What: Saks Global’s bankruptcy exposes deep vulnerabilities in the financial models and operational structures of luxury department stores.

Why it is important: This event exemplifies how high-profile bankruptcies can destabilise the industry.

The financial collapse of Saks Global serves as a stark illustration of the underlying weaknesses within the luxury retail sector, particularly among department stores. The bankruptcy, driven by aggressive debt-fuelled expansion and compounded by leadership missteps, has sent shockwaves through the industry, affecting not only investors but also luxury brands and vendors reliant on Saks Global’s stability. This event has intensified scrutiny of traditional retail models, which are increasingly challenged by operational inefficiencies and shifting consumer preferences. The broader retail landscape is simultaneously contending with persistent macroeconomic pressures, such as inflation, rising interest rates, and fluctuating consumer confidence, all of which have eroded profitability and heightened the need for strategic adaptation. In response, retailers are emphasising operational discipline, cost management, and the adoption of technology-driven solutions to maintain competitiveness. The Saks Global case underscores the urgency for department stores and multibrand retailers to evolve structurally and strategically in order to withstand ongoing volatility and secure long-term viability.

IADS Notes: The financial turmoil surrounding Saks Global, detailed in The Robin Report and BoF in January 2026 and further examined by Glitz in February 2026, highlights the destabilising impact of high-profile bankruptcies on luxury retail and the broader sector. These developments, set against macroeconomic uncertainty discussed by The Economist and Euromonitor in December 2025 and January 2026, reinforce the necessity for disciplined cost management and strategic innovation, as emphasised in industry analyses throughout late 2025 and early 2026.

Deconstructing the financial viability of retail

What: The Saks Global bankruptcy highlights the stark contrast between private equity-backed department stores and the resilience of family-led retailers in today’s retail landscape.

Why it is important: These developments underscore how aligned incentives, long-term orientation, and stakeholder trust are critical for retail sustainability, as evidenced by the divergent fortunes of PE-backed and family-led businesses.

The collapse of Saks Global serves as a cautionary tale about the risks inherent in debt-fueled expansion and misaligned capital structures within the retail sector. While Wall Street-backed department stores like Saks have struggled with aggressive mergers, mounting debt, and leadership instability—ultimately leading to bankruptcy and widespread store closures—family-led and founder-driven retailers such as Mitchell’s, Dillard’s, and Von Maur have demonstrated remarkable resilience. The difference lies in the alignment of incentives, long-term vision, and the deep-rooted commitment of family stakeholders to brand legacy, customer relationships, and operational excellence. Private equity involvement, when not carefully aligned with business needs and stakeholder interests, can accelerate the “cycle of death,” eroding supplier trust, inventory quality, and investment in customer experience. In contrast, family-led businesses are structurally better suited to navigate complexity, adapt to change, and sustain performance through turbulent cycles, as their leadership is often fully invested in the brand’s enduring success.

IADS Notes: Saks Global’s bankruptcy and operational collapse have become a defining case study in the risks of debt-fueled expansion, misaligned capital structures, and leadership instability within luxury retail. As detailed by WWD (January 2026), the company’s aggressive merger with Neiman Marcus and Bergdorf Goodman left it burdened with unsustainable debt, strained vendor relationships, and persistent payment delays, leading to inventory shortages and eroded supplier trust. Retail Dive (December 2025) and The Robin Report (January–March 2026) highlight how ambitious cost-cutting, executive turnover, and failed integration efforts failed to deliver promised synergies, while competitors like Bloomingdale’s and Nordstrom gained market share by focusing on customer experience and operational clarity. Forbes (March 2026) notes that Saks Global’s post-bankruptcy restructuring has triggered widespread store closures and a renewed focus on portfolio optimization, reflecting a broader industry trend toward operational efficiency and curated retail models. Collectively, these sources underscore that the collapse of Saks Global is not simply a story of retail disruption, but a cautionary tale about the dangers of aggressive consolidation, the limits of financial engineering, and the enduring importance of vendor trust, customer-centricity, and aligned stakeholder incentives for long-term viability in the department store sector.

Are family-led business performing better in retail?

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Annual Department store results

The 2026 edition of the IADS Global Department Store Monitor covers department stores’ financial results from fiscal year 2024-2025, a year marked technological transformation, rising geopolitical tensions and subsequent effects on currency exchanges and consumer confidence.

Launched in 2021 by Dr. Christopher Knee, the IADS Global Department Store Monitor purpose is to enable data comparison of department stores’ financial performance, especially to compare pre- and post-COVID-19 performance. The goal is to make sense of a complex and culturally central sector characterised by changes in ownership, privatisation, and mergers. To achieve that, and to provide a benchmark for global department store stakeholders, the monitor reviews 58 department stores with publicly available information.

The report includes current and fixed (2021) exchange rates, to isolate the impact of sales growth from the effect of exchange rate changes. This feature is increasingly relevant as real and nominal sales growth have diverged in a turbulent economic and political landscape. To account for nonuniform accounting standards, the broken calendar year system ensures that retailers results are being compared across the same world events, offering a clear overview of their performance.

Context: macro growth vs. consumer caution

The global economy in fiscal year 2024-2025 performed better than expected, especially in major markets. However, the economic ‘soft landing’ at the beginning of the fiscal year transitioned to renewed volatility driven by Donald Trump’s re-election as U.S. President in November 2024, and a return to aggressive protectionism later in the period following his entry into office in early 2025. See-sawing tariffs and bi- and multilateral trade negotiations added uncertainty to already strained supply chains.

The geopolitical landscape fractured further due to conflicts and election-driven volatility. The war between Russia and Ukraine, which started in 2022, continued, while Israel launched a full-scale invasion of the Gaza Strip in March 2025 which led to a famine-driven humanitarian crisis and over 67,000 civilians killed. Compounded by regional geopolitical shifts and tensions, global consumer confidence saw a ‘vibecession’, a disconnect between improving macroeconomic indicators such as reduced inflation and steady growth, versus consumers’ negative perception of the economy.

Department stores also went through major transformations during FY 2024-2025:

• In the US, Saks Global acquired Neiman Marcus Group for USD 2.7 billion in January 2025 to include Neiman Marcus, Bergdorf Goodman, Saks Fifth Avenue, and Saks Off Fifth under their operations. However this luxury consolidation was short lived as Saks Global filed for Chapter 11 bankruptcy and shuttered several locations in January 2026. Saks Global strained relationships with its unsecured creditors, luxury houses like Chanel and Kering, and creating a power vacuum for competitors like Nordstrom and Macy’s to fill while further damaging trust in the department store model as a viable channel for luxury brands.
• The personal luxury goods market saw a 2% decline in 2024. This marked downturn extended across categories, including fashion, accessories, watches, cars and even beauty. This slowdown was structurally driven by a decline in aspirational luxury consumption, especially among Gen Z. Chinese consumption, which drove global luxury growth for the last decade, slumped due to a property sector crisis and high youth unemployment. However, Japan emerged as the strongest luxury market driven by Asian tourism and a weak yen.
• The second-hand and recommerce segment outpaced the growth of the broader retail sector driven by value-conscious and environmentally-motivated consumers. Retailers across categories and price brackets expanded their second-hand offerings: Vinted became the top clothing retailer in France, Galeries Lafayette opened a second-hand watch and jewellery space, Ikea launched a second-hand peer-to-peer marketplace, and Zara expanded its second-hand clothing service to the US. Furthermore, Japan’s second-hand luxury sector gained by capitalising on international tourists and a weak yen. Second-hand fashion in Japan boomed even as the yen rebounded driven by local frugality, international demand for high-quality vintage pieces, and social media trends positioning Japan as a top destination for thrift shoppers worldwide.
• AI usage transitioned from experimental ‘hype’ to operational deployment with retailers focusing less on consumer-facing solutions and more on backend improvement to protect margins. Hyper-personalisation remains a priority, with several retailers including Walmart and Amazon launching generative AI shopping assistants. Consumers’ discovery behaviour is fundamentally changing from keyword-based searches to complex, conversational questions using LLMs.

Fiscal Year 2024-2025 financial results: middling stability

For the retail sector, this fiscal year was one of cautious normalisation: while retail sales grew, consumers remained price-sensitive and value-driven, forcing retailers to rely heavily on promotions and AI-driven efficiency to protect margins.

Broad observations from the IADS Global Department Store Monitor for FY 2024-2025 indicate that:

• Across a sample of 58 department stores globally, the average year-on-year total sales growth rose to +0.63% from -1.6% last year, highlighting a moderate normalisation after the post-COVID-19 peak.
• The share of department store sales in their owners’ total retail sales remains similar to last year and close to pre-COVID-19 levels.
• The volatile geopolitical and economic landscape amplified the impact of currency fluctuations on department store performance. While many retailers reported sales growth in local currency terms (reflecting resilient underlying demand), these gains often evaporated when converted to reporting currencies like the Euro or US Dollar due to unfavourable exchange rates. This currency volatility also reshaped international tourism flows, creating a divide: countries with weaker currencies attracted a surge of high-spending tourists, boosting their retail sectors, while those with stronger or less competitive currencies faced a leakage of domestic spending to cheaper destinations.
• In terms of regional trends, in the Americas, Latin American department stores were resilient while the US market struggled with significant volatility. Latin American retailers, including Falabella and Liverpool, leveraged high consumer confidence and multichannel adaptations to achieve growth despite currency appreciation. In contrast, US retailers faced a restrictive economic environment marked by cautious spending, leading to contraction and restructuring for major players like Macy’s, Dillard’s, and Kohl’s.
• The Asia-Pacific region was defined by sharp regional divergences, contrasting structural challenges in Greater China with growth in India and Japan. While China and Hong Kong underwent a reset driven by the property crisis and weak consumption, India emerged as a growth leader buoyed by rising discretionary spending. Japan experienced a volatile boom fueled by a weak yen and tourism, achieving record sales that masked domestic fragility and rural decline. In South Korea and Southeast Asia, retailers navigated household debt and shrinking disposable incomes by pivoting toward experiential luxury and omnichannel strategies, with retailers in the Philippines pursuing expansion despite a cautious consumer environment.
• Europe was marked by a distinct north-south divide. Northern Europe and Scandinavia struggled with currency weakness that fueled inflation rather than tourism, leading to stagnating sales and strategic restructuring for players like Stockmann. Conversely, Southern Europe thrived on a tourism super-cycle, with retailers in Spain, Italy, and Greece leveraging a weak euro to attract high-spending non-EU visitors, boosting sales for El Corte Inglés and Attica. In the UK, the absence of tax-free shopping dampened international spending, yielding mixed results.
• However, the IADS sample also showed a separate trend where retailers can be divided into three permeable buckets: emerging markets and Southern Europe that saw organic growth, strong currency effects in East Asia, and cautious consumer sentiment in mature markets. China and Hong Kong faced a deep structural reset given macroeconomic conditions.

I. Organic growth: emerging markets and Southern Europe

Latin American resilience
Overall, Latin America’s performance was one of the best, with many department stores growing despite currency appreciation in Chilean and Mexican pesos (CLP and MXN). Department stores were able to capture some of the spend resulting from high consumer confidence in Latin America during FY 2024-2025, through strategic adaptations.

In South America, Falabella (+10.2%) achieved significant growth in 2024. Peru emerged as a key contributor to regional revenue contributing 28% by maintaining competitive position through multichannel strategy including stores, institutional sales and e-commerce. Falabella's management also expressed confidence in the company's resilience against US-China trade tensions, citing limited direct exposure due to its concentrated operations in Chile, Peru, and Colombia. Cencosud Paris (+5.4%) in Chile saw an upwards sales trend and a hefty rise in profit driven by its supermarket operations and increased online sales. Ripley (+8.3%) strengthened its sales performance and profitability, driven by retail growth in Chile and Peru, improved inventory management, and reduced promotional activity.

In Mexico, El Palacio de Hierro (+2.4%) posted a small retail sales growth after multiple years of double digit growth post-COVID-19. Its profit increase was driven by the successful launch of its mobile app, opening its 15th large-format store and controlling operating expenses. Similarly, Liverpool (+9.6%) also grew sales and profit, and acquired 49.9% of Nordstrom in December 2024.

India’s domestic drive
Despite the weak rupee, Indian consumers shopped international beauty brands, watches, and premium fashion. Unlike Japan or Europe, India did not see an influx of shopping tourists to offset this currency weakness for structural reasons. Instead, the weak rupee made overseas travel and education more expensive for wealthy Indians, potentially diverting some spending back home.

Lifestyle (+6%) gained in both sales and profits driven by its market presence in India’s transforming retail sector. Its growth is tied to broader consumer trends, with India leading discretionary spending in the Asia-Pacific region and a new generation of affluent, digitally engaged consumers driving demand for premium retail. Shoppers Stop (+5.2%) saw a similar increase in sales but slightly reduced profit, partly because Amazon sold its 4% stake in the company.

