What: Coresight reviews the situation for department stores playing in the top tier market, named ‘luxury’ by the research company.

Why it is important: This report provides interesting numbers and a perspective, however is also flawed by a lack of understanding of some aspects of the business, which leads to some confusion in the diagnosis.

Coresight reviews the global situation of “luxury” department stores which are poised to continually reinvent themselves in order to remain relevant to demanding customers. The luxury department stores size is expected to grow +10.7% to $127.5 bn in 2022 and is mentioned in the report as the biggest offline luxury retail channel (61.2% of the total offline sales) which somehow questions the methodology and point of reference. Coresight includes in the Luxury Department Stores cohort the likes of Hyundai, Shinsegae, Takashimaya, Nordstrom, SKP, Golden Eagle, Sogo, Galeries Lafayette, Harrods and others, as shown in the exhibit below.

![CORESIGHT 

Coresight identifies 5 key trends for them:

• Reduce the dependence on wholesale distribution, through the development or redeployment of private labels or special partnerships with brands, as well as an increased proportion of concessions granted in stores.
• Increase resale initiatives as illustrated by the Re-store in Galeries, Lafayette, dress rental and fine watches exchange services at Harrods, Reflaunt partnership at Harvey Nichols or a second-hand service at Selfridges or Printemps.
• Achieve renewed relevance as experience centres. Coresight chose to illustrate this fact by mentioning la Samaritaine or the Playhouse at Selfridges, however we believe that SKP-S is the best illustration of this trend.
• Develop popups relationships with DTC brands, in order to bring a new customer in the store,
• Help luxury brands to reach suburban customer, with new store formats able to penetrate new markets and therefore increase the exposure of luxury brands to new communities.

Situation of "luxury" department stores in the world 

What: A selection of 45 start-ups specialized in e-commerce fulfilment.

Why it is important: Last-mile deliveries are especially important, as it is on the one hand all about the speed of delivery, but on the other hand the level of service and personalisation.

Coresight reviews a selection of 45 start-ups involved in e-commerce fulfilment across the following categories: micro-fulfilment, order-picking robots, product delivery, returns, sustainable packaging and cross-border e-commerce.

Coresight identifies the 2 following trends when it comes to this part of the business:

• Speed and agility are increasingly vital features for retail operators when it comes to e-commerce. Retailers are using artificial intelligence and machine learning in order to get products into customers’ hands as quickly as possible. For instance, Walmart plans to open a high-tech fulfilment centre in Q2 2022 which will store items to be picked, packed and shipped within one day,
• Cross-border e-commerce will keep its momentum in 2022. 69% of US customers made a cross-border purchase in 2019, and this share increased to 76% in 2021. The most important categories in this part of the business are fashion, beauty and personal care.

Retail-tech landscape: E-commerce fulfilment 

What: McKinsey addresses the notion of organisation complexity through the angle of the maximum span of control, and identifies archetypes to do so.

Why it is important: Instead of using industry norms or other KPIs to make decisions that could become counterproductive, this approach allows to draw a flexible organisation adapted to the tasks to be performed.

Throughout the 20th century, McKinsey has found that there is no single magic number that fits all types of managers and the work that they do, when it comes to the maximum number of people they can manage (Span of Control). Chasing such an idea could actually be counterproductive. They also do not believe that there are industry norms, or corporate size, and propose instead to use managerial archetypes to evaluate the maximum SOC for each of them:

• “Player / Coach”: three to five direct reports (e.g.: Functional vice president)
• “Coach”: six to seven direct reports (e.g.: customer-analytics  manager in a marketing group)
• “Supervisor”: eight to ten reports (e.g.: Senior vice president of finance)
• “Facilitator”: eleven to fifteen direct reports (e.g. accounts receivables and payables managers in a large finance organisation)
• “Coordinator”: fifteen or more (e.g. manager in a call centre).

How to identify the right spans of control for your organisation 

What: The fashion industry has a massive supply chain problem and change begins within a company, starting with C-suite executives and the value system they create.

Why is it important: A persistent lowest-cost mindset over the years created gaps between buyers and suppliers, which deepened amid the global pandemic. The outcome is a trail of imbalances and one-way practices imposed by brands and retailers on supplier networks to cut their own costs and risks, squeezing factories and their workers. The overhang of lost or damaged trust between buyers and suppliers is still with us, a concern that is a major obstacle to a more sustainable future.

Survey results published in a report from BoF Insights, found that 70% of fashion industry executives polled said strengthening supplier relationships was one of the top supply chain priorities.

The Gen-Z consumer crescendo for sustainability has changed everything, there is a generational demand for end-to-end transparency, trust, and accountability, superseding operational language for efficiency alone. Executives must ensure that their business models go beyond seasonal, transactional contracts. The alternative is to be more “relational,” inclusive of end-to-end, mutual incentives for long-term investment.

Over the course of global research and case studies, Harvard production expert and Stanford guru of supply chain metrics, encountered indifference among fashion chief executive officers to primary drivers of market value, such as speed-to-market, order cycles, working capital and forecast accuracy. These were of little interest to merchants insistent on volume, lowest prices and highest incoming margins. The favoured C-suite perspective was demand creation, not supply flexibility.

The short answer to finding a solution is, culture. The internal values of a brand hold the key to a tipping point. Cultural leadership is the prerequisite for meaningful, non-incremental change. Culture matters more than strategy and marketing. It is the basis of a sustainable business model. Fashion must strive for continuous learning, seek and adapt knowledge outside of its industry, and partner in the spirit and reality of value creation with suppliers. Buyers and suppliers, together, create a new equilibrium.

Fixing fashion’s supply chain with company culture

What: McKinsey polled CHRO across the globe to understand the extent of the role transformation.

Why it is important: The traditional 3 pillar Ulrich model is dissolving as its siloed approach might not be adapted anymore to the current challenges companies face, and their need for flexibility and agility.

The pandemic came with significant challenges, which put the HR role at the centre of the organisation, since it became vital to be able to reorganise teams and processes from scratch in the minimum time possible. While making clear that the position is as central as sales or production, for instance, the pandemic also induced changes which are transforming the HR role.

In the past, HR officers were broadly responsible for 3 areas: being business partners with the rest of the company, provide shared services, and develop centres of excellence. However, this approach (the Ulrich model) could easily lead into siloed organisations and diluting the focus.

According to McKinsey, there are 8 areas of changes when it comes to the role:

• HR should be elevated through digitalization, by automating processes and administrative tasks. It is not about large ERP systems anymore, but solutions, data and employee experience.
• Enabling agility and fluidity, by not organising the HR team anymore according to the 3 pillars, but as pools of professionals who can be quickly deployed to deal with critical issues and priorities.
• Refocus business partners on advising top management rather than working on routine administrative tasks.
• Create HR practice groups to tackle specific and cross-functional HR priorities from end to end, putting an end to the separation between strategic and transactional tasks,
• Organize around employee experience,
• Virtualize centres of excellence and centres of competence, with workflow practice groups, instead of business partners being kept separate from the HQ.
• Put the business in the driver’s seat by shifting responsibility for traditional HR tasks to line managers.

