What:  A paper on the future of work, which is already “here but still unevenly distributed”.

Why it is important:  The notion of work as we know it might be very well challenged and redefined, however, even though the possibilities offered and endless and fascinating, it is stlll very early to  understand what direction all this is going to take and to what extent it is going to influence larger organisations not involved in tech as a primary activity.

The author argues that in the future, people will not work anymore for large companies, but will rather earn income in a non-traditional way (playing games, learning new skills, curating content…). To support this view, crypto protocols are seen as ways to coordinate, measure and reward contributions to complex ecosystems, based on decentralized autonomous organizations (DAOs) outside of the corporate world.

The argument is based on the fact that the traditional corporate system has become outdated, as we  see alternative forms of earnings (influencers, contractors, creators, gig economy…). Those possibilities are still limited in number nowadays because the whole business model is still operated by corporations. However, the most advanced ones (such as Apple) have created “orbital stakeholders” (in the case of Apple, all the companies developing apps for instance) and, according to the author, as companies grow, they are no longer able to maintain a sustainable relationship with these orbital network participants and are therefore tempted to extract value from these participants instead of maintaining an cooperative mindset. This is the reason why DAOs will grow in importance, as they will allow the “orbital stakeholders” to exist independently of corporate organisations.

The combination of several DAOs and crypto will help people to generate an income based on a mix of things we already do, but with the notion of earnings at the core of these activities. There are several types of profiles identified:

• The core contributors (work to earn), which could be compared for instance to the present days consultants, in management and growth development areas,
• Bounty hunters (contribute to earn), functional experts who will provide services at one time and fulfil tasks with clear boundaries, in Finance, development, design…
• Network participants (participate to earn, play to earn, learn to earn, create to earn), which could basically include everyone, and could be seen as a way of rewarding people for living their life online.
• Token holders (invest to earn), or shareholders.

However, it is not clear how much income can be earned through these outlets and if it could suffice to make a living.

Considering Crypto and Decentralization for the future of work 

What: Retail Dive looks at what has been successful for US department stores for the last year, and what remains to be fixed

Why it is important:  Although they mention the changes in terms of customer behaviour or channels, they do not seem to take into account a catch-up effect which has indeed helped all department store companies in the world in 2021, but which is also a true issue in terms of durability of this effect.

Retail Dive looks at the reasons why, in spite of a worldwide pandemic leading to a slump in tourism, some department store companies posted excellent results, both in terms of sales and traffic, in 2021 compared to 2019. Of course, this is due to the fact that these companies were forced to adapt and innovate, especially on the digital front where they were notoriously lagging, and results are paying off. However, Retail Dive also points out the remaining challenges that were evident before the pandemic and which are still unresolved:

• Traffic to malls is not recovering and department stores do not benefit anymore of being anchors in such locations. The pandemic has accelerated the decline of malls as retail locations, and some of them even turn away from department stores to generate a new kind of traffic based on experience or innovative retail formats.
• Consumers are spending less, as they realized that they could live with less, meaning that all of a sudden Walmart, Amazon, dollar stores and off price retailers are formidable competition for department stores,
• Channels keep shifting, which is an issue for department stores which built their USP on convenience, when online becomes the most convenient option possible,
• The pressure to spin off e-commerce is a distraction, under the pressure of activist investors. This is a short-term pay-off but ultimately destroys customer experience,

For Inside Retail, department stores are doing a turnaround, however the question is to what extent the turnaround is sufficient to guarantee their survival on the long run.

Can this year's department store recovery last

What:  The metaverse allows people to immerse themselves in any digital surrounding, and participate in any physical reality, at any time – offering endless opportunities for companies to extend themselves into the space.

Why it is important: Tech companies are racing to enter the metaverse to offer enterprise level products and services with an immersive experience, although the future of this technology is yet to be defined.

Venture capitalist, Matthew Ball, has studied the metaverse closely and categorizes the metaverse into eight core features which can be thought of as a stack: hardware, compute, networking, virtual platforms, interchange tools & standards, payment services, and content, services & assets.

It is likely that the metaverse will have waves:

• The first wave: mixed reality hardware offers immersive experiences
• The second wave: fully immersive augmented reality glasses hit the market as the gateway to the metaverse, allowing personal avatars to show up as a hologram to someone else in their physical reality.

As virtual spaces rise and mature, offering the potential of a connected network across all platforms and spaces, this hope is less likely to happen as rivalries continue between the different companies that own these spaces (Apple, Epic..). But the metaverse has so much more to offer than just a connected gaming world, it has the potential to transform just about every industry.

Enterprise applications of the metaverse using VR and AR

• Google glasses allow workers to go hands-free, especially in industries that are heavy in logistics, manufacturing, or collaboration. The glasses can funnel information from the web to layer over your physical reality. Google Meet can even be held on the glasses. Google is continuing to work on projects to advance the glasses to blend physical and virtual realities.
• Meta (Facebook) is investing heavily in AR and VR across devices, and renamed their company, to show the importance of the metaverse in the future. Meta wants to harness the technology to put users directly into other experiences rather than augment the existing reality. They have come out with a VR headset and a VR platform with spaces for work, personal, and events. Meta is also developing a mixed reality (MR) headset that will allow sensors to pick up your surrounding to inject them into your VR experience.

Mixed reality

AR glasses and VR headsets both have limitations. With VR headsets, the user relinquishes their own reality, creating two mental framework that can be disorienting. AR glasses are complicated to get the lighting right as well as ensure the depth and focus are adjusted to the pupil. Therefore, mixed reality might be the best option until fully fledged AR arrives. While Google, Microsoft, Lenovo, Oppo, and Xiaomi work on AR glasses, Qualcomm has come up with chipsets for headsets. They have been building the way to bridge AR devices with phones, which is important for the short-term success of devices. The adoption of Qualcomm’s technology by big players implied that the space is converging around a basic infrastructure.

• Microsoft is offering the best immersive mixed reality experience so far with the HoloLens 2, which uses Microsoft Edge to allow you to do things like open up virtual browser tabs in front of you and reach out and scroll with your fingers.
• Apple is working on a MR headset in the short-term as a precursor to full-fledged AR glasses when. The app store has become a major source of friction as Apple continues to charge a 30% tax on revenues made from apps – which is higher than developers want. Apple has the power to slow things down considerably as it is very strict about operating systems and applications that can be used.

Other metaverse factors

Despite Apple’s efforts, the metaverse will not be owned by a single player. Hardware also plays a big part as it gives users access to the metaverse. Virtual native gaming companies such as Epic, Unity, and Roblox are strong contenders in the metaverse because they are helping thousands of developers build games that are fundamentally virtual. These gaming worlds connect users together in online spaces where digital products can be bought (clothes, skins..) with virtual currency.

Digital twin technology (creating a virtual twin from a physical original) is also gaining in popularity as an extension of the physical world into the metaverse. The number of companies that have launched digital twin simulations with gaming engines like Unity and Epic have increase with the need for remote workers to collaborate. Nvidia, another gaming company, has announced that they are going to build a digital twin of the entire earth, called Earth 2.0, which will be used to simulate and predict climate change. A fully digitalized earth will contribute to the advancement of the metaverse.

