 4.5% of gross sales due to inefficiencies, underscoring the vast potential for improvement. Success stories showcase the impact of effective implementation: Walmart processed 850 million data points to enhance their product catalog quality, while The Mall Group achieved 30-45% increases in email engagement rates by combining GenAI with machine learning.

BCG report: Learning to manage uncertainty with AI

What: The report outlines AI’s pivotal role in optimising companies’ merchandising strategies, such as their assortment planning and demand forecasting strategies.

Why it is important: Coresight Research estimates that retailers lose 4.5% of their gross sales annually due to in-store inefficiencies, underlining key merchandising shortfalls in modern retail operations.

The report focuses on four main usages of AI for retail merchandising:

• the role of AI across key business functions,

• demand forecasting and how to use AI and data-driven insights to respond to demand,

• assortment and allocation planning using AI that analyses data into hyper-localised inventory insights,

• and using AI for precise, efficient inventory replenishment.

AI for Merchandising: Applications, Implementation and Benefits

What: Despite COP29's shortcomings, fashion's unique position across multiple sectors presents an unprecedented opportunity to drive environmental change through industry-led initiatives.

Why it is important: With 60% of consumers showing increased climate concern and major retailers committing billions to sustainability initiatives, the industry's cross-sector influence can drive meaningful environmental change beyond its own footprint.

The fashion industry's response to COP29's disappointing outcomes in Azerbaijan highlights a crucial moment for sector-led climate action. While the UN summit, hosted in an oil-rich nation, failed to secure strong climate financing commitments, fashion's notable absence from the event speaks to a broader industry shift towards independent action. Industry leaders argue that waiting for global mandates is no longer viable, particularly given fashion's unique position to influence change across multiple sectors.The industry's interconnection with agriculture, water systems, and renewable energy creates opportunities for meaningful impact. Lewis Perkins, president of the Apparel Impact Institute, emphasises fashion's potential to create collaborative blueprints for change that extend beyond its own footprint. However, this potential remains largely untapped, with experts noting a disconnect between urgent climate needs and industry action.The challenge lies in transforming rhetoric into action, particularly in supporting Global South suppliers who face the greatest climate impacts. The industry's cultural capital and storytelling capabilities could be powerful tools for driving collective action, provided companies move beyond mere commitments to meaningful implementation.

IADS Notes: The fashion industry's response to COP29's disappointment reflects a broader pattern of industry adaptation identified in recent reports. As noted in November 2024, the BoF-McKinsey State of Fashion report emphasises that brands must act decisively on sustainability despite economic uncertainty, while the Transformers Foundation highlights the persistent exclusion of Global South suppliers from key sustainability decisions. The industry's potential for leadership is demonstrated by Neiman Marcus's achievements in October 2024, exceeding emission reduction targets ahead of schedule. This contrasts with Bain & Company's September 2024 findings that while 60% of consumers show increased climate concern, there's hesitation to pay premiums for sustainable products. These insights suggest that rather than waiting for global climate summits to drive change, the fashion industry has both the capability and responsibility to lead through direct action and inclusive collaboration.

The COP flop: What the failure of the world’s biggest climate summit means for fashion

What: Which? research reveals 92% of Black Friday deals were cheaper or identically priced at other times of the year, exposing widespread misleading pricing practices among major UK retailers.

Why it is important: As retailers invest heavily in AI-powered pricing systems and consumers embrace technology for price comparison, this investigation underscores the urgent need for more honest and transparent promotional practices in the retail sector.

Which? has uncovered significant concerns about Black Friday pricing practices among major retailers. Their investigation of 227 products during last year's Black Friday fortnight revealed that 92% of deals from eight prominent home and tech retailers were available at the same price or cheaper at other times. The research particularly scrutinised the credibility of "was" prices used to demonstrate supposed savings, finding that in 60% of cases, the higher price was in place less than half the time during the previous year. Most concerning were 14 instances where the higher reference price had never been charged by the retailer in the preceding 12 months. Specific examples included a Remington hair dryer at Boots advertised with a 62% discount from a price never actually charged, and a Garmin smartwatch at John Lewis with an inflated reference price. The investigation marks the first time that every analysed deal was available for the same price or less at other times, with approximately 40% being cheaper outside the Black Friday period.