Reimagining the CHRO role 

What: NFTs are often seen as a significant new technology allowing to protect and very ownership of digital assets. Coresight explores their application in retail.

Why it is important: Even though some might consider it as too early, many brands and retailers have already launched trials with NFTs, often with financial success. Coresight explores their meaning and implication, including in the coming retail in the metaverse activities.

NFTs are non-exchangeable units of data stored on an indelible record of transaction (the blockchain). External events (Covid-19 pandemic) and industry developments (the metaverse being increasingly pushed forward by Silicon Valley) have made NFTs visible to the general public and increasingly popular. According to Coresight, the NFT market represents $35 bn in 2022 and is expected to grow to $80 bn by 2025.

NFTs are central in the metaverse, as users are increasingly interested in equipping their avatars with unique features. The metaverse being in reality a collection of various platforms, NFTs allow for interoperability, allowing users to bring their assets and avatars between virtual worlds. They also allow a very strong individualization per se, as shown by the Ready Player Me initiative, which allowed owners of the CryptoPunks NFTs to have their avatars represented by these NFTs on various virtual word platforms.

Coresight reviews in this report the various technologies available to retailers who want to venture into NFT initiatives, and makes a balance between Solana, Ethereum, Solanart and AtomicMarket.

Notable examples of successful NFT initiatives in retail include Nike, Clinique, or Hot Wheels (toys).

NFTs and retail metaverse 

What: Digital transformation is often seen as an end, when it is a mean. This misconception leads to not making the most of KPIs, which can contribute to the changes in the company.

Why it is important: KPIs can be transformative and MITSloan proposes an approach that contribute to identify, address and improve the reservoirs for growth.

Digital transformation is a mean, not an end. Considering that the digital transformation is a goal can be a source of strategic mistake and can lead to picking up the wrong KPIs, misleading the organisation as a whole. In addition, many legacy companies see KPIs are reporting and accounting mechanisms, and miss their potential contribution to the strategic changes, by helping the decision-making process.

MIT Sloan argues that KPIs should lead, not track, digital initiatives. Top management should define and communicate both the key performance that is required to execute its strategic plan and the digital capabilities that will enable that performance. For instance, dramatically upgrading technology infrastructure only ends in doing the same old things, but in the cloud. This is why the transformation opportunity lies in making strategic metrics both individually and collectively visible and valuable, with a strong Return on KPIs.

For example, a financial services company identified agility (ability to rapidly react and respond to customers’ requests) as a KPI. Legacy systems did not provide any additional value, so the company dissected the processes and identify new measures: session time, autofill, customer effort, loan approvement cycle. This led into generating new questions: for instance, could autofill be used to increase customers’ loyalty by reducing their effort? These new metrics did not just monitor digital agility but informed possible investments for agile improvements. Another example is the Customer Lifetime Value.

MITSloan identifies 4 components of a leadership framework for KPI-driven digital transformation:

• Create a strategic KPI portfolio, with a clear strategic vision, with tangible goals, each of them coming with key inputs and actions, methods for measurements and priority of such measurements. For instance, a global hardware company identified NPS, number of lines of business, number of general ledgers as 3 important KPIs. A financial services company idenfied the ratio of transactional to analytical operations, the percentage of data storage and distribution processes leveraging cloud-based platforms, and the percentage of roles offering flexible work schedules. MITSloan mentions that there is not an ideal number of KPIs, but 5 to 9 are consistent.
• Commit to data as a digital asset. Defining the key data points that individually and collectively make up the KPI portfolio is the first and hardest task. Usually, legacy organisations have bold digital ambitions but inadequate command of their data. This involves strategic investments in making the data more valuable. “Return on data” should be expressed as a necessity at the corporate level and senior directors should be held accountable on this metric.
• Orchestrate data flows to make KPIs shareable, visible and dynamic: usually through a coordination, sequencing and orchestration of the data journey through systems, business units, functions and geographies.
• Commit to continuous KPI improvement: KPIs are waypoints, not endpoints, because digital transformation is a process, not a destination.

Taken together, this framework’s four components enable a virtuous cycle: better data and analytics improve and enhance KPIs, better data orchestration encourages the discover of and access to new data sources, seeing KPIs as dynamically evolving encourages leaders to look for new KPIs to track new kinds of value the company can create, and ongoing improvement  and growth is baked in.

How the wrong KPIs doom digital transformation 

What: Blockchain is already being used in supply chains to create greater visibility and transparency.

Why it is important: Blockchain technology has the opportunity to unlock a lot of information that is typically lost throughout the supply chain. There are many hurdles to overcome, but each successful use case will create more opportunities for growth.

Blockchain initially gained footing in grocery, where knowing the source of a product can be a matter of life or death. The technology is allowing retailers to quickly pinpoint the source of outbreaks of pathogens like E. coli.

But for blockchain to work across the supply chain, everyone involved must add information about products to it, and make that information accessible to everyone else. Not all players are comfortable with sharing information and there are also complications with governance.

As more and more players see success, such as Walmart with groceries and luxury goods with certification, blockchain will be adopted more readily and extended to new use cases.

Blockchain drives transparency in the supply chain

What: Unlike entertainment or social media, retail does not break the barrier of going global with a single champion thriving across the planet.

Why it is important: Thriving retailers are the ones who understand their local customers. This is at the heart of all European retailers who know that the Asian tourist bonanza is not going to be back soon. However, it might be a blessing in disguise as they build entry barriers to foreign international champions by doing so.

The New York Times columnist Shira Ovide argues that while technology does not know any boundaries and Facebook, Whatsapp, Google, YouTube or Tiktok are shared global experiences, this is not the case for shopping (online or offline) as there is no global behemoth catering the shopping needs for all customers across the planet.

Even though Amazon announced some years ago that “customers behave the same globally”, this did not translate into a reality: 90% of Amazon’s revenues are made in 4 countries only: the US, Germany, the UK and Japan. Walmart is equally successful in the US, Canada, Mexico and Central America but nowhere else. And the Asian starts (Alibaba in China, Coupang in South Korea) have not done better in terms of expanding internationally. Forrester analyst Sucharita Kodali puts it in these words: “retail is just hard to globalize”. Reasons explored for that state of things are multiple, and hypothetic:

• It could be due to local regulations which are favouring national champions therefore making it difficult for them to enter new markets,
• To thrive on a market, retailers need to acquire a customer knowledge that will not be the same in another country,
• Entry barriers are high in countries where national champions already operate.

The New York Times mentions that not having a global champion may be a blessing in disguise in terms of environmental impact.

There is no such thing as a global shopping mall 

What: The simplification of performance metrics can contribute to the business development, provided the considered metrics are the right ones.

Why it is important: Simplifying and having the right KPI has dramatically positive consequences on organisations and teams, and can be structurally transformative.

Agoda, an Asian-based travel company, discovered that it had too many goals and metrics, creating confusion and waste of energy and resources. It then decided to create a singe key performance indicator in order to unify behaviour between teams and be a shared currency across them.