The metaverse: Where we are and where we’re headed 

What: It is tempting to simplify the number of variables taken into account to predict future sales, for the sake of simplicity, but it can lead to errors varying from 1 to 3.

Why it is important: Uncertainty modelling is surely an approach worth to be considered in these times of extremely high uncertainty from one day to another in terms of customer behaviour.

Even though companies are working hard on controlling their supply chain bottleneck, now that just in time production is a common thinking and this led to the disappearance of intermediary buffer stocks, the disruption in production prediction persists. According to the HBR, it is not due to a shortcoming in the approach (or, as they call it, the ‘software’) but more to its implementation.

Researchers categorize data analytics according to 3 types:

• Descriptive analytics, answering to ‘what happened’ and ‘what is happening’ (e.g. sporting good chain The Gamma Store),
• Predictive analytics, often using advanced statistical algorithms to predict the future values of the variables on which decision-makers depend (e.g. Amazon, Procter & Gamble, Unilever),
• Prescriptive analytics, informing decision-makes about the potential consequences of their decisions and prescribe actionable strategies, based on mathematical models (e.g. Airlines, UPS).

Usually companies use a cocktail of these 3 approaches, and are usually weak at the predictive part, according to the researchers due to the assumptions and choices around the generation of data analysed. In order to reduce the noise, and improve the quality of the predictions, researchers advise to use uncertainty modelling, which aims at identifying key parameters associated with data generation to reduce uncertainty around the predictive value of that data.

The example given is a customer which increases his orders by 500 units each time that an order is placed. Companies are going to reason on an average amount of products ordered each month, and will not be able to correctly predict the future amounts ordered, if they miss the specific information of +500 pieces ordered per month. Uncertainty modelling, through advanced algorithms, allow to increase the number of uncertain parameters taken into account, and help predicting with better accuracy, as shown with a tire manufacturer example in Turkey.

Using Uncertainty Modeling to Better Predict Demand

What: The line between fashion and sports has become increasingly blurred, as fashion and sportswear are inherently linked and continuously influence each other. Luxury brands becoming involved are infusing sportswear into their aesthetic leading to the development of new trends.

Why is it important: The interest in activewear has shifted into a cultural wellness phenomenon, becoming a staple of fashion history. The rise in the number of health-conscious consumers and the effect of pandemic had great benefits for the sector. The sustained blur between loungewear, sportswear and conventional clothing as a side-effect working from home.

Field giants continue to dominate the field in terms of fashion, but specialists hold their place

With their expertise within the sector, both fulfilling different consumers' needs. Luxury players are also starting to infiltrate the sector. By offering garments that go beyond functionality and illustrate the quality, luxurious style characteristic of established fashion houses.

Sneakers have been one of the most telling examples of this bankable mutual influence. Nike and Adidas have obviously been the most profitable actors in this sneaker craze. Luxury houses, although historically specialized in the design of formal shoes for men and women, have all hopped on the sneaker frenzy to profit from it, the most successful being Balenciaga with the Triple S, the Track, and the Speed.

Gorpcore, a term describing the creation of outdoor hiking aesthetics within the realm of fashion. The craze has led to “technical” gear like rainproof jackets, hiking boots, utility jackets, cargo pants, camouflage, purposeful accessories, and bucket hats becoming hot commodities in fashion. Gorpcore expands as field giants are partnering with luxury brands such as, north face and Gucci, Nike and Dior, and Adidas and Prada.

There is a slow shift toward more specialized brands operating in small batches, producing

garments that are made-to-last. Indie brands appeal to consumers through their quality

products with an attractive and distinctive design. Alo yoga and girlfriend collective being among the most popular.

The famous athleisure garments that have a sporty appearance but are not necessarily designed to be

functional, have grown to become nearly indistinguishable from ready-to-wear fashion. Leggings, casual shorts, sweatpants, hoodies, slide sandals, sports bras and baseball caps are seen everywhere.

Preppy sportswear or the “Country club aesthetic” is a dominating force in fashion, reflecting the more bourgeois aspect of sports culture. Sweater vests, tennis skirts, loafers, tennis dresses and sweatbands are making a reappearance.

A confirmed synergy that is mostly tackled through collaborations between both factions and the pandemic, has only accelerated the shift towards more versatile and comfortable attire that are here to last. Trends like Gorpcore, Athleisure and Preppy Sportswear can be adopted for different brand positioning strategies and understanding different consumers can help in brand positioning, and how to tackle multiple consumer segments.

The impact of Sportswear x Fashion

What: The annual prospective analysis from the trend agency Wunderman Thompson.

Why it is important: Interestingly, the report mentions many tech oriented trends, but almost nothing on sustainability. Does this mean that it is not a trend anymore, or that it is not considered to be hot and interesting for customers (at a moment when 35% of French customers identify sustainability as one of their top 3 worries)?

Every year, Wunderman Thompson issues a selection of the trends they identify as crucial for the coming year. This extensive report (more than 200 pages) makes the balance between a ‘return to retro’ and a strong acceleration on online sales. In details, here are their main findings and interesting insights:

• The Avatar economy: many companies completed in 2021 the B2B and B2C approaches to do DTA (Direct To Avatar) sales: RTFKT (purchased later on by Nike), Balenciaga on Fortnite, Ralph Lauren on Zepeto, American Eagle on Bitmojis, Gucci on Pokemon Go.
• The sales process is morphing:  customers do not consider that brands only serve one objectives. They expect brands to embrace broader purposes and propose larger experiences than solely related to their products, which in turn generates new opportunities. For instance, John Lewis aims to become a landlord by renting out apartments, or Ikea which sells energy.
• Growth of conversational commerce: in China for instance, Wechat allows brands to establish a direct link with individuals, instead of addressing masses, which is the reason why some qualify c-commerce as “private commerce”. According to the BCG, customers spend on average on Tencent a total amount of €23.674 a year thanks to such techniques.
• Virtual flagships: it is expected that e-commerce grows from €4.33bn in 2021 to €4.8bn in 2022. Virtual flagships are developing as they allow to reach new customers as well as propose different experiences to customers unable to travel. For instance, Lancome opened a virtual flagship based in Singapore, Australia, Korea or in the US.
• Selling to the Alpha generation: the new cohort is coming to the market and some brands are already targeting them: Pacsun (unisex products), inclusive and durable products (J.C. Penney).
• The reinvention of department stores: some new concepts are appearing, such as Bobby’s, which opened in Bournemouth (UK) in a former Debenhams location, which includes a beauty salon, an art gallery, a café, as well as local artisans and manufacturers. A hairdresser, a dentist and a brewery are planning to open as well.
• Digital twins: brands are reproducing virtually their stores to reproduce in the metaverse the experience felt in the physical world.
• GAFAM physical stores: now that Amazon is opening fashion stores, and following the Google store in NY, one must expect new usages, services and proposals to customers which will force other retailers to adapt.
• NFT platforms: some companies are able to significantly increase their revenue by creating and selling NFTs. Selfridges recently opened a point of sales allowing customers to purchase over the counter NFTs without technological hassle.
• Retro commerce: after recent trends based on nature and comfort, it seems that store design trends are gearing towards a nostalgia for retro

The Future 100 

What: Ben Evans’ view on the future of commerce.