IADS Notes: The Which? investigation into Black Friday pricing practices comes at a crucial time when retailers are fundamentally transforming their promotional strategies. As revealed in November 2024, John Lewis's successful implementation of AI-powered price matching represents a shift toward more transparent and technology-driven pricing approaches. This contrasts sharply with the misleading practices exposed by Which?, where 92% of deals were available at the same price or cheaper at other times. The retail industry's increasing adoption of AI-driven pricing strategies, as reported in October 2024 , suggests a move away from traditional blanket discounts toward more sophisticated, data-driven promotional approaches. This evolution is particularly significant as consumers themselves become more tech-savvy, with BCG's November 2024 research showing 38% of shoppers now using AI tools to verify deals . This changing dynamic, combined with the previous year's global average discount rate of 27% , indicates that retailers must balance competitive pricing with transparent practices to maintain consumer trust and market position.

Nine in 10 Black Friday ‘deals’ cheaper or same price at other times of the year

What: Stakeholders disagree on how much of the secondhand clothing that’s imported to the Global South is waste.

Why it is important: Experts say it’s distracting from the underlying issue of overproduction.

In recent years, varying estimates have circulated around the world for how much of the secondhand clothing imported into countries in the Global South is not fit for reuse or resale — ranging from 1 to 40%. The higher estimates are contested by export companies and trade associations.

The problem is that textile recycling, in this context, is regarded by experts as a misnomer. What these companies and organisations more accurately do is sort and export used textiles. And what’s really at risk of failing, say experts, is the business model that the export sector has depended on for decades: sell en masse to countries with thriving secondhand markets, where buyers purchase clothing bales sight unseen, and hope that what is inside will generate them a profit.

While this model seemed to work for a long time, export companies are starting to feel threatened by the growing negative publicity around the waste that critics say the secondhand trade is responsible for in the Global South — and because they’re worried about the implications of forthcoming legislation including extended producer responsibility (EPR).

Researchers and analysts say that by maintaining a narrative that textile resale and recycling are in crisis, the secondhand clothing industry is keeping attention off the real problem:  overproduction, and the fact that nearly limitless volumes of low-quality clothes cannot be repurposed on a planet with limited places to put them and limited people to wear them.

The secondhand market is imploding. Who is responsible?

What: Rising costs, shifting trade policies, and geopolitical tensions are pushing fashion brands to diversify their sourcing strategies, moving away from China and exploring nearshoring and alternative Asian markets like India and Vietnam.

Why it is important: As global trade dynamics evolve, fashion companies must adapt to maintain supply chain resilience, reduce costs, and meet sustainability targets, all while navigating increasing trade restrictions and rising labour costs.

The BoF-McKinsey State of Fashion 2025 report highlights how fashion brands are rethinking their global sourcing strategies amid rising costs, evolving trade policies, and geopolitical shifts. The US and Europe are diversifying away from China, with imports from the country dropping significantly between 2019 and 2023. Markets like India, Vietnam, and Bangladesh are emerging as key sourcing hubs due to lower labour costs. Nearshoring is also gaining traction, with regions like Latin America for the US and Turkey for Europe becoming important alternatives. The report underscores the need for fashion executives to regularly assess their sourcing footprint, develop strategic relationships with suppliers, and collaborate on sustainability goals. These shifts aim to build more resilient supply chains that can adapt to future disruptions while meeting cost-efficiency and environmental targets.

How fashion is shaking up its global sourcing strategies

What: New industry report examines department stores' transformation strategies, finding that retailers are balancing data-driven decision-making with traditional intuition while prioritising customer engagement and strategic brand partnerships.