They share their methodology in this MITSLoan article. This went through a series of A/B testing and test and learn processes on their front-end website, initially with one-off experiments, but soon they centralized learnings into a single unified system, and “experiment engine”. They also understood that the speed of the experiment engine had to be dramatically increased, created a new KPI on speed, and went from a dozen experiments per quarter to more than 1,000. However, this generated bugs, so a KPI constraint was introduced, in terms of code quality.

Soon, they realized that the velocity KPIs was not always focused on the conversion rate itself: teams were rewarded for testing ideas, not for testing ideas with an increased conversion in mind. This is why the primary KPI was replaced by the notion of “incremental bookings per day”. This led to a dramatic increase in terms of productivity, cooperation between teams and will to test new ideas. This also allowed to simplify teams and reduce the hierarchy as a sense of cooperation spread across the company.

MITSloan sums this approach through the following 9 steps methodology:

1. At the beginning of each project, define a primary metric of set of metrics that will gauge success,
2. Assign a KPI to every project
3. Look for a KPI that is relevant across teams, to create a shared language
4. Try to break that KPI repeatedly,
5. Revise the KPI again and again
6. Define a primary constraint that needs to be met while the company strives for the KPI
7. Keep the data clean and reliable
8. Accelerate innovation and experimentation, but limit errors
9. Let the process of measurement inspire the corporate culture.

The quest for a killer KPI 

What: Retailer efforts to charge more for certain items have met consumer resistance.

Why is it important: With inflation at a 40-year high, companies across the spectrum have been charging more to offset rising costs with little resistance from consumers. That trend is starting to change.

Compared to February 2021, sales are up 17.7%, but a large chunk is due to rising prices. Unit sales of general merchandise goods such as apparel, footwear, toys, and sports equipment declined in nine of the 10 weeks from Dec. 26 through March 5 compared with the same period a year ago, according to market research firm NPD Group.

Around 43% of consumers surveyed by NPD said that if prices continue to rise, they will delay less-important purchases to stick to a budget.

Apparel retailers have been among the biggest beneficiaries of consumer spending as Covid-19 restrictions ease and people refresh their wardrobes in anticipation of more in-person meetings and social events. Chains from Macy’s to Target reported strong holiday sales, and many have reduced promotions and raised prices, a departure for an industry that had been in a deflationary spiral for decades. However, Citigroup Inc. analyst Paul Lejuez noted in a recent report about the impact of inflation on apparel companies, despite a strong job market and rising wages, consumers’ “wallets are not infinite.”

The pushback from consumers varies across categories and brands. Luxury players have been jacking up prices with no visible collapse in demand. Items that are scarce because of supply-chain shortages can also command higher prices. And shoppers are more willing to pay up for fashion items like spring dresses than basic T-shirts.

Analytics company DataWeave Inc. found wide disparities in the price increases by item and gender. The average price of skirts is up 31% compared with a year ago, while pants cost only 8.6% more. Women on average are paying an extra 13% for pants, while men are paying an additional 5.3%.

Retailers are trying to figure out how far to push prices without losing customers and developing workarounds when price increases aren’t feasible. Some brands are reducing costs by using lower-grade leather, lighter-weight cotton, or cheaper trim. Others are switching to less-expensive manufacturing techniques such as single-brushed instead of double-brushed fabrics.

Premium brands are taking the opposite tack, by adding quality to products in the hope that consumers will pay more. When Coach introduced the latest version of its Tabby 26 handbag last spring, which is made of softer, fluffier leather than the original, it raised the price by USD 100. Higher prices can make luxury items seem more desirable. Macy’s has been able to charge more for expensive items but not less-expensive models. The chain raised the price of a $2,000 sectional sofa to $2,200. But it was unable to charge $100 more for a $499 sofa.

Shoppers resist price increases

What: Coresight explores the challenges retailers could face in improving sustainability in sourcing and how they can resolve them.

Why it is important: As the global pandemic shed light on the weak points in current retail supply chains, they are being revamped. These supply chain make overs should also include making these operations more sustainable.

The Covid pandemic exposed many weaknesses of supply chains and has prompted many companies to restructure various aspects of the supply chain. During this restructuring, companies should consider the tradeoff between costs and sustainability in their new strategies and implement initiatives that produce more environmentally friendly results.

There are many areas of retail supply chain that present opportunities for greening- spanning, pre-production, production packaging, storage, and distribution. Retailers should look to adopt 3D sampling and digital design, implement specific environmental conservation practices for their suppliers, use eco-friendly packaging, implement stricter audits for the use of space in packages, reduce energy use and rethink their sourcing destination mix and transport options.

The challenges of greening supply chains include a lack of visibility into supplier infrastructure and subcontractors, varying sustainability standards between sectors, conflicts between sustainability and procurement strategies, and pressure on supply chains through trade disputes. But collaboration and participation between stakeholders across multiple industries could lead reduce overall impact.

Sustainability in sourcing: greening supply chains is more critical now than ever before

What:  A selection of 40 start-ups involved in payments to provide a wide array of options to retailers.

Why it is important: All department stores know that their POS system is crucial to improve customer loyalty and level of service while also maximizing efficiency. Payment solutions are a key part in this process, all the more that the recent pandemic has changed a lot of mechanisms.

Coresight dedicates a report to the payment solutions currently available on the market, which are increasingly digital due to the recent Covid-19 pandemic. It is expected that the global transaction value with digital payment increases from $7.86 tr in 2022 to $10.7 tr in 2025. The report covers 40 startups and companies spanning across BNPL solutions, checkout experiences, cross-border payment solutions, cryptocurrencies and digital assets, digital wallets, payment gateways and processors, payments-linked loyalty / reward services, risk management and fraud prevention, and subscription management solutions.

In terms of overall directions, they also identify the 2 industry trends:

• Cryptocurrencies are on the rise as their use is favoured by the metaverse expansion,
• The rising inflation across the globe should also favour deferred payment tools

Retail-tech landscape: payments 

What: Nordstrom launched its retail media network in the fourth quarter of 2021 and has already seen success driving millions in revenue.

Why it is important: An opportunity has emerged for multi-brand fashion retailers to drive revenue with their own advertising arms. So they are now under pressure to launch their own units. To avoid being shut out of the digital advertising market, they’ll have to move quickly but launching a retail media network requires for them to build out their own technology or partner with existing firms that offer ad tech solutions.

Pressures in the digital advertising space are increasing, due to both rising costs and new data privacy rules that make ad targeting more difficult. Rather than trying to make sense of ever-murkier customer data from Google, Facebook and Amazon, media networks offer retailers the ability to instead grab first-party data themselves. The benefit for brands advertising on retailer platforms — as opposed to more broadly across the internet — is that they are able to get in front of consumers when their intent to shop is higher, that is, on the retailer’s website itself.

While much attention has been paid to the cost of advertising on Facebook and Google, the cost to advertise on a fashion retailer’s advertising platform will likely be subject to the same auction-style dynamics. And just like with social media and other digital platforms like Facebook, Google, and Amazon, fashion retailers will own the data that indicates how effective the marketing is.