Why it is important:  By definition, e-commerce has now a competitive advantage on traditional brick & mortar business model: each budget (be it advertising, sales, marketing, product..) can be reallocated as the digital touchpoint is by essence versatile in terms of utility for the customer. This also relates to other analysts calling for retailers to think about their stores as advertising platforms, showrooms and brand experience playgrounds in addition to points of sales.

Tech analyst and former Andreesen Horowitz consultant Benedict Evans reviews how commerce and its digital iteration is slowly getting transformed by tech.

At first, e-commerce was all about commodity and utility: people knew what they were looking for (including a price) and connected to purchase the said product, fuelling at the same time an online advertising business model based on search. However, since then, discovery and advertising have been expanding and moving, from utility to experience (for instance, in Google, the search on ‘cheap’ has consistently lost ground in favour of ‘best’ for the last 10 years).

For him, such changes are extremely important, because it is not anymore about presenting the right product and waiting for the customer, but being able to connect the product which is right for one given customer, thanks to recommendations and data. The most important point he mentions is the following:

-    In the “real” world, retail rent, price, manufacturing, advertising and marketing, logistics, are all separate components that do not overlap and are not intrinsically connected,

-    In the “new retail” world, this is the contrary: online, all these budgets become one, all pieces of the same algebra. As a consequence, every touch point in every part of the buying journey could be part advertising, part retailing, part product.

Even though this also suggests that in the future such brands will have to operate with new ecosystems (Amazon, Target, Instagram…) for Ben Evans this also means that we might see the emergence of new, exciting brands as they will be experimenting even more.

Creating Commerce 

What: Macy’s expanded itself into the largest department store in the US, but this transformation turned into its demise.

Why it is important: Macy’s needs to go back to the basics, focusing on the offer and the store experience in order to survive the coming years. The retailer will need to take a close look at its portfolio and cut out the activities that are distracting the business to be able to focus on the pieces that can survive.

In 1994, Macy’s had a mission to compete in new locations where other department stores had roots and successfully replaced many local department stores.

But after achieving 853 stores in 45 states, Macy’s started to backpedal by focusing on a local offer and reducing store count. The CEO at the time, Terry Lundgren, basically bought up multiple brands (Federated…) of stores, branded them as Macy’s, then closed them.

The rise of Amazon and e-commerce also hurt Macy’s and led to another closure of 225 stores. Amazon’s rise has forced retailers like Macy’s to dedicate resources to selling online, resulting to a fewer need for physical stores.

Then came the rise of the discount chain Target, created by department store owner Dayton-Hudson. In 2006 Macy’s ran more than 850 department stores and a website resulting in USD 27 billion in sales. In parallel, Target ran around 1500 stores and a website resulting in USD 59.5 billion. Macy’s did not recognize that it was expanding a business model that was no longer as relevant as other formats such as discount chains (Target, Walmart, Costco).

While Macy’s argues that their biggest enemy is the internet, but their stores are old and tired and the malls they are in are dying. The merchandise they are selling is ordinary and overpriced.

 How Macy’s set out to conquer the department store business — and lost

What: A new generation of mid-market American labels are thriving, as spending patterns change, by offering value-conscious products with a point of view.

Why is it important: While the pandemic widened the income gap, it also forced consumers to change the way they shop. Many wealthier buyers became happy to trade down for products with a sharp point of view. US companies like Jenni Kayne, Loeffler Randall and Clare Vivier are experiencing triple-digit sales growth, thanks to smart distribution and unique products.

The American “accessible luxury” market, once squeezed between fast fashion and the very high-end, is now on an upswing after years of decline. Some of the once-struggling leaders in the category including Coach and Michael Kors, used the pandemic to reset and focus on profitability and distinctive designs, rather than sales volume driven by discounts.

Brands are also taking advantage of consumer frustration with the rising costs of high-end luxury goods in some cases, up nearly 20 percent during the pandemic alone. This value-conscious mindset has presented an opportunity for lower-priced labels that are held in a higher regard than fast fashion.

However, lower prices alone aren’t enough. Accessible luxury labels have often taken styles from true luxury lines rather than designing new things. History shows that the most successful, long-lasting brands are more successful with original creations, from Coach’s Bonnie Cashin-designed handbags to Tory Burch’s Reva flats.

Many of today’s most promising mid-priced labels are diminutive in size compared to the market leaders, although some believe they can reach that level of mass appeal.

The return of accessible luxury 

What: After a year of survival mode in 2020 and a year of tech innovation in 2021, an increasingly digital consumer environment has developed and here are 5 tech trends for brands to stay relevant in 2022.

Why is it important: Retailers have learned to keep up with fast-paced, digitally savvy consumers by boosting their presence on popular platforms and adopting new capabilities in a relatively short amount of time. With those initiatives came massive retail tech funding for the space.

Five trends to look out for as the evolution of retail tech continues are:

Consumers continuing to lean on buy now, pay later options. BNPL allows consumers to pay for an item in smaller amounts within a certain timeframe, often interest-free. This momentum will likely continue well into 2022 and is quite attractive to young consumers who may not have the funds to pay for big-ticket items upfront. According to a survey from NerdWallet, the respondents who've used BNPL during the holidays are 36% millennials, 22% Gen Z, 18% Gen X and 3% baby boomers. If inflation persists, consumers may have even more reason to use BNPL services.

Social commerce playing a crucial role in consumers' purchasing journeys.

Social media sites are accelerating efforts to allow the purchase of products without leaving the platform. There is good reason to invest in shopping capabilities since over half of consumers surveyed by NPD said content shown on their Facebook and Instagram feed influenced them to make a purchase. A list of platforms where shoppers discover and learn about items include Facebook (41%), Instagram (35%) and Pinterest (21%) who ranked on top. The industry's scale in China is a reflection of what social commerce in the U.S. could be. Social commerce sales in the U.S. are just about one-tenth the size of China's $351.65 billion industry in 2021.

Brands normalizing the use of augmented reality

In 2020, only 20.1% of consumers said they've used AR to test makeup or try and discover new products. However, with the quantity of brands launching AR tools, consumer adoption may soon rise. Just last year, Snapchat teamed up with six companies in various industries, including Walmart and Hollister, to create virtual stores in the app during Black Friday. Fendi, Dior and American Eagle also ran AR shopping lenses on Snapchat around the same time.

Livestreaming living up to its potential

Coresight Research estimates that the livestreaming market would reach $6 billion in 2021, and in 2023, it could reach $25 billion. On multiple occasions, retailers and social media platforms have partnered to launch shoppable livestream shows. And like social commerce, livestreaming is already a multibillion-dollar industry in China. The market was estimated to be worth $305 billion in 2021, according to KPMG and research firm AliResearch cited by Coresight.

Retailers pressured to find way to deliver goods faster

Industry giants have set customers' expectations high, which might push other retailers to keep up. For example, Walmart has teamed up with automotive company Ford and startup Cruise for self-driving deliveries as well as investing in drone services for deliveries. The demand for speedy delivery has also presented opportunities for companies like Uber to diversify their sources of revenue. Uber worked with retailers like Hims & Hers, Bed Bath & Beyond and Costco to deliver goods.

Staying relevant in 2022 with 5 tech trends

What:  An impressive set of 130 pages on the major trends spotted by Shopify for 2022 when it comes to e-commerce, retail and logistics.