Essential spending vs. expansion: the South and Southeast Asian paradox
In Sri Lanka, Odel (-19.1%) dropped sales and deepened losses despite inflation stabilising, and a resurgence in tourism. The market remained reliant on essential spending as households rebuilt purchasing power after the economic crisis. In Indonesia, Matahari (-2%) dipped in sales but rose in profit by closing two stores to optimise its business. The Indonesian retail landscape struggled amid declining purchasing power and potential trade war.

In Singapore and Malaysia, Parkson Retail Asia (-2.9%) dipped in sales and profit and Isetan Singapore, a subsidiary of Japan's Mitsukoshi Holdings, announced the closure of one store. Singapore’s retail sector navigated significant volatility marked by sharp declines and subsequent rebounds during FY 2024-2025. Compared to Hong Kong, Singapore’s retail environment proved more robust despite structural challenges in both markets.

In the Philippines, SM (+5%) and Robinson’s Retail (+3.6%) saw their sales and profits increase. SM announced a USD 9 billion expansion plan including opening three new malls, with the goal of reaching 100 locations by 2027. In mid-June, DFI Retail Group sold its Robinsons Retail stake while maintaining strategic brand partnerships. Though the Philippine retail industry posted top-line growth, consumer sentiment was pessimistic, resulting in spending on essentials and convenience food but curtailing non-essential purchases.

Southern Europe: outperforming continental stagnation
The Southern European retail industry was resilient, driven by tourism, with the strongest growth in inbound spending found in Spain (+25%), Greece (+25%), and Italy (+20%) in addition to recovering domestic sentiment. Underpinned by the weak euro, this acted as a stimulus for high-spending non-EU tourists which compensated for the currency devaluation.

In Italy, Rinascente (+4.3%) increased sales and was divested by Central Retail Corporation to be operated via their European structure. It also invested 40 million euros to transform a historic Milanese cinema into a new beauty destination, expanding its beauty offering. In Spain, El Corte Inglés (+2.3%) increased sales and considerably rose profits. It developed a new strategic plan to revitalise operations and enhance its competitive edge, as well as reorganised its top management structure. In Greece, Attica (+8.8%) saw an increase in sales and profit especially driven by non-EU spending which rose 9% during the first half of the year. However, it was fined 400,000 euros for misleading pricing practices on a cosmetic product.

 II. East Asia: currency effects and structural reset

The yen paradox: record profits and the looming correction
Japan’s retail performance in FY 2024-2025 was characterised by a weak yen driving up retail and luxury sales unsustainably. H2O (+8%), J Front Retailing (+10.1%), Takashimaya (+6.9%), Isetan Mitsukoshi (+6.5%), Marui (+8.2%), Kintetsu (+6.9%), and Tokyu (+1.7%) all rose sales and profits considerably. Tobu (-0.7%) is the only department store that saw a slight drop in sales but still posted profits. For J Front Retailing, their department store portfolio (Daimaru Matsuzakaya) represented over 60% of revenues, achieving a 6.2% year-on-year sales growth pronounced in flagship locations while regional stores faced challenges. Despite record profits and revenue, Takashimaya’s growth was driven by flagship stores in tourist-heavy locations resulting in its withdrawal from regional locations. Notably, Marui issued a issued a direct digital green bond using Securitize to advance its sustainability and funding strategy as well as launched a museum-supporting credit card.

Japanese department stores achieved a record 5.75 trillion yen in sales for 2024, topping pre-pandemic levels. Duty-free sales set a record for the second straight year driven by multiple factors, including the return of Chinese travellers, a weak yen boosting luxury purchases, and strong domestic demand for high-end goods. However, there was a clear urban-rural divide as several prefectures lost their last department stores despite the overall market recovery.

After four consecutive years of growth relying on tourism, this became a vulnerability as tax-free sales plummeted 40% year-on-year by mid-2025, with average tourist spend dropping. The appreciation of the yen and persistent inflation further dampened demand, resulting in a 7.3% decline in department store sales and exposing the risks of over-dependence on luxury and international visitors.

Thailand’s tourism squeeze
Consumer confidence in Thailand was volatile as a result of crippling household debt (almost 90% of GDP), the cost of living and political instability, including military confrontations with Cambodia over border temples in December 2025. As a result, consumers became highly price-sensitive, despite the retail sector expanding by 6% and the government’s digital cash stimulus of 140 billion baht in 2024.

Thailand also faced a direct negative impact from the weak Japanese yen: In the first half of 2025, the number of South Korean visitors to Thailand dropped by 17% while Japan continued to see record inflows. While high-income consumers went to Japan, Vietnam overtook Thailand for budget-conscious tourists, which was cheaper due to the strong Thai baht relative to regional currencies.

Central Retail (+5.7%) closed 2024 with a rise in sales and profits. It relaunched Central Chidlom as “The Store of Bangkok,”, drew growth through omnichannel strategies and strategically pivoted away from Europe, divesting La Rinascente, to focus on Southeast Asian markets. While consumers reacted positively to stimulus, growth was inorganic due to structural debt.

Lipstick effect in South Korea
South Korea’s retail landscape was defined by deepening market polarisation and shrinking disposable incomes for the middle-class. Lotte (-3.9%) dropped sales and profit despite sales at its Jamsil branch surpassing three trillion won. The branch is undergoing its first major refurbishment in 37 years. Hyundai (-0.5%) also dropped sales but managed to increase profits slightly. It launched a platform for K-fashion expansion, positioning itself as an incubator for local fashion, as well as Connect Hyundai, a new concept combining department stores, outlets, and art galleries in Busan. Hanwha Galleria (+12.6%) rose in sales but faced losses. The rise in sales was driven by the growth of Five Guys Korea, operated by Hanwha Galleria's subsidiary, however it was subsequently sold while the core department store business remained sluggish. Shinsegae (+3.4%) rose sales but fell in profits. It partnered with Alibaba, integrating advanced e-commerce capabilities to better compete with both domestic and international digital players. It also rebranded its flagship Sogong-dong branch, which despite some initial confusion over English naming, was a commitment to attracting a broader customer base.

South Korea was the biggest inbound tourist market for Japan, leaking domestic consumption due to the weaker yen. However, the Korean won also won against the dollar, positioning South Korea as an alternative to Japan for international tourists, as Japan became crowded and prices began to adjust in early 2025. The strained middle class shifted toward affordable alternatives and luxury beauty products, creating a ‘lipstick effect,’ where consumers favour smaller luxury indulgences during economic downturns. South Korean luxury beauty sales surged by 24% while fashion growth slowed considerably. Department stores revamped their beauty counters, maintaining strong performance through their beauty segments despite overall market challenges. In Myeongdong district, Lotte and Shinsegae faced off in flagship renovation with Lotte emphasising Korean culture and Shinsegae focusing on luxury expansion. Shinsegae’s “House of Shinsegae” concept stood out for its immersive, high-end experiences that resonated with consumers

In between currency and structural reset: China and Hong Kong slump
Driven by the property crisis, high youth unemployment and low domestic consumption, China’s retail landscape went through a deep reset in FY 2024-2025. In China, Parkson Retail Group (-13.6%) significantly dropped in sales and profit, though it remained positive. However, Parkson’s Chinese subsidiaries renewed their tenancy agreements for ten years. Similarly, Dashang (-5.2%) dropped sales but managed to increase profits driven by the home appliance category. Rainbow (-2.5%) dropped sales and profit with the Shenzhen location shutting down in 2025. Wangfujing (-7%), Maoye (-13.2%) and Wushang (-6.6%) all dropped in sales and profits. However, Wushang Group’s online orders surged 77% and number of online users increased by 25%. New World Department Store (-48.6%) dropped sales as well, however this number is inflated due to changes in accounting for discontinued operations. There were also talks of the parent company selling the K11 Art Mall in Hong Kong to combat mounting losses amid the Hong Kong property slump.

In Hong Kong, Wing On (-10.41%) saw a drop in sales and significant losses. Hong Kong saw retail sales fall consistently for over a year due to the rivalry with Shenzhen, where currency depreciation made shopping cheaper for both Hong Kong locals and mainland Chinese consumers.

 III. Cautious consumer sentiment in mature markets

US market volatility
While the exchange rate to the euro remained relatively stable, US consumer confidence was volatile due to high prices and interest rates. Despite a post-election peak in November 2024, this resulted in cautious consumer spending.

In the US, Nordstrom (+2.4%) increased sales after a decline in the previous year, along with a considerable rise in profit, driven by an expansion in private labels, strong holiday performance and being acquired by Liverpool. Macy’s Group (-3.5%) reduced sales and profit with activist investors urging the group to spin off Bloomingdale’s and Bluemercury in December 2024. Bloomingdale’s opened a fourth Bloomie’s location while shuttering full-line stores including San Francisco, with plans to open 15 more Bloomie’s and outlet stores in the next three years.

Dillard’s (-4%) also declined in sales and profit due to a tough holiday quarter in a challenging consumer environment and subsequently pivoted to focus on luxury shoppers through initiatives like The Coterie Shop. Kohl’s (-7.1%) saw a steep decline in sales and profit despite launching a family-focused brand platform and same-day delivery. It restructured its real estate by closing 27 stores and an e-commerce fulfilment centre by April 2024, shifting to store-based order fulfilment. GIC Private Ltd., a sovereign wealth fund representing Singapore, acquired 5% ownership in Kohl’s.

Stagnation in Scandinavia and Northern Europe
The retail sector in Scandinavia and Northern Europe faced stagnation, struggling against the dual headwinds of persistently weak currencies and plummeting consumer sentiment. Unlike the tourism-led boom seen in Japan, the depreciation of the Swedish Krona and Norwegian Krone failed to generate a sufficient offset in foreign spending; instead, it exacerbated inflation on imported goods and squeezed retailer margins. European consumers were optimistic but not spending on non-essentials, leading households to prioritise essentials and value.

In Denmark, Magasin du Nord (+5.4%) increased sales and profit. It succeeded with the introduction of a new, smaller store format and reported high holiday season traffic with every fourth Danish household purchasing Christmas gifts at its stores. In Sweden, Ahlens (+6.8%) increased sales. In July 2024, its parent company Axcent of Scandinavia acquired INNO in Belgium. NK (+8.8%) saw an increase in sales and profit.

Tallinn Kaubamaja (-0.3%) slightly decreased both sales and profit. It finally secured approval for major renovation including underground parking and urban corridor development, after a decade-long dispute. Stockmann (-1.2%) slightly decreased both sales and profit. Its owner Lindex Group is considering selling Stockmann to the minority shareholder, Nordic Retail Partners, and exploring other strategic alternatives as it undergoes restructuring.

Switzerland’s reset: structural shifts and mixed-use
The Swiss retail industry faced a strong Franc problem which leaked domestic consumption while consumer confidence remained negative.

Jelmoli (-1.8%) closed its Bahnhofstrasse location and ceased airport operations, marking the end after 125 years. Manor is set to occupy 13,000 square metres of the renovated building from 2027 as part of Swiss Prime Site's mixed-use development plan. Coop Group (+0.6%) slightly increased sales and profit. Its performance was driven by gaining market share in supermarkets and specialist formats, with strong demand for both the Prix Garanti private label and sustainable products.

The UK’s divide: innovation in a tax-disadvantaged market
The UK retail narrative in 2024 was dominated by the absence of tax-free shopping, disadvantaging it compared to Paris and Milan. Despite a relatively weak pound which should have attracted shoppers, the UK remained the only major European country without tax-free shopping for tourists, with Chinese tourists explicitly ranking the UK as their "least popular" European shopping destination in 2024.

Marks & Spencer (+9.3%) considerably increased sales and profit. It proposed a redevelopment of its Oxford Street flagship store to meet modern retail needs. It was also the victim of a cyber-attack by teenage hacker gang Scattered Spider in April 2025, which required six weeks of halting online orders and dented consumer confidence. John Lewis (+1.4%) increased sales while decreasing profit. It reinvested revenue by reviving its Never Knowingly Undersold price promise which led to a surge in Black Friday interest online, covering 25 major competitors and added Klarna as BNPL provider. In March 2026, it also announced a 2% staff bonus. Liberty (+4%) increased sales and profit after betting on its own private label beauty brand and enhancing personalisation. Fortnum & Mason (+4.8%) increased sales and profit. In June 2025, it announced plans to expand in the UK outside London for the first time in its 300+ year history. It also launched its first-ever membership programme offering exclusive benefits, seasonal gifts, and privileged access to events for GBP 100 annually. Earlier in 2025, it also launched 24/7 rapid delivery and subscription delivery services to enhance customer experience.