The Nordstrom example

Nordstrom, following the lead of not only Amazon but other retailers like Walmart, CVS and Target, became the first major fashion retailer to launch an official in-house media network. This new digital advertising arm allows brands to purchase advertising space on Nordstrom’s owned e-commerce platform, bringing participating brands to the forefront of shoppers’ minds when they’re searching Nordstrom’s site.

Nordstrom’s initial media network offering includes sponsored product ads on its website that appear alongside non-sponsored results, dedicated brand pages and “off-site” options like video, paid social, direct mail and display ads that will appear elsewhere on the internet. Right now, only brands Nordstrom stocks have access to these options, but eventually, Nordstrom plans to make its advertising network available to brands that it doesn’t stock but that customers could be interested in.

For Nordstrom itself, it drove $40 million in revenue in 2021.

Fashion retailers race to become ad giants

PRINTABLE VERSION HERE

IADS recently held a meeting about on the home and decor sector. Based on market research, the IADS team and NellyRodi presented the most innovative brands from different segments of home and decor: furniture, home appliances, home accessories and electronics. Check out a selection of these brands!

Furniture

Vetsak

Produced locally and sustainably with an innovative design from South Africa. One-of-a-kind, modular, quality, practical furniture, that brings life a little extra comfort.

Check out the Vetsak website here

Vetsak Instagram

Lapalma

Balancing craftsmanship, industrial techniques, efficient production, and a focus on details, Lapalma produces and sells its quality design aimed at creating innovative solutions that interact with each other. Lounge, Light Office, Outdoor, Cafè and Home, all customised environments, by extending the range of finishes.

Check out the Lapalma website here

Lapalma Instagram

Home Accessories

Ago

Korean design studio specialized in lighting, that searches for a balance between beauty & function with light. With the line between residential and commercial space becoming increasingly blurred, Ago values simple, honest and refined aesthetics.

Check out the AGO website here

AGO Instagram

Helle Mardahl

Helle Mardahl is an artist and designer with an eccentric and contemporary aesthetic. Playing with forms and materials, she playfully combines strength and fragility, crafting pieces that bring life to  spaces. Creating a dreamy universe of richly coloured quirky glass designs.

Check out the Helle mardahl website here 

Helle Mardahl Instagram

Cookut

Cookut is a brand of kitchen utensils, which also offers accessories for storing and transporting food, as well as hygiene and care products. Their goal is to reduce plastic and daily waste, reduce CO2 emissions while using natural raw materials, promote eco-design and produce responsibly and transparently.

Check out the Cookut website here 

Cookut Instagram

The Citizenry

Citizenry believes homes deserve designs with a soul, a story, and a purpose. Country by country, they partner with master artisans, blending modern style with different cultural time-tested techniques.  The products reflect a collective of individuals from different cultures and backgrounds who rally together to create something beautiful.

Check out the Citizenry website here

The Citizenry Instagram

Boy Smells

Highly spirited scented candles, fine fragrance, and intimate wear for all or neither gender. Boy Smells wrap traditionally masculine scents in a prettier bouquet, made with natural oils, all-natural coconut wax, and beeswax blend and are hand-poured in a reusable glass vessel and hand-labeled.

Check out the Boy Smells website here

Boy Smells Instagram

KJP

Colourful homewares, cheerful print & pattern-focused textiles and lifestyle goods that spark joy.

Check out the KJP website here 

Kjp instagram

Lucas du Tertre

Creating a bridge between India and France and between tradition and modernity. Colourful and printed collections created in the Parisian workshops and printed or woven in India according to ancestral know-how.

Check out the Lucas du Tertre website here

Lucas du Tertre Instagram

Dusen Dusen

Bold, original prints on versatile, textile and home goods products that includes bedding, throws, pillows, and towels.

Check out the Dusen Dusen website here

Dusen Dusen Instagram

Electronics

Mirror

A mirror that is also the ultimate home gym with the most workout variety that actually looks good in your home. 10,000+ classes on demand, 50+ genres, and new live classes daily.

Check out the Mirror website here

Mirror Instagram

Yoto

Carefully connected speakers that puts kids in control of their listening, learning and play. Packed with features for day and night and without any cameras, microphones, or ads.

Check out the Yoto website here

Yoto Instagram

Gomi

Wireless mag chargers, portable chargers and speakers, made out of non-recyclable plastic bags, and powered by 100% repurposed e-bike batteries.

Check out the Gomi Website here

Gomi Instagram

Home Appliances

Netatmo

Aesthetic smart home devices with a variety of products including various security cameras, personal weather sensors, and an internet-connected smoke detector.

Check out the Netatmo website here 

Netatmo Instagram

Daan Tech

Customisable dish washer with 24 colors to choose from that washes daily dishes for one or two people in just 20 minutes. Bob the dishwasher is the world’s most advanced autonomous and eco-friendly dishwasher thanks to its integrated water tank.

Check out the Daan tech website here

DAAN TECH INSTAGRAM

Lema

Lema Air Cleaning System uses nanotechnology and a special UV lamp to generate a photochemical reaction within the wardrobe that naturally destroys viruses, bacteria, odours and mould, improving the customers’ well-being, reducing allergies and respiratory problems. The wardrobe is entirely sanitised, including internally and at the back, without air resistance.

Check out the Lema website here 

Lema Instagram

Somnox

Somnox Sleep Robot is a soft-robotic that enhances the quality of sleep and uses breathing regulation and audio to help fall asleep faster, get deeper sleep, and wake up at the optimal time through a smart alarm.

Check out the Somnox website here

Somnox Instagram

PRINTABLE VERSION HERE

In early 2021, the IADS Academy participants were set the task by their CEOs of suggesting ways to develop a truly omnichannel P&L and related KPIs relevant to department stores. Their proposals covered several areas including KPIs and data sharing (see Presentation to CEOs at IADS General Assembly, 28 October 2021; and IADS Academy 2021 report). One of the proposals called for the development of “omni-clusters” of customers. The IADS has attempted to develop this idea.

Imitate or innovate?

In the early days, many omnichannel department stores in effect created a separate and competing business within their companies: e-commerce, which started as an “add-on”, often an experiment, was operated on the same principles as the traditional stores, with the differences that selling took place on a website rather than in physical stores, and that customers were delivered at home instead of carrying their purchases away with them.

As e-commerce began to include more merchandise categories, department stores saw the format as competition, just as they had seen big-box and discount retailers, then fast-fashion companies enter their market and address their customers. It was supposed that by getting involved in e-commerce, the danger could be fended off and those customers tempted by pure online retailers could be brought back to the fold. However, online retail proved to be bigger than expected, customers integrated it quickly into their retail habits and department stores found themselves running to keep up with the trend. Today, it is more of a scramble to adapt to the pandemic new normal. The puzzle of profitability of e-commerce was not solved, even by the pure players.