Why it is important: This comprehensive analysis reveals the complex balance retailers must strike between modernisation and tradition, while addressing critical operational inefficiencies that impact profitability and growth.

NuOrder by Lightspeed's research, based on insights from senior retail leaders at major department stores like Saks Fifth Avenue and Nordstrom, reveals the sector's key challenges and opportunities. The study, conducted between July and August 2024, gathered responses from executives in fashion (44%), luxury (25%), and beauty sectors, all representing companies with revenues exceeding GBP 38 million. The findings emphasise three primary focus areas: improving customer engagement, streamlining operations, and optimising product assortments. While personalisation is recognised as crucial, supply chain innovations show more immediate impact on profitability. The research highlights how retailers are combining AI-driven forecasting with traditional methods, though many still struggle with product data management and inventory optimisation. The UK Treasury's plans to increase business rates on large distribution warehouses, aiming to support high street shops, adds another dimension to the sector's transformation efforts.

IADS Notes: The NuOrder by Lightspeed report aligns with broader department store transformation trends observed throughout 2024. UK department stores' survival strategies, as seen in January 2024, emphasise creating unique shopping experiences, while the beauty sector's transformation demonstrates successful category innovation. The introduction of tech-driven retail concepts on Oxford Street reflects the industry's push toward digital integration, supporting NuOrder's findings about technological adoption. This evolution mirrors broader transformation strategies documented in May 2024, highlighting the need for physical retail reinvention. The World Department Store Summit insights confirm the importance of merging digital capabilities with physical experiences, while innovative features in luxury department stores showcase how retailers are successfully implementing these strategies. These developments collectively validate the report's emphasis on enhancing customer experiences while addressing operational inefficiencies through strategic partnerships and technological innovation.

NuOrder’s report on the state of department stores

What: The fashion industry is expected to face a challenging 2025, marked by economic uncertainty, shifting consumer behaviours, and the need for brands to adapt to ongoing global changes.

Why it is important: As the industry grapples with sluggish growth, geopolitical instability, and evolving consumer priorities, brands that can pivot quickly, especially in areas like sustainability, supply chains, and customer engagement, will be better positioned to succeed.

The "State of Fashion 2025" report by Business of Fashion and McKinsey highlights the turbulent path ahead for the fashion industry. Economic uncertainty, geopolitical instability, and changing consumer preferences are expected to create significant challenges. Growth will remain sluggish, with non-luxury segments driving economic profit for the first time in years. Key trends include the rise of AI-powered product discovery, a focus on older consumers (the "Silver Generation"), and a shift towards value-driven shopping behaviours. Brands must also navigate disruptions in global trade, particularly in Asia, where markets like India and Japan are emerging as new growth engines. Sustainability remains a critical issue, though consumer reluctance to pay more for eco-friendly products complicates efforts. The report underscores the need for agile supply chains and improved inventory management to meet both regulatory demands and consumer expectations. Ultimately, brands that can innovate and differentiate themselves will be best positioned to thrive amidst these challenges.

BoF and McKinsey unveil fashion’s 2025 roadmap

What: Research by YouGov and Motorola Solutions showed that 41% of retail workers are worried about their safety during the festive rush amid rising retail crime.

Why it is important: These concerns are amplified as holiday season approaches when shops are busier, stay open later, and may be understaffed.

Petty theft was the most common crime as 56% of retail workers said they or their store has experienced this in the last 12 months. The report also found that 51% witnessed or experienced a hostile customer interaction, 31% have encountered organised retail crime gangs, and 15% of workers have been victims of or witnessed a physical attack on a colleague.

In the survey, the role of technology emerged as integral to improving safety as 67% said video cameras have been installed in stores, 30% use two-way radios, and 25% said body cameras have been used to improve safety. When asked which technologies would make workers feel safer, a wearable or mounted panic alarm topped the list. Body cameras and video security cameras completed the top three.

Four in 10 retail workers are worried about their safety during the festive season