Selfridges (-7.2%) considerably decreased sales while increasing profits significantly. After the arrival of new CEO André Maeder in August 2024, Selfridges’ strategy pivoted to exclusive partnerships, immersive retail experiences, and sustainability initiatives through its ReSelfridges programme. It also launched a loyalty programme that rewards customers for purchases and time spent engaging with store experiences. Harrods (-0.4%) saw a slight decrease in sales and almost halving of profit amid being sued by former owner Mohamed al-Fayed’s alleged sexual abuse victims. It settled over 250 claims and set up a compensation fund for survivors. In December 2024, hundreds of Harrods staff including shop, restaurant, kitchen, and cleaning workers, voted to strike during peak holiday season, citing deteriorating pay and conditions despite high executive compensation, further impacting sales. Fenwick (-3.9%) saw a decrease in sales and improved losses while still staying in the red. It brought in restructuring experts in March 2025 to grapple with consistent losses. Later in the year, it also launched its first ever loyalty programme MyFenwick offering tiered rewards and online and in-store exclusive experiences.

Australia: Consolidation and realignment
In FY 2024-2025, the Australian retail sector faced volatile pessimism. However, the weak Australian Dollar provided a silver lining by improving affordability for inbound tourists and theoretically keeping domestic spending onshore by making overseas travel more expensive. However, this potential boost was largely negated by persistently negative consumer sentiment as households battled high interest rates and inflation . Consequently, rather than splurging on discretionary items, Australians prioritised essentials and mortgage repayments.

Woolworth’s (+4.2%) rose both sales and profit. It stopped selling Australia Day merchandise, due to its colonial origins which resulted in Australia's main centre-right opposition party calling for a boycott of Woolworth’s. David Jones was sold by Woolworth’s in 2023. Myer (+12.5%) also rose sales and profit. It finalise the merger with Premier Investments in January 2025, integrating Premier’s fashion brands into Myer's network of 56 stores. Myer also divested three private labels to rationalise operations.

Conclusion and going further: What to expect from Fiscal Year 2025-2026 and beyond

Data collection and financial reporting for the fiscal year 2025–2026 are currently in progress. As retailers aggregate results, several macroeconomic and geopolitical developments have emerged as definitive drivers of performance for the period:

• The second year of the Trump administration has entrenched a protectionist agenda, characterised by aggressive tariffs that are actively restructuring global retail supply chains. Beyond direct cost implications, the policy whiplash has introduced significant volatility, complicating long-term forecasting for the industry. Concurrently, the escalation of conflict in the Middle East following direct military engagement between Israel, the US, and Iran has further strained global logistics corridors and impacted key macroeconomic indicators.
• A stark divergence in regional performance is evident in East Asia. Japanese retailers are contending with a sharp downturn precipitated by a diplomatically driven boycott by Chinese tourists. This contraction has exposed the sector's historic over-reliance on inbound luxury spending. Conversely, this demand has been displaced rather than destroyed; South Korean department stores are reporting record-high foreign sales as Chinese consumers redirect their travel and spending to Seoul.
• The Indian luxury market continues to mature, highlighted by the milestone opening of the Galeries Lafayette flagship in Mumbai in November 2025. This strategic entry underscores the region's growth potential, with further expansion into Delhi anticipated in the coming years through the retailer’s partnership with Aditya Birla Group.
• The obsolescence of traditional SEO in favour of Generative Engine Optimisation (GEO) has altered e-commerce traffic models. Major platforms are now prioritising AI-generated answers over blue links. Retailers are adapting their digital storefronts for machine readability to ensure that their products are recommended by AI agents.
• Physical retail is experiencing a renaissance of quality over quantity. While total store counts are stabilising, retailers are closing underperforming locations to fund experiential flagships.

The next edition of the Global Department Store Monitor will examine the results from FY 2025-2026. However, the volatile landscape described above suggests that department stores must prioritise omnichannel ecosystems and agile responses to shifting consumer behaviours to navigate the complexities of the 2025–2026 cycle.

Credits: Anchita Ranka

What: Digital Capability Index 2026 reveals how leading UK retailers are adapting to evolving consumer expectations through innovation, omnichannel strategies, and operational changes.

Why it is important: The findings underscore the necessity for retailers to balance cost pressures with rising consumer expectations, echoing trends identified in the past year.

The Digital Capability Index 2026 provides a comprehensive overview of how top retailers are responding to the rapidly shifting landscape of consumer expectations. As shoppers increasingly demand seamless online experiences, fee-free returns, and personalised service, retailers are being forced to rethink their operational models. Many fashion retailers have introduced charges for returns to offset rising costs, while others are experimenting with handling fees for frequent returners, reflecting a broader industry move to protect margins. Despite significant investment in artificial intelligence and digital tools, the impact on consumer satisfaction remains limited, with adoption rates high but conversion and trust still lagging. Mobile commerce continues to grow, driven by flexible payment options and superapps, yet consumer hesitation around mobile payments and privacy persists. In the grocery sector, leaders like Tesco and Sainsbury’s are leveraging scale and innovation through rapid delivery, loyalty pricing, and scan-and-go technology, setting new benchmarks for the industry. Omnichannel excellence and hyper-personalisation have become essential, as retailers strive to unify digital and physical experiences to build loyalty and meet sophisticated consumer demands.

IADS Notes: The Digital Capability Index 2026 findings are reinforced by recent industry developments. In October 2025, Retail Week reported that three-quarters of major UK fashion retailers began charging for returns, while Asos introduced handling fees for serial returners in January 2026 (Retail Week). Chinese e-commerce platforms also tightened refund policies in April 2025 due to economic pressures (Inside Retail). Despite high AI adoption, a March 2025 Forbes report and an October 2025 Digiday study highlighted that conversion rates and consumer trust remain limited, with ChatGPT-driven traffic resulting in low sales. Mobile commerce’s growth, driven by buy-now-pay-later and superapps, was documented in November 2025 by Forbes and GDI, though BCG’s September 2025 report noted persistent concerns about payment security. In grocery, The Robin Report in January 2026 and Internet Retailing in May 2025 detailed Tesco, Sainsbury’s, and Morrisons’ advances in digital loyalty and rapid delivery, while Inside Retail in October 2025 covered Amazon’s withdrawal from checkout-free formats. Finally, omnichannel and personalisation strategies were spotlighted by Monocle in December 2025 and Journal du Net in November 2025, confirming their central role in retail competitiveness.

Digital Capability Index 2026

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During the 2025 IADS General Assembly, which took place in Hong Kong. David Baverez, an investor and writer, shared his original understanding of the disruptions linked to the emergence of a “new world order”, influenced by the rise of the ‘New China’. From his vantage point in Hong Kong, he highlighted a $600 billion China-US trade relationship now conducted with Hong Kong functioning as neutral ground for Chinese and US American CEOs to meet without legal or political risk, a role he likened to Vienna in the 20th-century US-USSR relationship.

This text is a synthesised version of his presentation, where he characterises China’s ‘economy of war’ as well as political, economic, demographic and cultural considerations for retailers. Confidential information including the Q/A section, only available to IADS members in the meeting recap on the IADS website, has been omitted from this article. This article is based on the presentation and does not reflect the views of the IADS.

Introduction: “economy of war”

According to David Baverez, the world is in the opening stages of an “economy of war,” a fundamental shift that closes the 30-year chapter of globalisation from 1989 to 2020. He contends that this is not a cyclical change but a structural one, where the tempo of value creation is set by control over supply and manufacturing, not consumer demand. By his count, the world as just three years into this new cycle, a period still too early for credible forecasts but already reshaped by the geopolitical “fracture” signalled at the 20th Congress in Beijing. The West’s initial denial in 2023, evident at the endurance of Putin’s Russia and the direction of the Chinese economy, gave way to acknowledgement in 2024. Baverez opines that this new reality has finally been confirmed, proved by Mario Draghi’s call for radical European reform, China’s $500 billion anti-deflation stimulus, and Donald Trump’s re-election amid widespread economic frustration.

2025 marks the year the US and China engage as equals: the US as the financial hegemon and China as the manufacturing superpower. China no longer approaches the US with an ambition to converge on financial dominance; it asserts primacy in manufacturing, including critical inputs such as rare earths. This reframes negotiations: both sides recognise distinct and non-overlapping strengths, and leverage shifts accordingly to supply control, input security, and industrial capacity rather than purely market access or consumer growth.

Baverez stated that October 3rd, 2025 emerged as a historic inflexion point. The invitation of North Korean leader Kim Jong-un to China, coupled with China’s energy agreement with Russia to double gas imports signalled deliberate decoupling from the US. Complementary moves amplified the shift: China’s refusal to purchase US soybeans in favour of Brazilian suppliers, and its rejection of Nvidia chips at a 50% premium, pointed to a decisive break with the globalisation model of the past three decades. The operating model is migrating from an “economy of peace,” centred on consumer pull, to an “economy of war,” centred on supply push and manufacturing eminence.

The COVID-19 period accelerated this consolidation. China increased its global gross manufacturing share from 30% to 35%, with even higher concentration in certain value chains. That concentration reallocated value from consumers to suppliers and exposed Western firms to fragility. Baverez pointed out that for retail operators, the practical implication is that margins, availability, and time-to-shelf are now functions of supplier leverage, chokepoint materials, and logistics sovereignty rather than demand curves alone.

Drawing a parallel to the early 1990s, as it was impossible then to foresee the full impact of the internet, mobile phones, and free communication, it is equally difficult to forecast this cycle’s end-state. The agenda, therefore, is question-led rather than answer-led. Baverez addressed four questions for China’s future along political, economic, demographic, and cultural lines that will determine how supply power is institutionalised, how domestic demand is balanced against export dependence, how ageing and workforce dynamics are managed, and how cultural narratives shape internal cohesion and external alignment.

The public-private partnership model

Baverez reasons that China’s public-private partnership model sits at a crossroads. The engine that delivered a 10% compound annual GDP growth rate from 1980 to 2022 combined technocratic leadership with entrepreneurial dynamism, forging a balance between state control and private initiative that differs from US and Russian approaches. Since 2022, the stock of private capital has stagnated while all incremental growth is driven by public capital, signalling subordination of private investors to government priorities. The investment consensus that followed projected scarcity of Chinese goods, inefficient capital allocation, and declining returns, while presuming an erosion of China’s manufacturing and innovation edge.

Recent evidence complicates that view. Rather than stalling, China has advanced in green technology, automation, robotics, and pharmaceuticals. In 2024, China accounted for more than 30% of all new molecule discoveries globally and signed more than $40 billion in licensed drug deals. Funding for this surge has not come from Western-style private equity channels but through a decentralised system of public financing described in The New China Playbook by Keyu Jing, which, despite appearances of centralisation, relies on local autonomy in capital allocation. Baverez adds that, in hindsight, post-2022 pessimism about China’s innovation capacity was partially misplaced. The feared collapse of the PPP model did not destroy value. Instead, a new equilibrium is forming where innovation continues, yet overall productivity remains low.

Baverez ideates that, in this configuration, innovation does not translate into productivity gains as it generally does in Western economies. Government actors reinvest innovation dividends into additional hiring and expanded manufacturing capacity, frequently at a loss. This sustains employment and industrial output but does not systematically improve productivity. For CEOs and retail leaders, this implies that China can remain a high-velocity producer in priority sectors even as capital efficiency lags, with state-driven capacity expansion shaping pricing power, supply availability, and lead times.

The question is whether China can reinvent PPP to reconcile innovation with productivity. The challenge is not uniquely Chinese as governments and private sectors globally are redefining the boundaries of state intervention and market-driven growth.

Diverging economic priorities

Baverez implies that international observers have misread the Chinese Communist Party’s “dual circulation” policy. Designed to strengthen domestic consumption while maintaining strong export capacity, Baverez argues that this policy has enabled China to absorb the entirety of global economic growth. With the world economy expanding at approximately 2% annually and China’s manufacturing sector growing at a commensurate rate, China is capturing 100% of incremental global growth, effectively outcompeting the rest of the world.

The recent plenum that served as the working committee for the upcoming five-year plan (from 2026 to 2030), reaffirmed self-sufficiency and minimisation of external dependencies. The strategic objective is to ensure that other countries are more reliant on China than China is on them.

This orientation is reshaping domestic consumption patterns. In response to a real estate crisis estimated at twice the scale of the 2007 US subprime crisis, with more than 65 million vacant homes and real estate representing 20% of GDP, the government has shifted the adjustment burden to households. Baverez claims that unlike Western economies, where banks, insurers, and governments absorb crisis costs, Chinese households are left to bear the losses. With no social safety net and 70% of personal wealth tied to property, the projected halving of property values required to reach financial equilibrium threatens a severe erosion of household wealth leading to a contraction in household consumption that dovetails with the state’s prioritisation of supply-side capacity.