Integration into the traditional business has been unfortunately very expensive. The original business was not adapted and e-commerce was generally loss-making. Department store companies have had to operate simultaneously two business models: one in which the main cost centres have been real estate and people, as well as the new one requiring significant investment in systems, fulfilment and marketing. In spite of efforts to the contrary, the traditional department stores found themselves competing not only against new online companies but also being cannibalised by their own creation, at first a modest separate pilot but which soon grew into a Frankenstein monster. The admittedly complex model of the traditional department store was clearly inadequate for the job of operating online, and a fortiori inappropriate for an omnichannel retail operation. One consequence is that, under pressure from activist shareholder groups, some US companies have already or are considering spinning off the high growth dot.com part of the business to increase market valuation such as Saks Fifth Avenue and Hudson’s Bay, and also illustrated by the speculations on Macy’s, even if this approach sparks controversies. This suggests that they believe there is no answer to the omnichannel conundrum.

Struggling with channel conflict

Part of the problem has been, of course a shift in customer behaviour and expectations. It is clear that any business model which does not start from the customer is doomed to failure in what has been called “the age of the customer” (from say 2010). Starting from the belief that online customers were different from store customers, department stores operated two separate channels and only slowly came to the realisation that there was such a thing as an “omnichannel customer” (with higher spending than the single channel customer they had been dealing with).

But then the challenge of merging two business models with very different cost structures became apparent. Against the traditional conversion ratios of 40% plus, the online part of the business was confronted with rates as low as 1%-2%; against sales per square metre, online invoked profit per transaction; against shareholder expectations of bottom-line profit, online was operating as a start-up expecting no profit for at least 5 years but demanding rapid growth during that time; against B2B logistics based on store deliveries, online required quick and efficient B2C fulfilment.

As long as the online part of the business represented 5% or less of the total, then it was monitored separately in order to determine its profitability, return on investment and its longer-term future. As time passed, it became clear not only that online was here to stay, but also that it was contributing to store-based business (and vice versa) in a complex and organic way making it almost impossible to isolate online P&L from store-based P&L. (See for example how Macy’s is claiming to “scale omnichannel thinking across the entire customer journey”.)

The question then becomes how to determine the profitability of various parts of the business, how to attribute costs and sales. Furthermore, it has become clear also that the “best” customers are “omnichannel” customers, making full use of all the opportunities available to them across channels to search, gather information, purchase, pay, get delivered and return merchandise. However, it remains unclear to what extent they are the most profitable, as they “consume” expensive services which are implemented through expensive platforms.

Omnichannel means integration

And yet… many department stores are locked into the double P&L model and struggling to determine how to attribute sales and costs. Partly because so many employees are assessed on a series of inappropriate KPIs which actually discourage an omnichannel approach. And partly because data is unavailable to track customers, inventory, fulfilment, returns etc. in sufficiently granular form to allow appropriate attributions.

Integration of channels means first and foremost the integration of data allowing all channels to be under the same control and distribution system. For example, all data on any particular customer must be available in one accessible place whether it concerns purchases or returns in all channels, preferences, hard data as well as unstructured data.

Similarly, inventory data should be updated in real time, any priorities for particular channels need to be clearly set out in order that channel conflict does not develop from limited inventory.

At the same time, traditional KPIs which have been focussed on transactional records are no longer able to evaluate the sometimes complex drivers of customer decisions. It has been suggested that omnichannel KPIs should fall into four main categories: awareness, engagement, conversion, and loyalty. Thus, such KPIs might cover traffic and visits, recommendations and conversion rates, cross-channel conversion and baskets, and advocacy, lifetime customer value, revisit rate and frequency, for example. (See KPI suggestions.)

A new idea: “omni-cluster”

Since the customer journey has become omnichannel, it has arguably become necessary to use management tools and financial statements which reflect this development rather than struggling to attribute revenues and costs to different channels. The notion of “omnicluster” is a proposal in this direction.

Clustering in itself is not a new idea for department stores. Different clusters as applied to department stores include clustering by store capacity (space for example); by attribute (traffic, location, income profiles…); by sales (revenue, inventory turn…); productivity (revenue or gross margin per square metre); price (price profile, elasticity); multi-dimensional clustering; and more.

In the same way, customer clustering is also common. Using algorithms and AI it is generally defined as an improvement on rule-based segmentation since it allows clustering over many more dimensions; allows only small variance within each group; and can be made dynamic and reflecting the current state of data.

The proposal made by the IADS Academy was to bring the two ideas together to create customer clusters who shopped at stores, online, or both. This would potentially avoid the difficulty of separate or overlapping P&Ls for stores and online. The only rule is that any customer can belong to only one omni-cluster even if they occasionally shop, return, or collect in several physical stores. All revenues, returns and costs associated with a customer would belong to that omni-cluster.

It has been often remarked that not only does online bring customers to stores (and vice versa), but most online customers are more dense around an existing store (while this was a surprising discovery in the early days of omnichannel, it is now fairly obvious since most customers now shop online and stores are situated in the most important markets). In this case, it is clear that an omni-cluster may consist of one or more stores and the online customers residing around that store. This is the simple omni-cluster model as favoured by Magasin du Nord for example.

If, however, a number of online or omni customers have a preference for direct contact with a distant store (say a flagship store, or a store closer to their office rather than their residence), then one mixed omni-cluster might include a store, its geographically close online customers as well as online customers geographically closer to a different store. This may happen also if the stores are clustered by size as they are at Manor, for example.

If store customers are very mixed (tourists and locals, for example), then one can imagine an omni-cluster made up of local store customers plus online, and another partial omni-cluster made up of tourists and the much smaller online tourist customers. A business which involves franchised stores might include its own stores and all online customers in its omni-clusters but not include the franchised stores. These cases may be more appropriate at, say, Galeries Lafayette.

A series of ecosystems

As these examples show, the criteria for omni-cluster membership may obviously vary from one company to another according to its history, its organisation, its market etc. It is a flexible model. The definition criteria of omni-cluster will be a function of the particular circumstances of each company and its history as well as of the omnichannel strategy pursued by a company (aggressive online growth, new store openings or potential store closures etc.).

The aim is primarily to group revenues and costs into a number of omnichannel P&Ls which cover total operations of a cluster which can serve to manage operations (through the related KPIs), and which can be consolidated into a total business P&L. While the different omni-clusters can be compared, it is clear that none will be exactly comparable to any other. For example, geographical location or the number of stores in a cluster may have an impact on fulfilment costs.

However, the advantage of this model is that it highlights the profitability of the customers in any one cluster (for example how much they spend in all channels, frequency, rates of return, margin per customer etc.). Clearly the costs of store personnel also do not relate only to store customers, which distorts store-only P&Ls. Potentially it also allows the evaluation of the true loss of revenue through a store closure.

The kind of integration referred to above moves closer to an “ecosystem” perspective of the retail business. Indeed, a degree of “unbundling” will be necessary to evaluate the costs attributable to an omni-cluster. When that exercise is pursued, then it becomes possible to find potentially more appropriate, more efficient or more effective solutions before rebundling these into an omni-cluster ecosystem.