Why it is important:  Sustainability is all across the board, and translates into transparent processes and practices, local partners, and use of tech to drive efficiency. Shopify presents itself as a tool which contributes to reduce complexity, seen as a major issue for retailers.

Shopify released its annual report, co-written with Forrester Research, on e-commerce and retail trends, to explore the opportunities and threat on the market as well as promote their own solutions to larger retailers (with the intention to move away from their image of platform dedicated to small-sized retail and entrepreneurs).

According to the report, consumers are more than ever looking for brands resonating with them in terms of geography (47% of the consumers mention that a local presence is a purchase factor), company values or sustainability (77% are concerned with the environmental impact). But in parallel, they also want fast and efficient delivery, even though they might spend more money and accept slower shipping times for the right brand. A balance between brand values and customers new shopping habits and expectations is therefore crucial for retailers to remain sustainable businesswise.

Also, the report states that customers are coming back to brick and mortar stores as they crave the experience, but it is not about one or the other: omnichannel is there to stay and the best brands are the ones able to operate digital and physical in a mixed way, not in silos.

More specifically when it comes to e-commerce:

-    Rising acquisition costs force brands to foster long-term relationship with customers, based on values. In parallel, there are more players online (as entry barriers are lowering), so merchants are spending more and gaining less. In order to limit the impact of this phenomenon, Shopify recommends to:

• Develop a brand measurement methodology,
• Invest in short-term performance marketing AND long-term brand building,
• Diversify the advertising and sales channels to lower the cost of acquisition,
• Highlight the unique differentiators and values at every customer touchpoint.

Shopify mentions that their custom storefronts help brands to build cutting-edge experiences.

-    Death of third-party cookies forces brands to rethink personalization. Personalization is a basic expectation now when it comes to the shopping experience, to the point of not even being anymore a magic bullet for long-term relationship. Loyalty is created through the building of brand communities. To achieve that, Shopify recommends to:

• Invest in the right team to help the community grow,
• Find ways to tie the community back to business results,
• Give members a clear reason to keep coming back.

Shopify mentions that their ability to help brands to sell everywhere their customers are (social media, website) are clearly an asset, as well as the ease of creation and sale of NFTs.

-    New commercial opportunities emerge of the biggest social platforms. The trend is clear: social commerce is a new sales channels for both brands and retailers. Shopify recommends to:

• Create live commerce experiences tailored to the audience,
• Design a social commerce experience that converts,

Shopify’s ability to optimize campaigns across social media, and the possibility to make content shoppable should be the ideal combination.

More specifically when it comes to the future of retail:

-  Digitally native brands drive retail competition leading them, given the ideal real estate conditions, to open physical retail seen as an affordable acquisition option. This creates new expectations from customers. In order to create experiential moments, Shopify recommends brands to:

• Use pop-up shops to test consumer demand for physical retail,
• Invest in creating unique in-store experiences to build brand affinity,
• Use customer profiles to offer personalized recommendations.

Shopify mentions the easiness with which its reports allow brand to identify the right location, as well as the Shopify POS solution to create customer profiles and make the most of its online to in-store fulfilment features.

-    The post-pandemic customer journey will bring about the next phase of omnichannel shopping. Consumers are now connecting with brands across multiple levels, and expect consistency across these channels. Shopify recommends to:

• Turn retail stores into showrooms to improve brand discovery and awareness,
• Unify customer and product data to provide a consistent customer experience across channels.

-    Consumer and employee expectations push brands to reimagine the retail staff role. Customers now expect world-class service from everyone, forcing brands to reimagine retail roles and compensations, through tech. Shopify recommends to:

• Create more specialized roles and increase compensation to match,
• Provide a healthy work environment for employees.

Shopify allows the creation of strong customer service proposals through virtual shopping apps, which will also allow staff to be motivated with best in class tech.

More specifically when it comes to the future of shipping and logistics:

-    Supply chain vulnerabilities force merchants to permanently modify their fulfilment and shipping. The issues from 2020-21 are here to stay in 2022 and brands are revising their shipping strategies. Shopify recommends to:

• Digitize the supply chain to improve visibility and responsiveness,
• Use data to optimize the fulfilment strategy,
• Consider outsourcing the shipping and fulfilment to a 3PL

Automation of fulfilment and centralization of all orders in one place are assets from Shopify to allow to bring the inventory closer to customers.

-    Social and environmental impact will define the next era of shipping and logistics. Sustainability is now a basic expectation from both customers and employees. Shopify recommends to:

• Find ways to reduce the carbon footprint,
• Make product packaging recyclable, compostable or reusable,
• Hold the business accountable to sustainability goals.

-    Customers choose to shop with brands that are transparent around delivery times.  It is not only about free shipping, but having a visibility on the shipping times too. Shopify recommends to:

• Manage customer expectations with clear delivery timelines,
• Offer fulfilment options that match the market’s expectations.

The Future of Commerce Trend Report Shopify

What: With lockdowns and restrictions, France was greatly affected by Covid-19 in 2021. Trade Alliance (Alliance du Commerce) reported that last year, sales fell by 16% compared to 2019 and increased by 9% compared to 2020.

Why it is important: The Retail Int. panel, which compiles data from about 50 clothing brands in France, also shows the cumulative lockdowns of 2020 and 2021 cost 38% of sales compared to 2019 (22% in 2020, and 16% in 2021). Two KPIs are positive: last year, conversion rate was up 13% compared to 2019, while the average basket has increased by 9% over the period.

Excluding periods of closures, activity is up very slightly by 1% at constant scope, compared to two years ago (+4% compared to 2020). Children's textiles have done well, while women's textiles have weighed down the annual balance sheet.

E-tailers more than doubled their revenues, posting a 113% increase in online sales compared to 2019 (+22% compared to 2020). A web upturn that compensates for the fall in physical sales of only 5 points. By compiling e-commerce and physical sales, the decline in activity over the year 2021 is set at -11% compared to 2019.

2021 was marked by an improvement for stores located in the city centres (+8% of sales compared to 2019) and in outlets (+8%), while downtown shopping centres fell, as well as department stores (-6%) and station shops (-13%). Paris sees a 12% decline compared to 2019.

Focusing on the new year, the Trade Alliance says that it began "extremely badly": the first five days of the winter sales recorded a drop in activity of 29% compared to 2019 (-19% vs 2020).

In 2021, fashion brand sales fell by 16% compared to 2019 

What: Coresight “ENCORE” approach to align profits and sustainability, which are seemingly antithetic to many

Why it is important:  Going sustainable is not doing retrofitting but redesigning the model at its core. It is costly and requires time, however this approach produces superior economic results since it embeds a true efficiency in its core.