Exports, in this framing, become less a growth engine and more a strategic retaliation tool. China’s goal is to anchor every major economy in Chinese supply chains, enabling the state to cut off access when countries act against Chinese interests. The rare earths sector illustrates the tactic. Despite US rare earth imports from China totalling only $200 million annually2, the signal is unambiguous: China exercises control through low-tech, low-cost segments of global supply chains often overlooked in conventional risk assessments.

Only child consumers

China’s demographic trajectory is set for the next two decades, with the lingering effects of the 1990 one-child policy, shaping a structural decline in births. Baverez states that despite recent policy relaxation, only 8 million births occur annually versus the 20 million anticipated, anchoring a long-term projection that the population will shrink from 1.4 billion to around 1 billion over the next thirty years. The resulting society of predominantly single children raises questions about social cohesion. Single children, unexposed to communal instincts formed in larger families, may become more individualistic, with traditional community socialisation mechanisms weakened when everyone is an only child. David Baverez is adamant that the long-term societal effects remain unknown.

For retail, the near-term consumer economics are favourable. He suggests that the prime 30-45 age segment remains compelling, with the typical 30-year-old Chinese consumer often having real estate already paid off and few dependents, which translates into high discretionary spending power. Luxury categories have already captured this momentum, with jewellery and gold sales doubling. In the automobile sector, the electric vehicle market has reached saturation after selling 30 million units, and two-thirds of new cars are now priced below $25,000, indicating mass-market affordability aligning with supply-led manufacturing scale. China, therefore, offers the world’s best market for customer lifetime value. Securing loyalty from a 30-year-old consumer could yield multi-decade purchasing potential, compounded by relatively low household obligations.

Cultural shifts amplify these consumption patterns. Gen-Z behaviour, shaped by a society of single children and a pervasive digital culture of selfies, narcissism, and live streaming, is transforming commerce. Live streaming has become a dominant sales channel in China, surpassing the commercial influence of platforms like TikTok in the West. Baverez notes that US efforts to bring TikTok under American control reflect not only political considerations but also the platform’s commercial power. Mastering live-stream commerce mechanics including creator economics, conversion funnels, impulse fulfilment, and social proof loops, has become central to customer acquisition and retention in China’s urban markets.

These demographic and cultural currents extend beyond China. Baverez concludes that fertility rates are declining across the Western world, raising the prospect that consumer behaviours crystalising in China such as more individualistic decision-making, concentrated discretionary spend among child-light households, and live-stream-driven purchase journeys may proliferate elsewhere. For retail specialists, the implications are twofold: align product, pricing, and channel strategies to the high-discretionary 30-45 cohort while preparing for a long-run population contraction; build capabilities in live-stream commerce and community-led digital selling that can port to Western markets as similar demographic conditions take hold.

Rebuilding connections and the sustainability opportunity

China’s cultural reset since COVID-19 is redefining consumer values and behaviours in ways that defy conventional forecasting. While the pandemic in upper income Western countries often translated into enhanced family time, remote work, and rapid vaccine-enabled security, cities like Shanghai experienced trauma marked by inadequate access to vaccines and prolonged lockdowns that left families isolated and fearful for survival. In Baverez’s opinion, this collective shock amplifies the social disruption introduced by the one-child policy, weakening the traditional family structure that historically underpinned Chinese society and altering the foundations of trust and decision-making.

In this environment, the importance of guanxi or personal relationships intensifies as institutional trust weakens. As the population ages, reliance on personal networks for retirement and healthcare will grow, with direct implications for how consumers evaluate brands, services, and experiences. The shift from product to experience in retail and luxury is already evident, but the next evolution points toward experiences that foster human connection. Louis Vuitton’s The Louis flagship in Shanghai, conceived as an immersive, transformative retail environment, signals how leading brands are recasting stores as environments to create meaning rather than mere purchase points. Chinese Gen Z consumers are expected to invest disproportionately in technologies that recreate human connection eroded by social and familial change. BYD has surpassed German automakers in brand strength for electric vehicles, and Huawei is now considered a stronger smartphone brand than Apple in the Chinese market.

Baverez postulates that the next wave of global consumer brands is likely to emerge from China, particularly in technology, as the “economy of war” model enables subsidised exports and innovation at scale, often at a loss. This model supports rapid iteration, capacity buildouts, and long-cycle bets that prioritise strategic positioning over near-term profitability, advantaging brands that marry engineering depth with platform distribution.

Environmental branding represents a parallel opportunity where Western firms have struggled to achieve scale. Despite visible brands such as North Face and Patagonia and sporadic traction for organic labels, manufacturers have largely failed to deliver environmentally friendly products at mass-market scale. The companies that first industrialise sustainable manufacturing at scale will shape the next global retail cycle. Chinese manufacturers, with their speed, data fluency, and scaling capability, are well-positioned to lead this transformation. Shein, now a global leader in fast fashion, illustrates the power of data-driven, white-label platforms. While Shein currently produces low-quality goods, the strategic question is whether the same platform could be leveraged to deliver environmentally sustainable products at scale, signalling a potential paradigm shift where cost, speed, and sustainability are no longer mutually exclusive.

According to Baverez, these dynamics together suggest that the global economy is entering a structurally different era, in which supply control, industrial capacity, and state-enabled innovation weigh more heavily than consumer demand, financial engineering, or legacy globalisation patterns. China sits at the centre of this transition: its evolving public-private model, divergent economic priorities, and distinctive demographic and cultural trajectories position it simultaneously as a critical supplier, a laboratory for new consumption behaviours, and an emerging source of global brands.

For retailers, this emerging “economy of war” redefines the foundations of competitiveness: supply security, access to Chinese manufacturing capacity, and mastery of new commerce formats now matter as much as brand equity or store footprint. China’s high-discretionary 30-45-year-old consumers and live-stream-driven purchase journeys set new benchmarks for customer lifetime value and digital engagement. Retailers must recalibrate risk models around concentrated supply chains, invest in capabilities for data-rich, experience- and relationship-led commerce, and prepare for Chinese brands and platforms to compete directly in premium, mass, and sustainability segments alike. Those that treat China not only as a sourcing hub or growth market, but as the reference laboratory for future retail models, will be best positioned to capture the next wave of demand.

Credits: IADS (Anchita Ranka)

What: Agent-based commerce and the Universal Commerce Protocol (UCP) are redefining how consumers and retailers interact, enabling seamless transactions across conversational AI platforms.

Why it is important: The adoption of open standards like UCP is crucial for ensuring accessibility, innovation, and competition in retail, preventing fragmentation and exclusion.

Agent-based commerce is rapidly transforming the retail landscape by shifting the point of purchase from traditional storefronts to AI-driven conversational platforms. With the introduction of the Universal Commerce Protocol (UCP) by Shopify, supported by major players in retail and payments, the industry is moving toward a standardized framework that allows consumers to express their shopping intentions in natural language and complete transactions seamlessly within conversational environments. This evolution challenges retailers to move beyond storefront-centric models and focus on data quality, real-time inventory, and technological transparency, as agents require precise and up-to-date information to facilitate purchases. The UCP aims to prevent the fragmentation that would result from proprietary integrations, ensuring that all merchants, regardless of size, can participate in this new ecosystem. By codifying trust, security, and fairness into open standards, the retail sector can maintain diversity and accessibility while embracing innovation. Ultimately, agentic commerce promises to make shopping more intuitive and inclusive, provided the industry aligns on universal protocols and responsible AI practices. 

IADS Notes: The rise of agent-based commerce, as described in the article, is mirrored by recent industry analyses from Forbes and Ian Jindal in February 2026, which underscore a fundamental transformation in retail. The rapid adoption of AI-driven shopping tools is compelling retailers to overhaul their operational and technological strategies, with agent-ready systems and robust data protection now essential for maintaining relevance. Major retailers are dissolving traditional sector boundaries by launching proprietary AI features, while the sector as a whole faces mounting pressure to invest in first-party data and hyper-personalisation to meet evolving consumer expectations. McKinsey in November 2025 projects that this shift could drive up to $5 trillion in global retail revenue by 2030, with agentic commerce automating and personalizing every step of the shopping journey and demanding new standards for trust and compliance. Inside Retail in November 2025 highlights how AI-powered agents are becoming the primary mediators of e-commerce, requiring retailers to prioritize algorithm-driven efficiency, real-time data quality, and machine readability to secure their place in an increasingly competitive digital landscape. Journal du Net in September 2025 emphasizes that this transition raises the stakes for transparency and responsible AI use, as power shifts from traditional retailers to digital intermediaries, making trust and accountability critical to sustaining consumer confidence.

Agent-based commerce: when AI becomes the new purchasing channel

What: Supply chain planning excellence in retail depends on aligning people, processes, and data, with AI and advanced planning systems serving as enablers rather than standalone solutions.

Why it is important: This insight reflects a broader industry consensus that technology alone cannot deliver supply chain resilience, as shown in recent analyses by Bain & Company, Harvard Business Review, and McKinsey.

Supply chain planning has evolved from a back-office function to a core strategic capability for retail organizations, with over 90% of executives now relying on it to navigate complex trade-offs and uncertainty. Despite significant investments in advanced planning systems (APS) and AI, many retailers have found that technology alone does not guarantee improved performance or resilience. The real differentiator lies in how effectively organizations align people, processes, and data to support these tools. While some companies have achieved competitive advantage by embedding APS and AI within robust operating models and integrated decision-making, others remain hindered by fragmented processes, inconsistent data, and unclear decision rights. The most successful retailers treat APS as evolving business infrastructure, continuously refining workflows, upskilling planners, and fostering cross-functional collaboration. AI is increasingly layered on top of APS to enhance forecasting and automate routine tasks, but human expertise remains central to managing exceptions and strategic decisions. Ultimately, planning excellence is achieved not through technology alone, but through disciplined change management, data quality, and organizational readiness.

IADS Notes: The BCG report on supply chain planning highlights a decisive shift in retail, where resilience and strategic planning have become essential for navigating disruptions. This evolution is reflected in Bain & Company’s May 2025 analysis and The Robin Report’s September 2025 coverage, both of which document how retailers are moving beyond traditional models to embrace scenario planning and cross-functional nerve centers in response to volatility and tariff pressures. Despite significant investments in AI and advanced planning systems, Harvard Business Review in February 2026 and BCG in June 2025 reveal that organizational barriers, insufficient change management, and workforce readiness continue to impede the realization of technology’s full value. The Economist’s February 2026 and McKinsey’s January 2026 reports further underscore the persistent gap between technological promise and practical outcomes, noting that only a minority of retailers have effectively scaled intelligent operations or integrated AI with ERP systems. As the role of planners evolves, Journal du Net in July 2025 and Forbes in October 2025 emphasize the importance of human–AI collaboration, with agentic AI serving as an enhancement layer that supports, rather than replaces, human expertise. Ultimately, achieving planning excellence and competitive advantage depends on foundational enablers such as data quality, leadership alignment, and cross-functional integration, as reinforced by Retail Systems Research in April 2025 and Harvard Business Review in January 2026.

Why AI alone isn’t enough

What: The UK retail sector’s persistent productivity gap is driven by structural barriers, a growing divide between high- and low-performing firms, and limited digital adoption.

Why it is important: The UK’s experience illustrates that technology alone is insufficient without addressing structural and organizational challenges, a lesson echoed in recent retail analyses.

The BCG report highlights that UK retail productivity has remained largely stagnant over the past decades, with output per worker barely increasing since 1997. While the top 10% of retail firms have occasionally achieved rapid productivity gains, these are often short-lived and followed by sharp declines, reflecting the sector’s sensitivity to macroeconomic cycles and consumer trends. The median retail firm has seen minimal improvement, and the least productive firms have actually declined, widening the gap between leaders and laggards. Unlike global frontier markets such as Singapore and Switzerland, where retail productivity continues to rise, the UK has struggled to embed gains in a sustainable way. Structural barriers—including limited economies of scale for smaller retailers and insufficient digital integration—have prevented the sector from keeping pace. Policy recommendations emphasize the need for shared infrastructure, digital transformation, and targeted support, drawing inspiration from international best practices. Ultimately, the report underscores that addressing deep-rooted organisational and operational challenges is essential for unlocking productivity growth in UK retail.

IADS Notes: The BCG analysis of UK retail productivity reveals a sector struggling to keep pace with global leaders, as evidenced by persistent stagnation and widening disparities between high- and low-performing firms. This trend is reinforced by Inside Retail’s February 2026 coverage of Singapore, where sustained growth is driven by digital innovation, experiential retail, and policy support—factors largely absent in the UK’s current landscape. Recent reports from Retail Week and the Financial Times throughout 2025 highlight the UK’s deepening workforce contraction, slow wage growth, and cyclical sales volatility, all of which expose the vulnerability of lagging retailers and the sector’s inability to embed productivity gains. Meanwhile, Fortune’s February 2026 analysis of Amazon’s UK exit underscores the limitations of relying solely on technology and logistics without addressing structural barriers such as scale and operational excellence. Singapore’s approach, detailed in Inside Retail’s January and April 2025 articles, demonstrates how targeted government intervention, shared infrastructure, and digital transformation can foster resilience and sustained productivity growth—offering a blueprint for UK policymakers seeking to close the gap with frontier markets.