Warnings, dangers and the way forward

However, such a move would make it quasi-impossible to spin off the dot.com part of the business as has been done recently by HBC with Saks Fifth Avenue and Saks.com. There are currently some reports of Macy’s considering a similar move. It is clear, however, that these examples are financially motivated and a result of pressure from activist shareholders. They are also more appropriate to larger companies. A smaller omnichannel department store following the integrated omnichannel route will be capitalising on its unique status as what Bain has called a “regional gem”. Once established, an ecosystem can no longer be dismantled and split up into its original component parts. It competes as a whole, not as a multi-channel entity. However, this commitment is no more risky than the spin-off of the dot.com part of the business may turn out to be for larger companies which choose this way.

The omnichannel route might also imply considerable reorganisation of the traditional bricks and mortar assets as illustrated by the John Lewis case which is closing and shrinking so many of the stores it (perhaps unwisely) opened while it was expanding its online business (now around 60% of total revenue). It also sold its Ocado stake in 2010 for £250m which would be worth nearly £2bn today. Rather than spin off the online business, it is reshaping the total business under a new team, focusing on own brands, convenience, high productivity, sustainability, and the integration of formats.

John Lewis raises the question of how to implement the shift towards real omnichannel in today’s retail landscape. Clustering, new KPIs and rejigged P&Ls cannot be put in place in a day. The question therefore is: What would a transition phase towards omni-cluster P&L look like? Who should guide the transition, and how can investors be won over to support this longer-term shift?

Credits: IADS (Dr. Christopher Knee)

Watch the full interview here

PRINTABLE VERSION HERE

*2020-2021 has been more than a period of pandemic and crisis: by its magnitude and lack of precedence, it has literally changed the world, especially the retail world, by changing habits: digitalisation and new purchasing habits, work from home and the question of commuting, notion of essential vs. non-essential goods.

The IADS launched a series of interviews with innovative thinkers to understand their views on how to deal with such changes. All organisations have proved their resilience and ability to cope with the emergency of the situation, however, it is a very human thing to tend to come back to habits whenever possible. What happened? How can we make the most of what we learnt and how can we make sure our organisations and thinking processes are durably impacted?*

Introduction: Chafik Gasmi, founder of Chafik Studio

For this session, we welcomed Chafik Gasmi, based in Paris and founder of architectural company Chafik Studio.

Chafik Gasmi, 59, launched his first designer’s furniture line in 1990, just after graduating from the Ecole d’Achitecture de Paris. This line was awarded the Grand Prix at the Paris Salon du Meuble in 1992. Following this initial success, his projects were selected by the French State to furnish the Prime Minister offices.

In 1996, the founder of Sephora, Dominique Mandonnaud, asked Chafik Gasmi to design the Sephora flagship boutique in Champs Elysées, to help him bring his vision alive. This was Chafik Gasmi’s first venture in cosmetics, and ended up in a mix of architecture, design, cosmetics, with a true customer-oriented vision. Then, after LVMH acquired Sephora in 1997, Gasmi was appointed as the artistic director for Sephora and personal advisor of Mr Arnault for several brands on branding and retail experience, including Kenzo, Guerlain or Dior. After a stint as Artistic Director at Baccarat, he created Chafik Studio in 2004. In 2010, he initiated a long-term relationship with Lancôme as well as with Fendi Casa.

Nowadays, Chafik Studio is a multidisciplinary structure, with competencies ranging from architecture, interior design, product design, retail design and artistic direction. The company is involved in hotels, department stores, retail spaces, furniture and objects, and is able to work with both corporate companies and family businesses.

Part 1 – Dealing with innovation

*IADS - Chafik, your studio is renowned for its groundbreaking approach, yet always keeping in mind the needs of customers, which explains why you have developed so many retail concepts with the biggest brands. How do you foster this creativity on a daily basis?*

Chafik Gasmi - First of all, the most important, and this is common to both family businesses and corporate companies, I always deal with the person who ultimately pays for the project, not intermediaries, even if they hold top positions. Innovation is always very difficult and can generate anxiety. For me, it is easier to talk about changing rules with the guy who pays, rather than how to deal with the rules with the guy who executes.

When it comes to my method, I always look at things in a very fresh, almost childlike way. In other words, we force ourselves to be naïve, curious, and ask questions, to make sure we see things differently, challenge the status quo, and get excited in the way. The idea is not to be different for the sake of it, but to generate a tension based on trust, within a reassuring framework.

Innovation can generate anxiety and trust is key to taming the feeling of danger.

*IADS - How do you manage creativity within your organisation? How are ideas generated and with what process? Also, how do you onboard newcomers in your organisation and make sure they fit with your mindset?*

CG - First of all, I avoid creating a silo between my team and my customers. We design the brief together, because the answer is often in the question. If you do not take part in the question elaboration, you will miss something in the answer.

Then, once the brief is done, we do the first meeting with our clients in our studio. During this “project session”, we work together on rewording the brief and gathering the ideas. Everyone sketches their ideas, which at the end I personally synthesise. The goal is to reach a very strong, clear and simple idea, coming from a series of interactions between everyone, including words, sketches, feelings.

Once the idea is here and we are ready to launch the project, we gather all the people who will be involved at one stage or another (contractors, third parties, middle management…) in a room to explain the project. During that moment, we identify in advance all the blocking elements and kill negative thinking. It is all about resolving all opposition at the launch instead of fine-tuning along the development phase, to keep the project strong and fresh. Any other approach invariably ends in concessions and compromises, which always dilutes ideas.

Given the level of interaction with which we work, I must say that Covid-19 has been a difficult period as we lost a lot of the intuitions we usually get from interactions. Video conferencing helps in the thinking process, but not on the perception of feelings. This is why we took a step aside and seized the opportunity to think about our own processes, organisation… to be ready for better days in terms of operations. Covid-19 has been quite difficult for creativity itself I must admit.

Part 2– Retail

*IADS – Coming back on your statement that “answers are usually in the question”, what was the answer in the 1996 Sephora store question, and are these answers still valid for 2022? What would you change if you had to do this project again?*

CG- The challenge at the time was to create a brand, Sephora, where “everything about beauty could be found”. The founder wanted to mix the ease of use from supermarkets, and the feeling of luxury, without being gimmicky. The question was therefore to combine the best of both worlds. In addition, he wanted to create a fascinating and impactful space, like a Versailles-meets-Disneyland idea.

This combination of ideas was a fantastic vision! I related this project to the idea of a religious place, like a “temple of beauty”. I wanted to come back to fundamental symbols that are universally understood. In the end we came up with a black and white store, where you do not see furniture, only products and brands. The original building had some columns for structural reasons, and we created new fake ones to create a rhythm and give the feeling of a temple.

From the merchandising point of view, we created gondolas which allowed us to give visibility and perspective. There was no signage, the zoning was defined by colours and lighting, in a very organic manner.

Today, Sephora is a fantastic selling machine but the point of sales itself may have lost some of its soul. I feel that a part of the magic has been lost, even though the store is extremely efficient from a business perspective. Efficiency is needed but should be completed by an unexpected details, an intention, to really touch the customer. For instance, in the store, in 1996, we wrote poems on the columns that could be visible only if you were extremely close to them.