For Coresight, there are 3 reasons why making environmental sustainability integral to a retailer’s business model is the most pressing topic now:

• Risks to businesses, society and the world come together in climate change, forcing companies to minimize their environmental impact,
• Consumers, employees and investors are prioritizing environmental sustainability and social issues when choosing what they buy, where they work and where they invest in,
• Investors are actively pricing in risk from emissions profiles, impacting valuation and market capitalization.
• However, it is often perceived as contrary to making profits. Coresight aims at reframing the common perception that enhancing sustainability is penalizing profitability by showing that doing well by doing good is possible, through a specific framework they developed, the EnCORE methodology:
• En stands for Environmental Awareness: internal and external audits enable companies to correctly evaluate their environmental footprint. For instance, Best Buy conducted a materiality assessment in 2021 to determine which issues are important to stakeholders based on a five-years outlook,
• C stands for Circular models: truly circular models are not retrofitted onto existing business models but are rather business models created at inception with circularity at their core. This is not the majority of the models yet today, as we are at the beginning of the digital transformation which would truly allow avoiding retrofitting and focusing on building the model of the future,
• O stands for Optimized operations: carbon reduction strategies are costly and take time to put into action, which is the reason why a holistic and integrated approach is for instance an example of how Amazon is tackling its environmental footprint, by addressing the last mile issue,
• R stands for Responsible supply chains: booming e-commerce means more packaging, which is a case for reusable packaging, provided the ROI implied by the number of reuses is positive,
• E stands for Excellence in reporting and communicating: a regular and transparent communication is key to help stakeholders measure up the progresses made.

Sustainable strategies should produce superior profitability as hey harness efficiencies and wring out excesses in supply chains. However, they also require the reset of many existing business and collaboration practices.

Can profits and sustainability align in the supply chain? 

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Digital payments are spreading fast. In spite of distrust, fear for privacy and inequality, retailers see digital payments as a way of reaching beyond omnichannel to unified commerce. If the right safeguards are observed, customers will benefit from a better seamless experience and retailers will achieve efficiency across operations. First we need to understand the extent of the revolution occurring in finance and payment systems, then we need to put in place technologies and safeguards to help serve our customers better and more efficiently.

Cash is no longer king

Do we still need cash? According to the US Federal Reserve, cards beat cash as a method of payment in 2018. Covid has seen merchants in many cities around the world refuse cash, calling it unsanitary. Three quarters of adults in Kenya use the mobile wallet service M-Pesa. China’s central bank is minting its own digital currency while even street-food sellers prefer to scan a QR code on mobile apps WePay or Alipay rather than give change.

Economists describe the advantages of a cashless society including lower costs for businesses, new tools to manage economies, limiting tax evasion and fighting money laundering. On the other hand, most Indians still rely on cash in spite of digital Paytm. And critics point to frightening new powers for governments and another sign of widening inequality. There is some resistance due to lack of trust in financial institutions (for example in Japan or Tunisia). Central bankers, on their side, worry about losing control over the supply of money to digital networks.

Whatever the position, it is clear that the movement away from cash towards digital payments is a reality. And the adoption of digital payments does not appear at first glance to be linked only to economic development, size of GDP or even geopolitical location.

According to Riksbank, Sweden is expected to become the first cashless society by 2023. Furthermore, Singapore’s DBS bank claims that their returns on digital customers are 30% higher than those from physical branch customers (AT Kearney, Global Trends 2019-2024).

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Bloomberg, The End of Cash, April, 2020

According to PWC, “by 2030 the number of cashless transactions will be about double to triple the current level, across regions” (PWC, Payments 2025 and beyond). Asia Pacific will clearly dominate the trend followed by Europe, US/Canada, Latin America, and Africa.

The reality of unified retail

Retailers increasingly talk about “unified commerce”, the stage beyond omnichannel. It refers to all channels exchanging product inventory, order and customer data in real time. It offers the opportunity for retailers to create hybrid shopping experiences with the customer at the centre, including click and collect, reserve and collect, click and return, click and go, or click in store, live stream shopping and more. In this context, payment is an experience enabler.

The challenge for retailers attempting to offer an enticing experience to customers by making use of digital and physical channels, is among other things, to integrate the payment experience into a seamless customer journey. For example, in-store shopping with classic contactless payments, through self-checkout terminals, to autonomous stores is transforming the customer experience to something closer to the convenience of app-based e-commerce with no queues, one-click payments etc. In this way, cash is no longer the preferred option, opening the way to further digital payment solutions.

Looking at points of interaction with the customer, Worldline describes next generation payment terminals (PoS) which are android based and deliver a smartphone experience in store. Also, several companies are currently developing Tap-on-Phone software solutions aimed at enabling a simple smartphone to process secure card payments, using the NFC (near field communication) capabilities of the device to read the chip of the contactless card or customer mobile (or even their smart watch). Depending on the technology, the user can enter their PIN on the merchant’s mobile or on their own smartphone. The development of contactless payment because of Covid measures has motivated more people to use their mobile e-wallet (such as Apple Pay, Google Pay, Samsung Pay, Lidlpay, Tescopay,

Paylib Paypal, etc.).

Available methods of payment and acceptance include proximity payments such as NFC, Bluetooth or QR codes. Many retailers are exploring in-store remote payments, blurring the line between online and offline. Account-to-account payments triggered by QR or e-wallets have the advantage of reduced fees. And BNPL (buy now pay later) has been explored.

In terms of payment processing, retailers are looking at API-based unified payment platforms bringing transactions together. This makes it possible to process transactions from online or in-store and even remote transactions made in store such as through a mobile wallet. These platforms can identify a customer wherever they interact without having to manage their identity. The tokenisation solution allows retailers to guard against personal data theft since personal data does not enter the ERP, CRM, legacy applications and e-commerce site.

Account-based payment solutions are also appearing: the user supplies account data instead of payment card data. For the merchant the same insurance mechanisms apply as for payment cards, but they may avoid card-based transaction fees. It also allows direct contact between customer and retailer in case of problems rather than having to go through a scheme and thus reinforces customer loyalty. These ideas are still being developed but Scandinavian countries and the UK appear to be in the lead.

Cryptocurrencies are also under the microscope, although at this stage they are used principally as “local money”. Gift cards bought with cryptomoney and mobile apps are the most popular ways of allowing crypto payments in stores.

A timeline of the adoption of these technologies by retailers is offered below:

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Worldline, In-store Payments Re-imagined, 2021

According to Oliver Wyman, writing in 2019, “unfortunately, most retailers fail to offer a seamless payment experience to their shoppers” and therefore payment is a largely untapped opportunity for retailers to increase revenues and improve profitability (Oliver Wyman, Payments in Retail, 2019). They offer Amazon, Uber and WeChat as examples of good practice. Apart from the obvious opportunity of improving the customer experience, they claim that savings on costs can also be made.

The Blackhawk Network Global Digital Payments study, which surveyed more than 13 000 consumers in nine countries including the US, Canada and the UK, revealed that 63% of respondents are more likely to shop at a retailer if it accepts the digital payments they use. Almost three-quarters (73%) of respondents say they want to be able to pay the same way they pay online and in-store (Chain Store Age, Consumers want digital payment, May 2021).

The Blackhawk Network goes on to say “the biggest winners in the next phase of the payments race will be the ones that are able to strike a balance between providing choices and seamless experiences to the consumers, while making it effortless for retailers. Streamlining the purchasing process for digital and mobile shopping has become a must for retailers”.

Business implications

In spite of the drag on cashless systems due to the distrust of financial institutions, fears about inequality, and privacy, digital payments will continue to grow, some predict at a rate of over 10% a year, underpinned by improvements in digital connectivity, the deployment of technologies such as 5G as well as the cost efficiencies and convenience of cashless transactions.