The productivity frontier: UK leaders, laggards and the growing gap

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For 170 years, BHV has been one of Paris’s most durable retail stories, from a trinket shop to a multi‑floored department store that helped shape how Parisians furnished, fixed and lived in their homes. It is a real saga, from the entrepreneurial zeal at the beginning, the rise of consumer society that anchored the store as a home-goods destination, the consolidation under Galeries Lafayette leadership, to the shocks of the last years: a pandemic, a polarising commercial bet with SHEIN, and the subsequent arrival of institutional capital. At stake is more than square metres and sales: the future of a retail anchor whose identity is tightly woven into Parisian everyday life. 

How it all started 

1856: a trinket shop became the “Bazar Napoléon”

Bazar de l’Hôtel de Ville, today known as BHV, was founded in 1856, when François-Xavier Ruel, a hawker selling beanies, opened a modest trinket shop called Ruel Jeune at 54 rue de Rivoli, opposite Paris’ Hôtel de Ville. The store was also called “Bazar Napoléon”, as legend has it that when Empress Eugénie passed by, Ruel saved her by restraining the horses of her carriage that had bolted.

As a thank-you, Eugénie is said to have given him money to expand his business. In 1860, the store was officially named Bazar de l’Hôtel de Ville and was led by his wife, with the goal of being the cheapest store in Paris. Similar to Le Bon Marché's innovative commercial techniques, the store was offering a wide selection of products at fixed prices. Piece by piece, the store expanded to the adjacent buildings. Early on, becoming a hardware store reference in Paris, Ruel also developed other departments, such as women’s and men’s fashion, and even sold a primary form of private-label products. When Ruel died in 1900, BHV had 800 employees.

Building the department store of tomorrow 

His grandson, Henri Viguier, took over, transformed and developed the business. He undertook major works in 1912, building the rotonda and the store’s structure as we still know it today. Viguier is widely regarded as the driving force behind the store's major achievements. After World War II, the store's offerings were redesigned. The basement really became the home improvement and DIY destination it had been for decades. Bazar de l'Hôtel de Ville also accompanied the rise of consumer society and leisure activities by offering fishing, gardening and a sports department in 1937, and selling camping equipment from the 1950s onwards. The department store embraced all the latest retail innovations with the inauguration of an escalator in 1954, the creation of a parking lot with direct access to the store and the introduction of the latest home appliances. From 1975 onwards, Bazar de l'Hôtel de Ville shifted its focus towards home furnishings, reflecting the customers’ growing interest in home decoration, partly due to the baby boom. The store also played a leading role in spreading new consumption practices, including home delivery, home installation, customer service, consumer instalment plans and late-night openings as early as 1963.  

The end of independence 

Following Viguier's death in 1967, the company stayed in the family: Gérard Boulot (1912-2006), Henri Viguier's brother-in-law, took over the management. From 1964 to 2016, BHV opened dozens of stores, owned or franchised in city centres and suburban malls (up to 29 stores in 1989). Then, many stores closed over the years. In 1968, Nouvelles Galeries acquired a significant stake in BHV.1 Two years later, the Galeries Lafayette group acquired Nouvelles Galeries. In 1998, Galeries Lafayette owned two-thirds of BHV. 

The Galeries Lafayette years: missteps and reinvention 

The identity crisis of the 2000s 

In 2005, BHV had 15 stores, generated €527 million in turnover and faced a financial and strategic crisis. Losses in 2004 (€8.3 million) and 2005 (€13 million) had left the group vulnerable. In response, Galeries Lafayette launched a three‑year, €30 million restructuring plan to restore profitability by refocusing the business on home and by transforming a 4,000 sqm nearby warehouse into a men’s fashion store, BHV Homme, across the Rivoli store (opened in 2007 with the ambition to double the category turnover from €15 to 30€ million). Despite the Rivoli store consistently being profitable, the network suffered a sharp sales decline. The overall fall was attributed to several strategic missteps:

• A shift toward low‑margin, low‑value merchandise,
• The abandonment of the lucrative fashion offer,
• A relative retreat from the DIY and home improvement identity, leaving room for competitors in secondary cities, suburbs and even Paris, with a 5,400 sqm Leroy Merlin store opening half a kilometre from the Rivoli store in 2002. At some point, BHV even considered closing the DIY department altogether, but local consumers strongly protested, showing how deeply this legacy component was intertwined with Parisian life. In  2005, the DIY department in the Rivoli store achieved an average turnover of €15,000 per sqm, compared to an average of €2,500 for other DIY retailers.

So, returning to its core strength in home equipment, BHV capitalised on this strength by evolving the concept to organise the product range by room (kitchen, bedroom, bathroom), reinstating fashion assortments, converting a few loss-making outlets into Galeries Lafayette stores, and rolling out pilot transformations at select stores in 2006. That same year, losses narrowed to €4 million, and sales at the Rivoli store increased by 8%. The objective was to regain profitability by 2007. That same year, the Rivoli store accounted for more than two-thirds of BHV's total business and generated 20% of its revenue from its 45,000 DIY and home improvement products. Unfortunately, in 2012, only 4 stores remained (Lyon, Paris, Limonest, and Parly 2). In 2014, seeking a more modern and urban image, the store name changed to BHV Marais, referencing the up-and-coming Paris store neighbourhood.

The Covid years: an ambitious relaunch plan 

Due to the Covid-19, 2020 was the worst year in the history of Parisian department stores. In addition to the unprecedented closures during lockdowns, BHV Marais also faced restrictions on car use on the rue de Rivoli, which has been closed to cars since 2020 and is now accessible only to pedestrians, cyclists and cabs. The lockdowns cost the company 20% of its €330 million in revenue in FY 2020. Visitor numbers decreased by 20% to 25%, and the tourists, who accounted for 15% of the pre-pandemic customer base, also declined.

Despite these setbacks, BHV Marais’ 38,000 sqm relaunched as “Le Beau Bazar” (translating to “The Beautiful Bazar”), positioning the store as both a local everyday resource and an international destination. The basement remained a 4,000 sqm temple of DIY stocking, serving both amateur and professional customers, alongside a comprehensive selection of household goods, furniture, lighting and culinary arts. Complementing the practical offer was a 700 sqm area dedicated to creative hobbies, hands‑on workshops and an “Expert Atelier” for personalised services such as material cutting and custom paint matching to architecture and interior design coaching.

At that time, BHV Marais probably had its most elaborate and ambitious strategy, which seemed able to make the most of the affluent residents and tourists. Food and hospitality were integrated into the retail proposition with 5 restaurants, including rooftop terraces and a chef‑led table. Architecturally and commercially, BHV Marais was also the anchor of a curated urban ecosystem developed by Citynove2 and linking:

• Fashion brand tenants around the department store (BAPE streetwear, Arket, for example), BHV-owned La Niche pet store, and Galeries Lafayette-owned luxury watches specialist Royal Quartz,
• Gastronomy with Eataly Italian supermarket and restaurant, and the innovative Parisian Omnivore District food court in the BHV Homme courtyard,
• Culture with Lafayette Anticipations, Galeries Lafayette’s art foundation,
• All linked by renewed public passages and courtyards designed to create connective urban flows and reinforce the store’s role as a civic as well as a commercial hub.

Omnichannel capability extended the store’s reach via BHV.fr, which listed roughly 90,000 references across a marketplace, click‑and‑collect and express delivery. Finally, sustainability and local engagement were embedded in operations with a 2,000 sqm rooftop farm and beehives to cultivate organic products, extensive repair and upcycling services, and greener last‑mile logistics (GNV trucks, cargo bikes and electric tricycles) to reduce environmental impact.

SGM: new owners, unprecedented problems 

SGM’s entry into BHV’s story 

Galeries Lafayette shifted its strategy to focus resources on its nameplate flagship stores and international expansion. As a result, in February 2023, they entered exclusive negotiations with Société des Grands Magasins (SGM) to sell BHV Marais. The sale to SGM was concluded in November 2023. SGM already had a business relationship, as seven Galeries Lafayette provincial stores had been affiliated3 with SGM since 2021 (Angers, Dijon, Grenoble, Le Mans, Limoges, Orléans and Reims).

The agreement signed by SGM, a family-run retail operator led by Frédéric Merlin, encompassed both the BHV brand and its business operations, as well as the rue de Rivoli building, which was scheduled for acquisition a few months later. The stated ambition at the time was to preserve BHV’s DNA, its focus on home, decoration and accessible-to-premium goods, while reinvigorating the store. SGM also changed the store name and logo from BHV Marais to BHV. They announced plans to invest in merchandising and customer experience.

The SHEIN experiment goes wrong 

Betting on the fact that 40% of the French population had at least made one purchase on one of the ultra-fast fashion platforms, SHEIN and BHV announced a partnership for permanent spaces, first in BHV in Paris, then in the affiliated provincial Galeries Lafayette stores. The news triggered immediate and intense backlash from political figures, retailers and parts of the public in France, raising concerns about fast-fashion practices and an unfair competitive advantage derived from low-value parcel tariff exemptions.

Opening in November 2025, SGM expected the SHEIN partnership would boost store traffic, attract younger shoppers who tend to avoid department stores, generate significant rental and commission revenue and benefit the other store floors. According to BHV, 7,000 visitors came on the first day and 300,000 over the first month, but they did not find the very low prices SHEIN is known for. The average basket was reported at €45 per transaction (well above SHEIN’s online average purchase price of €10), which seems accurate given the price point. Merlin reported to various media 15% to 30% cross-selling rates among SHEIN customers making additional purchases in other store departments. In parallel, he mentioned difficulties: a 10% drop in foot traffic during the fourth week and a conversion rate below expectations. In other words, people came in the beginning, but few have actually bought anything, Merlin acknowledged in mid-January 2026 before the French Senate. The initially planned provincial SHEIN expansions were postponed to unknown dates.

The controversy, along with numerous unpaid invoices, prompted brands to end their relationships with BHV. Around 30 brands and partners cut ties or cancelled collaborations (Disney, for example, for the store's Christmas windows). The store reacted quickly by moving around corners and sections to fill empty brand spaces, but too many spaces remained vacant to maintain a consistent store layout.

Refusing to have its name associated with SHEIN, Galeries Lafayette broke its contract with SGM for seven provincial stores, which were renamed BHV. Since then, Merlin’s questionable reputation has become public information. He is considered a questionable businessman who operates real estate and malls and has numerous unpaid vendor invoices.

At the same time, Banque des Territoires, the state-owned investment arm of Caisse des Dépôts, withdrew its participation after the SHEIN controversy. Reports indicated that SGM was unable to raise the roughly €300 million discussed for the property purchase, and that Galeries Lafayette resumed negotiations with other investors to sell the walls while confirming that SGM would continue to operate the business if an alternative owner was found.

Where does BHV go from here: the Brookfield pivot  

Is hospitality the cure to retail decline? 

By early 2026, Galeries Lafayette announced the finalisation of the sale of the BHV building to an institutional investor, Brookfield Asset Management, a North American company with an extensive global realestate portfolio. Failing to secure the financing necessary to become the sole owner of the walls, Brookfield’s role is that of landlord and capital partner while leaving SGM in place as operator. Also, Brookfield is committed to a comprehensive rehabilitation of the building fabric as part of the longer-term plan.

Brookfield’s takeover of the BHV Paris building could mark a decisive shift in the iconic Parisian department store's future, with plans to reduce retail space by 40% and halve annual rent from € 18 million to € 9 million. The most ambitious element of the new strategy is Brookfield’s plan to invest €150 million in the building’s rehabilitation, including the creation of a five-star hotel on the top floors in partnership with hospitality specialist Experimental Group. This move reflects the current trend in retail, where integrating hospitality and experiential concepts is seen as essential for revitalising legacy assets and attracting new customer segments.

The nearby long‑vacant former C&A store on 126 rue de Rivoli follows the same strategy. It is currently being redeveloped into a high‑profile mixed‑use project led by Redevco. They plan to convert roughly 13,000 sqm across eight storeys into a programme combining retail, restaurants, offices, urban logistics, and a hotel component, aiming to respond to new lifestyle trends while reactivating street life on one of Paris’s main tourist and shopping boulevards. Redevco’s project narrative emphasises socially engaged programming and flexible spaces that can host flagship retail concepts, F&B and services, while improving back‑of‑house logistics to serve both the site and nearby retailers. For BHV, this redevelopment will have consequences: it will change the competitive dynamics on rue de Rivoli, with a diversified tenant mix that may either complement or compete with BHV’s renewed focus on food, services, and everyday needs.