*IADS- You have collaborated with Lancôme for almost a decade now and accompanied them in the evolution of their retail concept. It is the same thing with Kenzo showroom. What where the key learnings for you when it comes to organising retail (or wholesale)?*

CG – I left Sephora and LVMH because I really wanted to do my job and be an architect. I designed hotels, museums… but I then realized how much I had learnt from retail. Nothing is more sophisticated than retail when it comes to building a space. When I built the Modern Art Museum in Algiers, I recalled my learnings from Sephora when considering the traffic flow within the building. It had truly been a virtuous circle.

When Lancôme reached out in 2012, I wanted to challenge them, and go beyond the architecture of their stores, to work on the architecture of the brand itself. Why? The store is the place where all aspects of the brand are conveyed, but in the case of Lancôme, the brand itself was fragmented and not fully coherent.

At the time, the brand was led by Sue Nabi and she was ready and able to change the rules, which is why she took the chance. Then the adventure continued with her successor Françoise Lehmann. For more than 10 years we were able to bring together the brand to another level. It was all about generating change by asking the right questions, pointing out the incoherences. It is not about doing the work of people, but helping them to grow.

Interestingly, what I realized is that when you are successful, you not only attract the attention of your clients, prospective ones, competitors, but also talents. These 10 years at Lancôme helped my agency to attract great individuals and allow us to grow, expand and look at new projects.

Part 3 - Department Stores

*IADS – You once mentioned that, for you, Department Stores are “decathletes”, do you want to explain your vision behind this phrase? What does a department store stand for you and to what extent do you consider it special (or not)?*

CG – Department stores were challenged twenty years ago by specialty chains such as Sephora, especially from the point of view of their location.

While specialty stores (and later, brands) have the possibility to choose their location, often going for the top ones, department stores have, by essence, to make arbitration and choices about the location they give to brands within their own spaces. Multiply this by the number of locations, possibilities and floors, and you have a handicap for department stores when it comes to the attractivity of their offer seen as a whole, compared to the easiness of access and appeal of specialty stores (not even talking about logistics, service or product range depth).

However, today, after the pandemic, now that digital is part of our lives, size matters. Convenience stores are being swamped by e-commerce. The only way to create a difference is to be big and to have many things, create excitement, events, make people feel they are part of a bigger community. The best in that race are obviously department stores!

However, they still have difficulties to behave as a unified place, rather than an addition of floors or a “vertical street”. The issue is not how to give the same feeling on each floor, but how to make sure that the idea behind the very concept of the department store is felt and palpable as one experience, at the entire building level. For instance, the concept of Galeries Lafayette at the beginning was to be an architectural destination, as the most beautiful place in the city, a monument. You started to shop after having seen the cupola at the Haussmann store. Because the department store was a monument, it became inevitable.

A department store is not a juxtaposition of clearly separated activities which is currently the case at La Samaritaine with a hotel clearly cut from the store itself. It should be a fusion, a mingling of activities under one name, one destination, one experience. For me, the future of department stores is the hotel activity. A hotel where you can shop whatever you want, whenever you want and however you want, is way more exciting than a store where you can stay.

*IADS – Who or what would you consider as exciting when it comes to retail?*

CG – In terms of brands, probably Apple, thanks to the level of service. But you do not sleep in an Apple store. I dream of a store that is accessible 24/7, where you can live. In other words, a hotel turned into a department store. It is all about living an experience, or renting a usage, rather than simply buying something. Alternatively, the metaverse opens unlimited possibilities in terms of architecture, usage, consumption, business…

*IADS – What is the future of retail?*

CG – Hotels!

Credits: IADS (Selvane Mohandas)

What: Coresight reviews with SAP the options at hand to increase profitability on returns, which are usually dragging P&Ls down.

Why it is important:  There are several options which imply to distanciate from the  mainstream  options proposed, among others, by the market leaders who have the possibility to sustain the losses incurred by these options. This requires at the same time a strong branding and a real added value proposal to be accepted by final customers.

According to the NRF, retail returns in the US represented $761 billion in 2021, or 16.6% of total retail sales in the country, to be compared to 10.6% in 2020. This increase is mainly due to the increase of e-commerce, which contributes to increasing the return average since its own rate sits at 20,8% of total e-commerce sales.

For Coresight, retail returns affect consumer sentiment and loyalty as return policies are now scrutinized by customers before shopping (and, in some cases, customers are asking for a sustainable policy, which raises the costs). In order to remain profitable, several options are at the retailers’ hand:

• Disallow returns, such as offering discounts in exchange of keeping the product
• Offer returnless refunds, (these options are optimal when the cost of shipping, repackaging and restocking the item exceed the sale price of said item),
• Bundle returns to reduce costs and enhance sustainability (often by enticing customers to bring back the product to physical points),

Of course, the best method to prevent returns is to use data from previous returns to make the proper analysis and identify reasons for returns (manufacturing issue, ordering and merchandising issue, etc…).

How to seize the opportunities in retail returns 

What: Customer lifestyles are drastically evolving and the pandemic continues to influence customer purchasing priorities and penetration in the omnichannel environment, which is affecting assortment mix and demand at each location.

Why it is important: This is creating new challenges for retail operations, including a particular demand for agile merchandise planning and supply-chain processes. These activities require frequent decisions on product assortment, store, and floor-space allocations. Such decisions are not new but they are now occurring outside of typical planning cycles and with less data to guide them.

Retailers are redefining their customer strategy, promise, and journeys based on an accelerated omnichannel environment in a disrupted retail industry. They are rationalising their assortment profiles and principles by channel, analysing their online and bricks-and-mortar ranges, and ordering allocations and product space by location.

The Work From Home phenomenon

Remote working created spikes in demand for product categories and high demand in new locations, with no historical data or trends to help prepare for this change. While the trend of working from home is expected to continue, the spikes in sales and locations have eased and retailers have established new buying patterns – but the volatile environment still exists, as the impacts of the pandemic are constantly changing.

Having adjusted for the impacts of working from home and a migration away from city centres, retailers are establishing their competitive advantage by focusing on customer experience strategies. Managing omnichannel complexities is how retailers will deliver on their customer promise and expectations.

The complex shift to omnichannel

With the online business rising, retailers will reshape their online product profiles and reconsider their store footprint for products and categories. It is predicted that, by 2024, up to 10 per cent of floor space will be repurposed in department stores as the shift to omnichannel continues.

Retailers are finding omnichannel fulfilment complex. Merchants must adapt their allocation and replenishment models to support total demand, rather than basing them on sales units by location. The challenge for retailers is to adjust allocation for efficient and profitable fulfilment through the most appropriate methods, to prevent unbalanced inventory by store.

Customers’ evolving expectations

Click-and-collect and curbside pick-up are now terms widely used in homes. Home delivery has increased, with the parcel carrier acting as an extension of the retailer. Leading retailers are establishing a competitive advantage by responding with agility in their operations and re-emphasising their customer-first approach across the entire organisation. This requires the whole business to buy into a seamless, end-to-end customer-centric view.

The supply chain and last mile delivery are playing a key part in the customer journey and the after-purchase experience is important, too. This creates an added complexity for the omnichannel promise to the customer.

Retail’s new range: The evolution of merchandise planning

What:  Department Stores are increasingly upping the game in terms of restaurant quality, to become top destinations.