For businesses, the implications involve:

• New insights from digital payment data. Digital payments provide valuable information on customer behaviour allowing retailers to personalise their offer and services, and indeed anticipate customer needs.
• Strengthen cybersecurity capabilities. The sheer amount of data at risk will grow exponentially. Security breaches will be particularly damaging when social mistrust in technology and institutions is already high.
• Anticipate regulatory pressure. Government efforts to regulate the digital ecosystem are already under way. We should familiarise ourselves with enacted and planned policies affecting current and future operations in order to reduce potential risks.

When handled with care and foresight, digital payments offer retailers the opportunity of truly capitalising on customer data and getting closer to a “unified commerce” model to cope with any customer journey.

Case study of department store updating payment systems: BHG Singapore and Adyen

*BHG Singapore operates several department stores in Singapore since it acquired the Seiyu stores in 2007. It is owned by BHG Beijing.

Adyen is a Dutch payment company that allows businesses to accept e-commerce, mobile, and point-of-sale payments.*

Extracts:

We introduced Michael Hill (a brand) to a payment method called Pay by Link where they can send an SMS link with a hosted payments page to a shopper, then ship the items to the shopper…

Many feel that going online and having an ecommerce channel is enough as a digital transformation. What also matters is having one backend system to connect your multi-channel business.

Take for example, the endless aisle concept, where you can easily access the full inventory across your organisation when you’re at any store. Shoppers will be able to do that at BHG because we will be migrating to a backend system that has a single view of our inventory…

Love, Bonito’s (another brand) point-of-sale (POS) terminals are tied to the online systems through Adyen. When you pay at the cashier, your credit card is automatically recognized and the cashier knows if you’ve used the same card to shop online, so there’s an upsell opportunity…

The more engagement you have through the various channels with your consumers, the more data you have to create loyalty and “stickiness”…

One of the problems omnichannel has is that there are different systems. You need to do a lot of work to make one system talk to another. It created a lot more problems, it was expensive and things got left out. If the data center or the CRM module wasn't connected, you need a lot of work to connect it.

What it has evolved to is a unified commerce approach where you have one system that has all of these capabilities and it makes data transfer very easy for the retailer. Essentially, the purpose of unified commerce, and digital transformation, is to make shopping easy and engaging for the consumer.

(See Adyen blog, January 2021)

Credits: IADS (Dr. Christopher Knee)

References:

Adyen & BHG - Delighting shoppers in a changing retail landscape

AT Kearney Resilience, Replacement, and Renewal

Chain Store Age Study - Consumers want digital payment 

Oliver Wyman - Payments In Retail

PWC Payments 2025 & beyond 

What: Coresight reviews the top trends that should shape up e-commerce in China in 2022.

Why it is important: Many players, many platforms, many levels of activities… it seems that the Chinese e-commerce market is significantly getting complex, which should increase the entry barriers for players trying to operate from abroad.

Coresight reviews the opportunities and constraints that will affect Chinese e-commerce in 2022, which represents $2.2 trillion in 2021, a year characterized by a strong resilience. They envision a very diverse online retail channels with a multiplicity of players and sub-channels, and recommend to look at the 10 following topics:

• Regulatory environment: this sets the whole context, as Coresight predicts that the recent moves in favour of a distributed richness will encourage sustainability, inclusion and social goods.
• Alternative retail: either in community group buying (in bulk) leading Alibaba to launch a new brand, Taocaicai, to address this demand, or in ‘recommerce’ or resale, which is gaining traction in the country and closely watched by Alibaba,
• Mini programmes: they are the perfect answer from tech giants to the recent government crackdown on “walled gardens” and the subsequent injunction to open up the platforms. It is simply a difference of scale and level in terms of branding power from these tech giants, who will still retain their capability to capture sales and profits, but through a different infrastructure,
• Livestreaming: even though it is already massive, Coresight predicts that it will consolidate its gains in 2022 and keep in growing both in value and in terms of e-commerce market share. Also, KOLs will remain at the centre of the brands’ strategies to leverage their livestreaming investments,
• Short-video content: livestreaming and video commerce will be a springboard for short video platform to increase their prominence in e-commerce. Coresight closely watches Douyin (the Chinese version of Tiktok) which launched a fashion-driven e-commerce platform called Douyin Bo, and Kwai/Kuaishou,
• Private traffic: it refers to brand-led online communication with customers via private groups, a method seen by brands to have greater control over communication and reduce third party costs. It also offers a highly personalized connection (being in terms of relationship to the brand or more simply in individualized perks and promotions) which means that it should be also scrutinized and highly favoured by brands,
• Rapid delivery: the ultra-fast delivery model is exploding in China, with JD.com investing in Dada group, an on-demand delivery platform, or Aoao Chifan (from ride-hailing provider Didi Chuxing) which is similar to Uber Eats. Ultra-fast delivery is believed to be both supporting and the consequence of the expected +14.3% in the online food market in 2022,
• Consumer to manufacturer model: in this model, retailers deply large volumes of customer data to create profiles, analyse characteristics and plan production (this is the Shein model). JD.com has partnered with Li&Fung in 2021 to deploy a multicategory collection of private label products leveraging the C2M model, with a design to shelf time reduced to 2 weeks.
• Luxury e-commerce: it is estimated that the travel restrictions helped the national luxury market to increase +21% in 2021, and a similar level of growth is expected in 2022, thanks to new habits taken by Chinese consumers, which should last even when borders reopen,
• Lower-tier cities will replace the saturated top-tier cities as reservoirs of growth and opportunities. This belief is supported by the excellent results shown by the platforms specifically addressing this type of cities.

2022 China E-Commerce Trends Opportunities Under Pressure

What: The Harvard Business Review explores what is at stake with digital transformation.

Why it is important:  While the 4 cases of use identified by the researchers can be debated, the 4 myths that they are trying to debunk greatly echoes the conclusions of the CEO meeting on the topic that the IADS organised with Accenture in October 2021.

The biggest change induced by the digital transformation is that customers have now a continuous interaction with brands, when it was only sporadic in the days when they had to go to stores to shop. Going further, sensors and data collection points allow to analyse behaviour and nudge customers when needed, providing, according to the authors a competitive advantage.

This competitive advantage can take 4 forms, which can all help turn episodic interactions into continuous relationships:

• Respond to desire: a customer knows what she plans to buy and everything (ordering, paying, receiving the delivery) is automatic and simple (e.g.: Kindle)
• Curated offering, to help customers understand all available options (e.g. Netflix)
• Coach behaviour: customers are made aware of their needs (e.g. : automated medication)
• Automatic execution: detect and resolve a customer need before the customer notices it (e.g.: automatic replacement of printer cartridges).

Research also shows that 4 myths are often blinding companies when they are designing their digital strategies:

• The more connected companies are with their customers, the better: this leads in structural burnout as most of organisations are not able to answer to an ever-increasing demand due to the very fact that customers are permanently connected,
• The more data is collected, the better: companies simply do not know what to do with the amounts of data collected,
• Connected user experiences are great additional features for customers: new services are not always the best. A simple example is when BMW removed keys and proposed customers to open their cars with an app, which was a mistake and ultimately reversed.
• Connected customer experience can only be created for existing customers: companies should also look at their ‘internal customers’: suppliers, employees.