What happens next: the make-or-break moves of 2026 

The near-term picture for BHV is shaped by three strands: SGM’s retail strategy under Merlin, the store’s urgent need to stabilise tenant composition and restore customer confidence, and the new owner’s capital and real estate programme. On the retail side, Merlin proposed concrete repositioning moves in December 2025 to attract local regulars and everyday visitors, unveiling new projects, including a 1.000 sqm food hall for mid-2026, food services, and a French pharmacy, while also preparing a plan to develop BHV’s private label (in place of the Galeries Lafayette brand) and a refresh of the product and concession mix to re-establish reliable revenues.

The next months should also be defined by careful public communications to address the reputational damage caused by the SHEIN episode and to convince both customers and national stakeholders that BHV’s historic character and local value will be preserved. However, SGM will continue to collaborate with SHEIN, with a larger space in the Paris store and adjustments to product assortments to improve conversion rates. Also, SHEIN in Dijon, Reims, Grenoble, Angers, and Limoges are finally set to open on 18 February 2026. The example of Dijon shows concerns for the future months, though. Originally scheduled for 18 November 2025, the SHEIN space has since been filled with winter merchandise and is ready to open, but has been repeatedly postponed. To hide the departure of dozens of brands, the size of the space has been doubled, amid growing discontent and anxiety among employees and the local retail community. Finally, as of February 2026, e-commerce operations are suspended.

BHV’s trajectory underlines a critical lesson: historic retail brands retain considerable civic and cultural significance. Any strategic move that interacts with that civic dimension, whether via tenant selection, brand partnerships or realestate disposal, will be scrutinised by local authorities, customers, partners and media. The Brookfield-SGM plan to pivot the business toward hospitality, food, daily needs and convenience offers a possible route back to stability, more footfall and a pragmatic response to weakened fashion sales. What to watch next is whether SGM can rebuild tenant trust, restore a coherent brand mix, repair reputational damage, and whether Brookfield’s redevelopment preserves the store’s civic function rather than simply monetising a landmark. The viability of the project turns on execution quality and on convincing both staff, partners and customers, but one question remains: after so many relaunch strategy attempts, should BHV be revived? Maybe not all brands are destined to survive beyond 170 years. 

Credits: IADS (Christine Montard)

What: The US Supreme Court’s ruling on IEEPA tariffs and the introduction of Section 122 duties have reshaped the tariff landscape, creating new uncertainties and operational challenges for businesses.

Why it is important: The evolving tariff landscape highlights the need for robust scenario planning and supply chain resilience, a trend echoed in leading retail and business media.

The recent US Supreme Court decision striking down the use of the International Emergency Economic Powers Act (IEEPA) for imposing tariffs has fundamentally altered the US trade environment. In response, the administration has enacted a temporary 10% global import duty under Section 122 of the Trade Act of 1974, with the possibility of increasing this to 15%. While this reduces the average US trade-weighted tariff rate from 15% to around 12%, the impact varies significantly by country and sector, with the largest reductions seen for imports from China and Brazil, and more modest changes for the EU and UK. Sectors such as consumer electronics, fashion, and luxury will benefit from notable tariff reductions, while others like biopharma and automotives remain largely unaffected. The ruling also raises questions about the future of bilateral trade deals, the potential for tariff refunds, and the administration’s next steps in deploying other trade instruments. As the trade landscape grows more complex, businesses must refine scenario planning, enhance compliance, and build resilience to manage ongoing volatility and uncertainty in global trade policy.

IADS Notes: The US Supreme Court’s ruling and subsequent policy shifts have intensified trade uncertainty, as detailed in Forbes (March 2025) and BCG (April 2025), which highlight the sweeping impact of tariff changes on operational models and costs. The Robin Report (September 2025) and BCG (January 2026) emphasise the growing importance of scenario planning and supply chain resilience, with businesses investing in analytics and diversified sourcing to navigate volatility. Sector-specific analyses from Inside Retail (April 2025) and Vogue Business (March 2025) show how tariff changes are affecting pricing and consumer behaviour, while Forbes (March 2025) and BCG (July 2025) underscore the need for advanced compliance and strategic adaptation amid a patchwork of exemptions and bilateral agreements. Collectively, these sources confirm that the evolving US trade landscape demands agility and innovation from all businesses engaged in international trade.

What does the US Supreme Court ruling on tariffs mean for your business?

What: The inclusion landscape in 2026 is marked by rapid change, with leaders adapting strategies, frameworks, and roles to balance compliance, business goals, and authentic inclusion.

Why it is important: These shifts ensure that inclusion remains resilient and effective, supporting talent retention and business performance in a complex environment

The inclusion landscape in 2026 is defined by a period of accelerated transformation, as organizations respond to shifting legal, regulatory, and societal pressures. Over the past year, many companies have rebranded or scaled back DEI initiatives, often moving away from equity-focused language toward broader concepts such as inclusion and civility. Despite these visible changes, most organizations have not abandoned inclusion; instead, they have recalibrated their approaches, integrating inclusion more deeply into talent, culture, and business strategies. The roles of inclusion leaders have broadened, frequently merging with HR or culture portfolios, requiring a strategic reset of expectations and success metrics. Global retailers are increasingly moving away from American-led frameworks, favoring regionally tailored approaches that reflect local realities while aligning with enterprise goals. The influence of AI on talent decisions is accelerating, making it essential for inclusion leaders to participate in shaping how technology impacts equity and opportunity. Employee Resource Groups (ERGs) are also taking on greater responsibility, necessitating clearer alignment with business priorities and better support. This dynamic environment demands that inclusion work be designed for resilience, ensuring it remains integral to organizational success. 

IADS Notes: The evolving landscape of inclusion in retail, as described in the Seramount report, is strongly reflected in recent industry analyses. Harvard Business Review in February 2026 highlights how retailers, under mounting legal and political pressure, are shifting from traditional DEI language to broader concepts such as “civility” and “inclusion,” often adopting the FAIR framework to balance compliance, culture, and business performance. Seramount in January 2026 details how this pragmatic shift, including rebranding or scaling back DEI initiatives, has allowed major retailers to maintain authentic inclusion commitments while navigating risk, with the FAIR framework emerging as a central strategy for resilience and talent retention. Entrepreneur in January 2026 underscores the transition from performative DEI to embedded inclusion in leadership, with leading retailers integrating these principles into core business functions to drive satisfaction and competitiveness. Forbes in April 2025 warns of the reputational and talent risks associated with scaling back DEI, advocating for practical, apolitical solutions to maintain inclusion. LEAD Network in February 2025 quantifies the business benefits, showing that effective inclusion strategies can yield substantial financial gains, reinforcing the imperative for systemic, measurable approaches like FAIR in the retail sector.

The inclusion landscape in 2026

What: Organisational barriers, leadership misalignment, and workforce readiness are the main reasons AI adoption stalls in retail.

Why it is important: This analysis demonstrates that bridging the gap between AI pilots and full-scale deployment requires both organisational change and employee engagement, consistent with recent data.

AI adoption in the retail sector continues to face significant hurdles, primarily stemming from organisational barriers, misaligned leadership, and insufficient workforce readiness. Despite growing investment and enthusiasm for generative AI, most retailers struggle to move beyond pilot projects to achieve full-scale deployment. The article underscores that successful implementation is not just a matter of technology, but of aligning leadership vision, redesigning workflows, and systematically upskilling employees. Many retail organisations underestimate the complexity of change management required, resulting in a disconnect between strategic ambitions and operational realities. Employees often feel unprepared for the shift, with only a minority expressing confidence in their ability to adapt to AI-driven processes. The persistent gap between experimentation and value realisation highlights the need for a holistic approach that integrates technological innovation with robust human capability. Ultimately, the future success of AI in retail will depend on organisations’ ability to foster both operational excellence and workforce resilience, ensuring that digital transformation delivers tangible business outcomes.

IADS Notes: The persistent challenges highlighted in “Why AI Adoption Stalls, According to Industry Data” are echoed across recent retail industry analyses, which consistently report that organisational barriers, leadership misalignment, and workforce readiness are the primary obstacles to successful AI adoption. Despite widespread enthusiasm and investment, only about 10% of retailers have managed to scale AI initiatives, as detailed in both Deloitte’s September 2025 and BCG’s June 2025 reports. These studies reveal that while a majority of employees now use AI tools, frontline engagement and systematic upskilling remain insufficient, with just 36% of retail workers feeling adequately prepared for AI-driven change. Bain & Company’s December 2025 survey underscores the critical need for leadership commitment and workflow redesign to move from pilot projects to production-scale AI, while BCG’s April 2025 analysis demonstrates that CEO leadership and employee engagement are decisive for bridging the gap between experimentation and value realisation. As AI integration accelerates, BCG’s September 2025 research stresses that the future of retail will be defined by those organisations able to blend technological innovation with robust human capability, ensuring both operational excellence and workforce resilience.

Why AI adoption stalls, according to industry data

What: The pressure to optimize content for algorithms is causing burnout among creators and disengagement among young audiences, highlighting the need for regenerative digital strategies.

Why it is important: Addressing creator burnout and Gen Z disengagement is essential for sustaining brand relevance and trust, as emphasized by multiple recent studies and media outlets.

The relentless pursuit of algorithmic optimization has shifted the focus of digital content creation from meaningful messaging to performative editing, leading to widespread exhaustion among creators and a silent exodus of Gen Z from public platforms. As creators devote the majority of their energy to satisfying algorithmic demands rather than delivering valuable information, their work becomes a source of burnout rather than fulfillment. This phenomenon is not limited to individual resilience but represents a structural occupational hazard, with self-worth increasingly tied to fluctuating engagement metrics. The resulting disengagement, particularly among younger audiences, is driving a migration toward private digital spaces and away from traditional news feeds, which are now perceived as overwhelming rather than informative. The article advocates for a paradigm shift toward cognitive sustainability, urging platforms to adopt regenerative algorithms that prioritize user well-being and meaningful engagement. It calls for the integration of new metrics and a systemic “Duty of Care,” emphasising the necessity for platforms to recognise and address the mental health impacts of their optimisation models.

IADS Notes: Drawing on sources from Adventures in Consumer Tech and Inside Retail in November 2025, the retail sector is being reshaped by AI-driven discovery and content strategies, with Journal du Net in February 2026 highlighting the creative impact of AI in fashion. Reports from HR Dive, Retail Week, and Times of India throughout 2025 confirm Gen Z’s burnout and disengagement, prompting retailers to rethink engagement and workplace culture. Inside Retail and MBS in 2025 document the shift toward private, trust-based digital spaces, while Harvard Business Review in early 2026 emphasises the growing importance of cognitive sustainability and responsible AI. Finally, McKinsey, Harvard Business Review, and The Korea Herald in 2025 underscore the industry’s move toward new engagement metrics and a systemic “Duty of Care” to build long-term trust.

The "Utility Tax": When the attention economy exhausts the human infrastructure of the Internet

What: AI is transforming workforce structures, elevating the strategic importance of senior employees and redefining career paths.

Why it is important: This shift reflects a broader industry trend where human discernment and experience are becoming critical assets, as highlighted in recent BCG and Forbes reports.

The article explores how artificial intelligence is reshaping the value and roles of senior employees across industries. Traditionally, older workers were viewed through demographic or regulatory lenses, but AI is now altering this perspective by automating routine and entry-level tasks, particularly those previously assigned to junior staff. While AI excels at processing information and optimizing processes, it cannot assume responsibility for decisions or manage complex human dynamics. As a result, the ability to exercise sound judgment, built through experience and exposure to real-world challenges, is becoming increasingly valuable. The article argues that as AI accelerates operational tasks, the strategic importance of discernment, mentorship, and decision-making maturity rises. Companies are encouraged to invest in digital skills for senior staff, recognize the value of mentoring, and adapt HR policies to reward judgment and responsibility. Ultimately, the future organization will combine technological power with human maturity, positioning experienced employees as essential drivers of strategic direction and coherence.

IADS Notes: In the context of AI’s rapid integration into retail, the strategic value of senior employees is being redefined. Recent analysis from BCG (September 2025) confirms that only 36% of retail workers feel prepared for AI-driven change, with foundational skills and adaptability now central to workforce resilience. As automation disrupts entry-level roles, leading retailers are prioritizing augmentation over replacement, recognizing that human discernment and experience are irreplaceable in decision-making and risk management. The evolving talent pyramid, highlighted by BCG (November 2025), sees middle management roles shift toward coaching and digital integration, while junior staff are upskilled for more analytical and strategic responsibilities. This transformation is not without challenges, as seen in the significant job cuts at Amazon and Target reported by Forbes (October 2025), which underscore the sector-wide move toward automation and the urgent need for new skill sets. At the same time, research from Harvard Business Review (September 2025) and The Retail Bulletin (May 2025) emphasizes that soft skills, values alignment, and employee engagement are now critical for sustainable success. Retailers that blend technological innovation with human-centric leadership and robust upskilling are best positioned to thrive in this new era.