Why it is important:  It is not about simply allowing customers to spend more time in the store, but really to add to the appeal of the store by including a high level restaurant designed as part of the store experience (and desirability) itself.

Several major department stores are taking fine dining to the next level by opening restaurants right in the middle of the store, between brands, such as Adesse, the new vegan restaurant at Selfridges. It is not about reverting to old dining halls, but to contribute to an elevated experience for a store seen as a ‘social place’. This is also the reason why a branch of Pizza Pilgrims opened in the store (with the dough produced on site) or a new Starck-designed restaurant at Saks Fifth Avenue, Palette at Bergdorf Goodman, or the whole food offer at Harrods, which tends to become less a grocery space than a collection of elevated restaurants.

The goal is to become a “global dining destination”, which presents the advantage to also be extremely appealing for local customers.

Could fine dining be the future of department stores? 

What: Automated warehouses are no longer nice to have, but crucial on the long range.

Why it is important: Bots will help dealing with demand spikes and limit the need of additional workforce (and the related costs), however companies should not expect to take down human costs in warehouses as the generalisation of robots will lead to the appearance of new jobs, which will be probably better paid than today.

The Economist reviews the latest evolutions in terms of robotic warehouse equipment and their consequences. Even though robots allowed Amazon to weather the Covid-19 crisis and the hike in terms of delivery, there were not enough to prevent the company being forced to have temporary workers in addition to its fleet (leading to increased spending in pay in order to attract them). In other words, McKinsey mentions that “automation in warehousing is not longer just nice to have but an imperative for sustainable growth”.

As a corollary consequence, not only more machines are needed, but more specialized ones too, or responding to new specifications. For instance, Ocado has developed the 600 Series, almost entirely build with 3D-printed pieces, decreasing its overall cost of production and weight, thus increasing its battery time. 600 series units operate in closed areas, known as “hives” and their new fabrication method allows such hives to be built in weeks, not months, at a lower cost, paving the way for city centre local fulfilment units.

Amazon on its side is refining its historical Kiva robot and upgrading it to pack more goods and be more efficient in smaller fulfilment centres. Exotec, a competitor, has developed “Skypods”, robots able to crawl along 12m up the shelves, maximizing the space value. They already equip Carrefour, The Gap, and Uniqlo.

Of course, such robots are designed to work in close circuit. Whenever robots need to be working alongside humans, new specifications and new security measures are to be implemented, sometimes leading to less efficiency and increased cost.

According to The Economist, this is an ongoing revolution which will have significant consequences in terms of job opportunities, however this shall not be seen negatively, as, and previous evolutions in the industry showed it, this new industry will give birth to new skills needed and new jobs. For instance, once telephone switchboards got automated, all operator jobs disappeared, but in the long run the number of jobs in the telecom industry soared.

The bots taking over the warehouse 

What: Work from home creates new tensions that need to be taken into account by leaders in order to make them sustainable for all members of the team.

Why it is important: It is all about equality, showing example, and taking into account the differences, especially for the most vulnerable class of workers (women, mothers).

With the development of remote working, new usages appear, but also new tensions, that could be detrimental to the most vulnerable class of workers. The Harvard Business Review goes through 3 tensions created by the hybrid workplace and explores ways to overcome them.

Tension created by the opposition of working anytime vs. all the time: there is a difference between giving individuals the chance to work when they choose and imposing an expectation that they be available all the time. This can feel especially heavy to carry for women having to deal with family and work. In order to offer an alternative, leaders should offer the flexibility to choose when they work, but also making clear that there should be times when they’re offline (by limiting communications, or having company-wide no work times).

Tension created by the opposition between isolation and invasion: for many employees, the office brings connections with others, and offers the chance to interact. Trying to reproduce the connection online can give to some the feeling to be invaded. It is recommended to leaders to institute moments of exchanges about non work related topics, in order to share personal experience and reinforce the bond.

Tension created by the opposition between what is possible and what is preferred: corporate organisations tend to favour individuals able to work all the time, which comes as a conflict with the notion of working from home, which provide flexibility (especially for women). As a consequence, a flexibility bias  has developed pre-pandemic, making leaders feel that flexible positions were less interesting and inspirational than being all the time in the office. As a consequence, to combat this bias, it is key that organisations set the example, by avoiding having different systems among the teams.

How to deal with hybrid workplace-induced tensions 

What: Days are gone when a pinball machine was enough to attract top talents. Now a sound strategy is needed to stand out on the market.

Why it is important: Department Stores suffer from both a poor image of the retail industry and the belief that their often historical and respected name is sufficient to attract talents.

Employer branding is increasingly important in a world where talent is becoming scarce and potential applicants have choice (all the more that retail is perceived as less appealing than other industries, such as tech, for instance). It is not about perks now perceived as gadgets, such as pinballs or juice bars, but a real strategy based on 3 pillars:

• Reputation: which is fostered through social media. Reputation can be evaluated by applicants according to the three Cs: Career catalyst (will I move my career forward by working here?), Culture (work environment), Citizenship (impact on the community and society at large).
• Proposition: what is the “give and get” that applicants will receive? Transparency and honesty here is central as overpromising might be damaging to the employer brand. For instance, Tesla suffers from a bad perception of the employer brand among its former employees, who make it known.
• Experience: the employee experience is extremely valuable and solidifies (or not) reputation. It is somehow a one-way process, however: if the employer brand is sitting at the top, top candidates might overlook a poor experience, but in the case of a poor brand, even the best-in-class experience will not  help to recruit the best talents. The employee experience is directly dependent on the ability to deliver an Employee Value Proposition as expected.

Employer branding does not rely on gadget decisions, on but on a matured strategy helping to stand out in a competitive environment.

Make your employer brand stand out in the talent marketplace 

What: The blockchain market in China is very regulated, causing it to be disconnected with the rest of the world.

Why it is important: Although crypto and NFT produced in China may not be able to transfer to the rest of the world, brands should not overlook the market as a potential to experiment with the blockchain market.

China’s tech giants are jostling for position in the rapidly evolving space for unique digital assets authenticated and minted using blockchain technology.

• JD.com, Alibaba, and Tencent are fighting to have a leading position in the “digital collectible platform” market.
• Bytedance, Baidu, Bilibili, NetEase, and Xiaomi stake claim in the metaverse (joining global players such as Meta, Alphabet, Microsoft, and Apple)

While China’s Web 3.0 activity seems very basic, there is not an easy bridge between China and the rest of the world. China banned crypto mining and trading in 2021, and only allows government approved blockchain technology in the country. Along with the release of the digital yuan, China is not aligned with the global NFT market (in terms of transparency and openness).

NFTs are still new in China, and there are not many set regulations around them, making them risky. There is currently no risk-free for purchasers to trade or resell badges within China, as there might be penalties.

Although NFTs in China are not fluid with the global market, it could still be worth it for brands to create China-specific digital collectibles. At the moment, NFTs are seen as the next thing in fashion, so they should not be overlooked in the market.

China’s Parallel NFT Universe: A Guide for Fashion