Designing a Seamless Digital Experience for Customers

What: A comprehensive state of the UK department store business.

Why it is important:  More innovative services, online presence and new store formats, less legacy stores: the UK market is quickly evolving.

In the wake of Brexit and Covid-19 pandemic, the UK retail scene has significantly changed. Coresight reviews the performances of the major players (Debenhams, Harrods, House of Fraser, John Lewis, M&S and Selfridges). Even though the department store market has undergone a permanent decrease over the past 5 years (-7.1% CAGR), Coresight envisions that 2021 will show an overall growth of +5.4%.

The main features of the market are:

• A gap between luxury department stores, which have consistently thrived over the past year, and mass department stores which are suffering,
• A significant consolidation: the top 6 department stores account for 95.3% of the total market (John Lewis 35.7%, M&S 21.5% and Debenhams held 13.9% market share in 2020 before liquidation),
• Massive store closures (112 stores closed between 2015 and 2020),
• A innovative mindset with new services offered to customers.

Coresight reviews each player one by one, including their e-commerce activities and future. It considers that the Debenhams store closures create a new opportunity for other retailers to capture market share, provided they are able to follow a new approach regarding stores, from legacy stores to showroom and small-format ones.

UK Department Stores Change Provides Opportunities

What: The annual Business of Fashion report giving a hint of what is going on in the fashion industry.

Why it is important: There is no new or surprising topic in the list of challenges that brands will have to face in the coming year. However, such a long-lasting challenging situation widen the gap between superstar brands and the others, which are also part of the ecosystem department stores rely on to survive.

The Business of Fashion produces its annual report giving the “state of fashion” for the coming year 2022. After two years marked by a significant change of conditions due to the worldwide pandemic, BoF identifies that in markets where vaccination rates are high, situation is improving (revenge buying in China and in the US).

However, the magazine also pinpoints the fact that the new conditions have created a growing gap between winner-takes-it-all brands and the rest of the market: while a very small number of brands are already surpassing their pre-pandemic level, most fashion brands are still struggling, especially if they are not able to adapt by selling online, to wealthier customers, products revolving around outdoor and comfort. Such a situation generates an unusually high number of takeovers and bankruptcies, while BoF identifies “supper winner” brands as being either from the Sportswear market, luxury segment or Chinese.

McKinsey estimates that 2021 industry turnover will be either -4% to flat compared to 2019, and 2022 between +3 and +8%, aggregated. However, once again, this hides the fact that some brands will be taking the lion’s share while others will keep on fighting for their life, in a market environment which will remain complex and inconsistent, as all will have to deal with:

• A long-lasting logistic gridlock which will also affect brands and producers all along 2022,
• Consumer shifts (getting local, digital and exploring the metaverse opportunities),
• Industry issues: circularity and CSR, use of technology offensively (product passports and NFTs) and defensively (cyber resilience) and the talent shortage.

Fashion 2022

What: Coresight list of their expectations and themes related to e-commerce in 2022.

Why it is important: Luxury brands are all about going direct and getting rid of their wholesale partners.

Coresight addresses the topic of e-commerce luxury market in 2022, estimated to represent 21% of luxury sales worldwide and growing +20.7% in 2022 (vs. a growth of +21.2% in 2021 and +33.4% in 2020) thanks to:

• Ingrained online shopping behaviors post-lockdowns (in addition to a delay in restoring confidence about visiting public places)
• Increased access to digital channels, as all brands have digitalized their operations,
• Restricted travels, which is expected to remain for most of 2022,
• Quicker consumer access to new luxury products.

Coresight also provides the panorama of the market and its players as well as the 4 themes to watch:

• Greater focus on DTC sales, as the customer data is a natural incentive for luxury brands
• Resale (according to Altagamma, 62% of customers would be ready to consider such a purchase)
• Metaverse, which appeals to the Gen Z
• Cross-platform collaborations.

It is expected that e-commerce represents 35% of the market by 2025. For wholesalers, it is all about staying in the game by enhanced experiences for customers and data collection for brands.

E-commerce outlook for global luxury 

What: Euromonitor’s take on the winning strategy for luxury brands in the post-covid world.

Why it is important: The message in between the lines is clear: department stores need to significantly invest in data management and sharing with luxury brands if they want to remain in the game, given that everything is enticing said brands to go direct (at least in the physical world).

According to Euromonitor, luxury and fashion are set for a strong rebound post-pandemic, thanks to a pent-up demand and domestic consumption, which will be even more fuelled once destinations open up again. We need to remember that this industry was among the hardest-hit ones during the pandemic, due to the global travel shutdown. Euromonitor mentions 4 key trends to watch:

• Digitalisation, which is expected to accelerate throughout the retail supply chain to speed up production and lower overall costs, plus of course allow brands to become more expert at analysing customer data. The top 10 technologies expected to impact fashion and luxury are (from the less mentioned to the most): blockchain, biometrics, robotics, cloud, geolocalisation, QR codes, 5G, IOT, AR & VR and the most important, AI and big data analytics,
• Wellness, linked to the focus on physical and emotional well-being after the anxiety induced by the Covid-19 pandemic, which should favour athleisure and outdoor clothing brands,
• Experience, by being where the customer is, across all channels,
• Sustainability, as brands are looking to recover from the pandemic in a more sustainable manner than offered by the previous volume-oriented model, all the more than customers are expecting luxury and fashion companies to care beyond revenue and to build back better.

In conclusion, according to Euromonitor, winning strategies for luxury brands are to be omnipresent (via a seamless experience across all physical and digital touchpoints), to embrace new ways of selling (as the wholesale model is under threat and the rise in e-commerce is challenging old principles, including the role of the retailer), investigate new technologies (to stay competitive) and put the customer first.

Euromonitor Luxuryand Fashion report

What:  IADS’ partner GDR quarterly report on innovation in retail.

Why it is important: A series of retail examples gathered by GDR from all segments and categories.

GDR identifies 6 trends this quarter: Regenerative brand building, New-trition, Multi-mission magnetism, Embodied marketing, Omni-flex optimisations, the Metaverse Emergence. We have made a selection of interesting cases from a retailer’s point of view below:

Regenerative brand building: it is all about highlighting brands which are embarking customers towards a sustainable future. Ikea for instance sells renewable energy to Swedish customers thanks to solar panels installed on their carparks, Madewell connects circular fashion with clothing care service, Tesco proposes refillable groceries, Lidl launches eco-store product labelling, or L’Occitane builds stores with material from its Terracycle recycling scheme.

New-trition: or how food and beverage are being disrupted. This part is more brand-oriented as it is all about new options when it comes to snacks, beverages, chocolates, etc..

Multi-mission magnetism, a phrase that GDR coined to talk about hybrid retail:

• Ikea which has launched a food and kitchen shop in shop in a HK grocer, or mixing housing and offices in Chinese store,
• A store mixing convenience and bank in Seoul,
• Really Local Group which transforms disused stores into multi-purpose community spaces,
• John Lewis which becomes a landlord by building 10,000 homes,
• A collaborative retail space in Shanghai, “co-retail” showing a selection of DTC brands,
• The Bloomie’s new store format, or the Ralph Lauren new ‘mini-store’

Embodied marketing with brands creating hand-on product trial opportunities to encourage customers to live their products:

• At Situ Live in London, nothing is available to shop, but it is all about product trial and then home delivery,
• Beauty giant Amorepacific launches a beauty library to encourage product trial,
• DTRC furniture brand Outer creates showroom network in its customers’ homes,
• Muji partners with Airbnb to offer home essentials to hosts.