In the age of AI, seniors are becoming strategic

What: Investor attitudes toward ESG have shifted, making measurable sustainability outcomes central to retail investment and operational strategies.

Why it is important: This shift reflects a broader industry trend where regulatory demands and investor expectations are driving retailers to prioritise transparent, measurable ESG outcomes.

A fundamental change is underway in how investors evaluate ESG, with a growing emphasis on tangible, long-term value rather than superficial commitments. For the retail sector, this means that sustainability and governance are no longer peripheral concerns but are now integral to both investment decisions and operational strategies. Retailers are increasingly expected to provide clear, measurable evidence of their ESG performance, as investors scrutinise not just the intent but the actual outcomes of these initiatives. This heightened focus is driving companies to overhaul their supply chains, enhance transparency, and align their sustainability efforts with evolving regulatory requirements. The shift is also influencing how brands communicate with stakeholders, as the risk of “greenhushing” grows in response to increased scrutiny. Ultimately, the retail industry must adapt to this new landscape by embedding ESG into the core of their business models, ensuring that sustainability is both authentic and demonstrable to maintain investor confidence and secure long-term growth.

IADS Notes: In January 2026, the introduction of the EU’s Environmental Omnibus package and stricter sustainability directives began to reshape retail supply chains and reporting standards, demanding greater transparency and operational change (Ecommerce Europe, ESG Dive). July 2025 saw Hyundai Department Store position itself as an ESG management leader, while Ikea’s ‘real zero’ climate strategy provided a benchmark for meaningful environmental action (Maeil Business Newspaper, Inside Retail). The regulatory landscape was further clarified in March 2025 with new EU sustainability laws requiring comprehensive due diligence and measurable outcomes (Drapers). Despite a rise in “greenhushing,” as noted in January 2026 (ESG Dive), retailers continue to integrate ESG into business value and stakeholder engagement, underscoring that accountability and measurable results are now critical for competitiveness and investor confidence.

Research reveals a fundamental shift in how investors view ESG

What: Topshop has returned to the British high street through a partnership with John Lewis, aiming to revive its brand with a new retail strategy.

Why it is important: The collaboration highlights the evolving role of department stores as catalysts for brand resurgence and experiential retail innovation.

Topshop’s reappearance on the British high street through its partnership with John Lewis marks a pivotal moment in the evolution of retail brand strategies. By leveraging the established platform and reach of John Lewis, Topshop is seeking to reconnect with both loyal and new customers, blending its fashion heritage with the experiential strengths of a leading department store. This move reflects a broader industry trend where legacy brands are turning to curated, omnichannel partnerships to regain relevance and drive engagement in an increasingly competitive market. The collaboration is designed to offer consumers a seamless blend of digital and physical experiences, capitalising on the strengths of both brands to create a compelling in-store environment. As department stores adapt to changing consumer expectations, such alliances are becoming essential for revitalising high street retail and ensuring continued brand resonance. The Topshop-John Lewis tie-up not only sets a precedent for other heritage brands but also underscores the importance of innovation, curation, and customer experience in shaping the future of fashion retail.

IADS Notes: Topshop’s return through John Lewis exemplifies the trend of heritage brands leveraging curated partnerships and experiential retail, as seen in Fashion Network (August 2025). The resilience and relevance of department stores, highlighted by The Retail Bulletin (April 2025) and Retail Week (August 2025), are reinforced by their ability to anchor new brand strategies and omnichannel excellence. Insights from Journal du Net (November 2025) and BoF (December 2025) further demonstrate that integrating digital and physical experiences is now central to winning back consumer loyalty and driving legacy brand resurgence.

Can Topshop regain its past heights with John Lewis tie-up?

What: Retailers are facing escalating cyber threats, prompting a shift toward collective resilience and industry-wide collaboration.

Why it is important: This development reflects the urgent need for coordinated defense strategies in retail, as highlighted by recent sector-wide cyber incidents.

Retailers are increasingly targeted by sophisticated cyberattacks, with recent high-profile breaches at major brands underscoring the sector’s vulnerability. The rapid pace of digital transformation and the growing reliance on third-party providers have expanded the attack surface, making traditional, isolated security measures insufficient. As a result, the industry is witnessing a strategic pivot from prevention alone to a broader focus on resilience, rapid recovery, and collective action. Regulatory pressures and the direct impact of breaches on customer trust and brand reputation have further accelerated this shift. Retailers are now prioritising industry-wide collaboration, intelligence sharing, and integrated risk management to safeguard their operations and maintain consumer confidence. This evolution marks a significant change in how the sector approaches cybersecurity, recognising that only through coordinated efforts can retailers effectively counter increasingly complex threats and ensure long-term business continuity.

IADS Notes: The urgency for collective resilience in retail cybersecurity is underscored by a series of sector-wide incidents and analyses over the past year. In August 2025, The Retail Bulletin reported that only 18% of retailers had mature digital core security, with ransomware accounting for 30% of attacks and average losses reaching $1.4 million per incident. The same month, Retail Week highlighted the escalation of cyberattacks on major UK retailers and the acute vulnerabilities introduced by third-party providers, prompting a sector-wide shift toward rapid recovery and coordinated responses. In May 2025, Inside Retail examined how breaches at M&S, Harrods, and Co-op evolved into core business risks, directly impacting market value and customer trust. By June 2025, Inside Retail emphasised that cyber resilience had become a competitive differentiator, with incidents like the M&S attack driving a 10% increase in cyber insurance premiums. Finally, RH-ISAC’s April 2025 analysis stressed the importance of industry collaboration and intelligence-driven solutions as cyber threats continue to evolve, reinforcing the need for integrated, proactive risk management across the retail sector.

Cybersecurity requires collective resilience

What: The Indian retail industry is set on a path toward a ₹200 trillion valuation by 2035, emphasising new growth strategies and the adoption of advanced technologies.

Why it is important: The anticipated growth underscores how strategic adaptation and technology adoption are reshaping India’s retail landscape, in line with recent market trends.

India’s retail sector is poised for extraordinary expansion, with projections targeting a ₹200 trillion market by 2035. This ambitious outlook is underpinned by a combination of strategic innovation, demographic evolution, and rapid digital transformation. The industry is witnessing a surge in investments, particularly in mall infrastructure and e-commerce, as international brands and local conglomerates intensify their presence. The rise of affluent households, Gen Z, and women as influential consumer groups is driving discretionary spending and shaping new retail experiences. Digital channels are becoming increasingly dominant, with the e-retail market now ranking among the world’s largest by shopper base, and significant growth coming from Tier II and III cities. Retailers are responding by adopting omni-channel models, enhancing experiential offerings, and leveraging technology to improve logistics and customer engagement. These shifts are not only fueling market growth but also fostering a more competitive, innovative, and resilient retail environment, positioning India as a global leader in the sector’s future evolution.

IADS Notes: The vision for Indian retail’s ₹200 trillion future is substantiated by a 55% year-on-year surge in retail leasing and the entry of 27 new international brands, as reported by The Robin Report (January 2026) and India Economic Times (April 2025). Demographic shifts, including the projected rise of affluent households to 30% by 2035 and the growing influence of Gen Z and women, are highlighted in BCG’s analysis (March 2025). Digital innovation is accelerating, with Bain & Company (April 2025) noting India’s e-retail market as the world’s second-largest by shopper base, and ET Retail (August 2025) documenting the transformation of malls into hybrid, experience-driven destinations. These developments collectively reinforce the sector’s adaptability and the strategic imperatives outlined for 2035.

Winning codes for retail 2035: Capturing the INR 200 trillion prize

What: Official, brand-backed AI agents are now a key competitive differentiator, directly shaping consumer preference and loyalty.

Why it is important: The rise of conversational AI and agentic commerce is accelerating the need for brands to deliver secure, seamless, and trusted experiences across all digital touchpoints.

The Valtech report, "The Era of Conversational Commerce," reveals that conversational AI has evolved from a support tool into the primary interface for customer discovery, evaluation, and purchase decisions in retail. Consumers are no longer satisfied with generic assistance; they increasingly seek official, brand-backed AI agents that provide authoritative information and trustworthy guidance. This shift is profound, as 43% of consumers say they would choose a brand offering an official AI agent over one that does not, and nearly 20% would switch brands or abandon a task if their preferred AI environment lacks such an agent. The report highlights that mainstream adoption is already underway, with over 70% of respondents willing to complete purchases within AI chat apps. However, trust remains a critical barrier, particularly regarding payment security and privacy, while expectations for seamless, guided experiences continue to rise. Brands that fail to orchestrate conversational AI across all digital touchpoints risk losing relevance, as consumer behavior is outpacing organizational readiness. The competitive landscape is now defined by the credibility and presence of brand-backed AI agents.

IADS Notes: The Valtech report’s depiction of conversational AI as the new decision and transaction environment in retail is substantiated by a wave of industry evidence from the past year. As highlighted in February 2026, over 70% of consumers are now willing to complete purchases within AI chat apps, a trend mirrored by the exponential growth of AI-assisted shopping and the urgent need for retailers to redesign digital platforms for AI compatibility, as noted by Journal du Net in January 2026. The emergence of official, brand-backed AI agents as a competitive differentiator is reinforced by Retail Touchpoints’ January 2026 findings, which show measurable gains in efficiency and customer experience for early adopters, while the Financial Times and McKinsey in late 2025 warned that brands failing to engage with AI risk losing visibility and direct customer relationships. Trust and payment security have become critical, with Techcrunch and Inside Retail in autumn 2025 documenting the rise of secure, agent-ready payment protocols and the demand for transparency in AI-led transactions. The maturity gap between consumer expectations and organisational readiness is evident, with Forbes and BCG reporting that most retailers are struggling to keep pace with the rapid evolution of consumer behaviour. Finally, the imperative for orchestrating conversational AI across all digital touchpoints is exemplified by Liverpool’s omnichannel agentic AI deployment in November 2025 and the sector-wide shift toward hyperpersonalized, multichannel engagement, as seen in the BCG and ElevenLabs partnership in February 2026.

The era of conversational commerce

What: The hidden curriculum of soft skills is widening the gap between college education and workplace readiness, prompting retailers to rethink early-career hiring and training.

Why it is important: The shift toward automation and evolving job roles in retail increases the urgency for systematic upskilling and early-career support to maintain business resilience.

Summary: The article explores the growing disconnect between what colleges teach and the operational skills required in the workplace, particularly in retail. While graduates fulfill academic requirements, employers increasingly find them lacking in essential soft skills such as communication, judgment, and collaboration. This gap, known as the hidden curriculum, is widening due to several structural changes: internships and entry-level roles are less accessible and less effective as training grounds, and automation is rapidly transforming job expectations. As a result, hiring decisions are often based on indirect signals like resumes and interviews, which fail to capture real readiness, leading to costly onboarding and early attrition. Retailers are responding by adopting applied, task-based assessments and job simulations to evaluate candidates’ practical skills before hiring. This approach aims to make readiness visible earlier, reducing hiring risks and supporting more effective workforce planning. Ultimately, the article argues that aligning hiring practices with evidence of operational skills is essential for building resilient retail teams in a changing labor market. 

IADS Notes: The persistent gap between college credentials and workplace readiness, as described in the article, is echoed by recent findings from Harvard Business Review, HR Dive, ERE Media, Stanford Digital Economy Lab, and Seramount. These sources highlight the critical importance of foundational and soft skills for workforce adaptability and business success (September 2025, December 2025). As automation and AI reshape entry-level roles, retailers face a growing challenge in developing talent pipelines, with only 36% of workers feeling prepared for AI-driven change, according to both Harvard Business Review and Seramount (September 2025, January 2026). The rush to automate entry-level positions, while promising short-term efficiencies, threatens long-term sustainability by undermining institutional knowledge and future leadership development, as noted by ERE Media and HR Dive (June 2025, December 2025). The most successful retailers, as observed by Stanford Digital Economy Lab, are those who strategically leverage AI to augment, rather than replace, human capabilities, ensuring operational excellence through systematic upskilling and robust early-career development (September 2025). This shift compels HR leaders to move beyond traditional workforce planning and embrace adaptive, scenario-based models that prioritize both technical and soft skills, ultimately reducing costly hiring mistakes and supporting business resilience, as emphasized by Seramount (January 2026).