Omni-flex optimisations : how on-demand delivery, livestreaming and flexible working habits are shaping an elevated customer service. For instance, 7-Eleven and Lotte are exploring staff-free stores in Lotte’s HQ, Lululemon uses digital educators to style consumers virtually, DoubleDash offers takeaway and groceries in a single delivery.

The Metaverse Emergence:

• a TV show, the Stoner cat, is only available to viewers who purchased a related NFT,
• Luxandia is a new virtual space aiming to be the leading luxury space in the metaverse,
• Visitors to Chipotle’s virtual restaurant receive free burritos in the real world,
• London O2 Arena launches in Fortnite, while Decentraland has launched its first  virtual festival in October,
• Dolce & Gabbana and Mc Donalds both launched and sold NFTs.

If there is any example you would like to deep dive in, let us know and we will liaise with GDR to know more.

GDR 80th Global Innovation Report

What: Luxury in Mexico is a USD 4.7 billion industry, according to Euromonitor, and despite challenges around pandemic restrictions, Bain & Co. forecasts a 22% surge in the luxury goods sales in Mexico for 2021 and 2022, partly fuelled by rapidly evolving e-commerce demand.

Why it is important: Although baby boomers and Gen X have a solid purchasing track record, Mexico is a predominantly young country. Millennials are deeply invested in the luxury arena, with a rapidly maturing Gen Z close behind. Also, the country’s burgeoning middle class now comprises 42% of the population: it is digitally ultra-savvy, interested in travel, tech and fashion.

Shopping culture in Mexico is tied to malls and department stores, the latter prominently represented by Liverpool and El Palacio de Hierro.

Liverpool is present with 150+ locations catering to the country’s middle class, while El Palacio de Hierro retails to the upper echelons of the socio-economic pyramid and has 14 locations (plus several homewares and concept stores). Luxury’s top brands are amongst the big sellers at El Palacio de Hierro: between January and December this year Louis Vuitton, Gucci, Tiffany, Carolina Herrera, and Saint Laurent were among top 10 brands.

Prosperous consumers have traditionally been keen to shop abroad because of lower prices and more attractive assortments, but the arrival of international brands in the market has created a more year-round and ongoing relationship between brands and local clients, who may still purchase overseas but return to brands domestically. International brands have historically entered Mexico by partnering with local distributors, but the market’s stability has encouraged brands to explore operating independently and setting up local teams.

Pure play e-commerce platforms such as Farfetch have successfully infiltrated the market, offering access to younger, more modern fashion and luxury brands with extended assortments, but the surcharge for international duties can act as a deterrent.

Smart shopping apps and payment technologies are advanced. Payment schemes that increase spending power are popular, from fixed monthly instalments with no interest to buy-now-pay-later options. Many fashion brands typically offer this, while most luxury houses discreetly participate too.

The Covid-19 pandemic accelerated the development of e-commerce. Retailers and brands pivoted quickly to remain close clients via email, Whatsapp, phone or face-to-face. This speaks to a local culture that hugely values warmth in client-brand relationships and meticulous service. Mexican consumers are extremely loyal to their brands and to retailers: personalised attention is crucial in building bonds.

Sales of luxury goods are also increasing because brands are being much more assertive in terms of the assortment and exclusives they bring into Mexico. Mexico was once low on the priority list of their international accounts, but the country has shown how avid the local consumer is for more sophisticated and limited-edition products. Price competitiveness is key in the market. High street labels must align with the pricing tier of their adjacent brands, while luxury must remain on par with USA prices including VAT (16% in Mexico) for which wholesale prices and discounts are crucial negotiation points.

Understanding luxury in Mexico Vogue Business

What: Euromonitor reviews the various scenarios that might take place in 2022.

Why it is important: Economic forecast are not only depending on the Covid-19 and its variants evolution, but also on the global production and logistical bottleneck which should last well until the end of 2022, as well as the situation in China, which is facing an increasing risk of “hard landing”.

Euromonitor reviews the situation for Q4 2021 and 2022, taking into account the various scenarios that are attached to the situation with Covid-19, China, and global consumption.

It is expected of course that the pandemic will continue to affect the recovery due to the slow vaccination progress in some countries, which favour the appearance of new variants (it is expected that vaccination in developing economies should remain below 50% in 2023 as a whole).

In terms of economic outlook, the supply chain bottleneck should ease in the second half of 2022, or even in 2023. Meanwhile, the risk of a Chinese “hard landing” has increased.

Taking all these elements into account, in the optimistic scenario, global GDP should increase by +6.6% in 2022 (USA +6.1%, China +7%, Europe +6.6%, developing economies +7.1%) while in the first pessimistic scenario (linked to Covid-19) it should reach +0.1% (USA +0.3%, China +2%, Europe -0.7%, developing economies +0.3%) and in the second pessimistic scenario (linked to a Chinese hard landing), it should reach +3.4% (USA +3.7%, China +2%, Europe +4.2%, developing economies +3.3%).

The report also includes projections in terms of central bank interest rates forecasts, as well as national projections country by country.

Global Economic Forecasts 2021

Global Economic forecasts 2022

What: The 13th report from the World Retail Congress, a long-time partner of IADS.

Why it is important: IADS members’ Christmas Windows are on display in the report, just like last year, while IADS shares its views on 2 topics:

Luxury and Metaverse, and Organisations in department stores (which is the topic of our latest White Paper).

The 13th issue of the WRC looks at the current situation of retail in the world: companies have significantly changed and pivoted, which is helpful in the current context, where the evolution with variants and vaccines does not change anything to the uncertainty that was prevailing already a year ago.

However there are reasons for hope given said adaptation, that has been seen and noted on all categories, worldwide. The report gives key metrics and numbers globally and by country, including a report from Mastercard, and also addresses a key strategic topics:

• The climate-change concern can be a cause worth to be embraced by grocery retailers. Adapting the logistical and distribution processes might be costly, but potential ROI and gains at stake will not only compensate, but exceed the needed investments. The report stresses on the fact that, in reality, grocery retails do not really have the choice if they want to preserve their profitability on the long run,
• How to adapt to an omnichannel, data-driven and customer experience focused era by addressing 5 key topics: getting ahead of costly returns, becoming the go-to destination for shoppers, expanding payment options, connecting online and in-store experiences, and diving into data through monetization,
• Deloitte share their conclusion about the changes that took place in the “new world”: in substance, customers are more attentive to their needs, looking for purpose over earnings, and willing to recalibrate their work-life balance,
• Alibaba provides some insight on the 11.11 event which is now a global phenomenon, while Spar shares the reasons for its success in 2021,
• A selection of interesting retail-tech startups is provided by Springwise, the innovation partner at WRC.

Finally, investment veteran Gilbert Harrison shares his view on the market, taking on the opportunity of the release of his latest autobiographical book, “Deal Junkie”.

The Retail World : End of the Year issue