Where the soft skills gap is coming from and how to fix it

What: AI adoption is transforming workplace culture, job structures, and inclusion strategies.

Why it is important: The evolving role of inclusion leaders in AI strategy is vital for ensuring fairness and trust, building on evidence that human-centric approaches drive better business outcomes.

The integration of AI into the workplace is driving a fundamental shift in how organizations operate, with significant implications for culture, trust, and opportunity. While leaders may perceive enthusiasm for AI, many employees—especially those in less senior roles—express uncertainty about the impact on their jobs, workloads, and future prospects. This disconnect is heightened by concerns over job security, as automation and AI-driven processes increasingly reshape traditional roles and responsibilities. The rapid pace of change has exposed gaps in upskilling and reskilling, leaving many workers, particularly those from underrepresented backgrounds, at risk of being left behind. Furthermore, the use of AI in HR and decision-making processes raises critical questions about fairness, bias, and transparency. Inclusion leaders are uniquely positioned to address these challenges by advocating for equitable access to training, transparent communication, and responsible AI governance. Their involvement ensures that technological advancements support not only efficiency but also a more inclusive and trustworthy workplace environment.

IADS Notes: Recent findings from January 2026 and throughout 2025 highlight that the challenges and opportunities presented by AI adoption are highly relevant to retail, where workforce diversity, frontline roles, and rapid digital transformation are defining characteristics. Retailers face unique pressures as automation impacts large numbers of entry-level and customer-facing employees, making equitable access to upskilling and fair, bias-free HR processes especially critical. The sector’s reliance on inclusive leadership to navigate these shifts is underscored by the adoption of frameworks like FAIR, which help ensure that AI-driven change aligns with both business performance and the values of fairness and trust that are essential in retail environments.

3 ways inclusion leaders should shape AI in the workplace

PRINTABLE VERSION HERE

The IADS invited Xiaohongshu, internationally recognised as Red Note, to present at the 2025 General Assembly held in Hong Kong. Xiaohongshu, now a key platform for brands navigating access to Chinese consumers, originated as a response to the needs of outbound Chinese tourists. When visiting Hong Kong, the founder realised that Chinese tourists were unaware of local purchase limits at the Apple Store, which led to the creation of seven region-specific PDF guides. Xiaohongshu evolved to include shopping tips, beauty advice and lifestyle inspiration. Today, the platform is a defining touchpoint for Chinese consumers, especially those travelling abroad, and the overseas Chinese population.

This text is a synthesised version of Xiaohongshu’s presentation, which provided an overview of the platform’s strategy, distinctive characteristics, and key user insights. They also explored how international brands can build a presence on the platform and harness user data to reach Chinese consumers across demographics. Confidential information including the Q/A section, only available to IADS members in the meeting recap on the IADS website, has been omitted from this article.

Authenticity and user-generated content as strategy

Xiaohongshu operates on an open model in which all accounts are public and all content is shareable. This structure establishes the platform as fundamentally community-driven, characterised by high-level engagement, with approximately one-third of users creating content actively. Consequently, content creation is not limited to official brand accounts or influencers; rather, everyday stakeholders contribute to a continuous cycle of discovery, purchasing, reviewing, and peer-to-peer sharing. This participatory model sustains a high content volume of ongoing discussion and inspiration, thereby fostering authenticity and establishing the platform as a trusted source of consumer insight.

The platform’s strategy is grounded in authenticity and user-generated content, a focus reflected in the generation of over 6 million comments and in the fact that 90% of all content is produced by individual users. Central to this strategy is directing at least half of all platform traffic toward user-generated content. In this ecosystem, user feedback is transformed into an active asset; the opinions shared provide brands with unfiltered insights and serve as organic promotional tools when positive sentiment emerges. Thus, authentic consumer voices act as a barometer of brand health and a catalyst for further growth.

Xiaohongshu’s capability lies in surfacing everyday stories from ordinary users rather than relying solely on curated content. The platform thrives on narratives rooted in daily life, such as users sharing arts and crafts projects, discussing materials, or detailing coffee rituals and the tools utilised. This approach enables brands and retailers to position their products within the context of users’ personal routines and hobbies. While the focus is on the ordinary user, KOLs remain an important part of the ecosystem, offering guidance to followers and shaping trends.

A defining characteristic of Xiaohongshu is its search-centric user behaviour, with 70% of users actively performing searches on the platform. This distinguishes it from Instagram or Facebook, where content discovery is algorithm-driven and interest-based. Conversely, Xiaohongshu users arrive with specific questions and intent, seeking actionable answers comparable to a commercially driven version of Reddit’s public forums. This behaviour has led the platform’s search volume to surpass that of Baidu, China’s dominant search engine.

Xiaohongshu’s analyses reveal emerging trends through a strategy of segmenting its user base into personas to target content more effectively. For instance, the platform identifies ‘early creators’ as users who travel specifically for art exhibitions, concerts, and cultural events. Major occasions like Art Basel in Hong Kong, or concerts by artists such as Adele, Taylor Swift, and Lady Gaga, attract attention from Chinese travellers, who go abroad to attend performances not available in mainland China. Beyond the primary event, these users are interested in associated lifestyle elements, such as the handbags celebrities carry or the immersive shopping experiences they seek. To leverage these behaviours, the platform’s analytics enable brands to segment audiences by highly nuanced interests including determining whether travellers are motivated by coffee culture, art history, or family-oriented activities, to ensure that messaging resonates with the correct consumer segments at the right time.

Outbound Chinese travellers: User insights and travel trends

Xiaohongshu currently has 350 million monthly active users, seeing a surge during China’s three-year COVID-19 lockdown as consumers turned to the platform for answers to urgent questions, such as hotel recommendations and quarantine procedures. The user base is young and affluent, with 85% of users under 35 and half residing in China’s first- and second-tier cities, which command considerable purchasing power. While the platform initially attracted a female audience and remains skewed toward women (60% to 70%), it has broadened its scope across a range of industries and interests, with ongoing efforts to balance the gender mix.

For outbound Chinese travellers, the platform serves a search-driven function, replacing traditional web searches as the go-to source for inspiration and practical advice on destinations, airlines, accommodations, and tax-free shopping options. This behaviour relies heavily on specific peer recommendations, such as tips to visit Galeries Lafayette’s rooftop or utilise John Lewis’s after-sales service for electronics. which the platform’s data analytics allow brands to study to understand consumer values, decision-making, and loyalty. Travel patterns are concentrated around three major holidays: Chinese New Year in February, Labour Day in May, and National Day in October, all of which drive pronounced influxes of visitors to retail destinations. Additionally, search activity mirrors social and political developments, such as visa requirement relaxations in Southeast Asia, leading to observed growth in trends for countries like Malaysia, Singapore, and Thailand.

The consumer journey is mapped out over a 60-day timeline, providing a framework for retailer content and campaign planning. The process begins 60 days before departure with searches for broad travel inspiration and city guides. Between 40 and 60 days out, attention shifts to logistical elements like visas, hotels, and transportation, where practical information on airport transfers and local navigation becomes relevant. As the trip approaches (20 to 30 days prior), users focus on specifics such as attraction tickets, local train bookings, and guided tours. Finally, in the last 10 days, the emphasis moves to detailed planning for daily activities and shopping, making this the most effective time for targeted invitations to stores and exclusive experiences.

Currently, Xiaohongshu is observing rising interest regarding exclusive products or experiences available only in specific cities or regions, such as fragrances or character merchandise limited to Singapore or Thailand. These city exclusives are significant drivers of live searches, fuelling a sense of discovery and urgency among users. Simultaneously, there is a prominent trend for “must-buy” recommendations, where users seek straightforward advice on what to purchase or experience, preferring curated guidance over conducting exhaustive research. The platform reflects an integration with global social media culture through fashion trends like “OOTD” (Outfit of the Day) and “summer feed check,” highlighting the importance of visual storytelling. This visual emphasis extends to the physical world, where users are drawn to retail environments that offer opportunities for selfies and social sharing; features such as mirrors and photogenic spaces have become differentiators for department stores and malls.

Brand seeding on Xiaohongshu

The first step for international retailers to build a presence on Xiaohongshu is establishing an official account, which grants access to tools for content creation, influencer collaboration, and community partnership. This system is designed to surface positive brand narratives while providing mechanisms to address negative feedback, often utilising large-scale IP-driven events around major festivals like Chinese New Year to introduce trends, encourage exploration, and foster optimism through emotional storytelling. The platform’s campaign logic prioritises gradual, sustained brand building over short-term, high-spend bursts; a strategy exemplified by a showcase for Singapore’s Changi Airport where pre-exposure to iconic features led to the creation of dedicated mini-pages aggregating discussions and reviews. This structure ensures that high-quality, positive content dominates the results page when users search for a brand or destination. To facilitate conversion, the platform integrates with online travel agencies (OTAs), closing the loop between inspiration and transaction by allowing users to book hotels, restaurants, or experiences directly through promoted posts.

Because Xiaohongshu rejects the notion of one-off, high-budget campaigns for instant mass awareness, the effective time horizon is long-term, typically spanning six months to a full year and timed to coincide with key Chinese holidays. The platform advocates for a ‘seeding’ approach: cultivating a group of engaged users, nurturing their interest, and expanding reach as brand affinity deepens. This is relevant to shopping malls and retailers outside China that face indirect competition from other cultural attractions vying for tourists’ attention. Brands are encouraged to use a funnel-based approach to track awareness, engagement and post-campaign evolution, to direct marketing investments toward building a foundation of loyal consumers. While most content targets the mainland Chinese audience, the platform is a valuable testing ground with currently only a handful of active international entities, offering new brands the opportunity to learn from early adopters and develop best practices for engaging Chinese consumers at home and abroad.

Beyond building brand presence to directly engage potential customers on Xiaohongshu, brand content on the platform could have broader trickle-down effects as search behaviours shift from engines to generative AI chatbots. The high-quality, high-weight data of genuine human voices is evidenced by Reddit’s data being one of the most cited sources on ChatGPT and being licensed to train AI models. It is highly likely that Xiaohongshu’s authentic user opinions may be harnessed in a similar manner, adding a distinct cultural lens to AI shopping, given its Chinese user base.

As marketing spend transitions from SEO to enhancing LLM visibility, a positive presence in training data becomes key to remaining relevant. Establishing and controlling the brand’s narrative on Xiaohongshu can lead to better discovery and user engagement through genAI chatbots as customers ask for hyper-specific recommendations, thus future-proofing retailers’ presence by embedding themselves in training data. By actively participating in Xiaohongshu’s ecosystem, international brands ensure that AI models grasp not just products but also why they matter to this specific demographic.

Credits: IADS (Anchita Ranka)

What: Products initially created for accessibility can evolve into widely adopted solutions, generating commercial success and industry transformation.

Why it is important: Prioritizing accessibility in product development leads to breakthrough solutions that benefit broader audiences and redefine industry standards.

Innovations that begin with accessibility in mind often transcend their original purpose, evolving into mainstream solutions that drive both commercial and social value. The story of Safety Tubs, initially designed for seniors with mobility challenges, illustrates how products created for marginalized users can expand to serve a diverse range of needs, from athletes seeking hydrotherapy to health-conscious consumers desiring relaxation features. This process, termed “design amplification,” starts by addressing specific constraints and then scales to broader markets, transforming features like low-threshold entry and ergonomic seating into luxury differentiators. The article outlines a structured methodology for leveraging accessibility as a catalyst for innovation, emphasizing the importance of embedding accessibility constraints at the outset of product development, investing in scalable technologies, and conducting ethnographic research with users facing extreme limitations. By adopting this approach, companies can unlock significant commercial opportunities and set new standards for inclusive design, demonstrating that accessibility is not just a compliance requirement but a powerful driver of innovation and market growth. 

IADS Notes: The growing emphasis on designing with disability in mind is reshaping the industry, as seen in Primark’s adaptive clothing and wheelchair mannequins (July 2025), Westfield London’s sensory room, and Selfridges’ Quiet Hour program (April 2025). Research from Forbes and ERE Media in 2025 confirms that inclusive practices yield measurable business benefits, while the Harvard Business Review’s February 2026 analysis of LIXIL’s walk-in tubs illustrates how accessibility constraints can spark innovations that transcend niche markets, transforming products into mainstream successes and reinforcing the value of inclusive design.

How designing with disability in mind sparks innovation

What: Generative AI tools accelerate work pace and expand responsibilities, but without structured practices, they can cause unsustainable workloads and cognitive fatigue.

Why it is important:  The risks of cognitive overload and blurred boundaries identified here align with recent retail reports emphasizing the importance of human-centric AI integration and comprehensive training.

The article challenges the common belief that AI reduces workloads, revealing instead that generative AI tools often intensify work by increasing the pace, expanding job responsibilities, and extending working hours—frequently without explicit direction from management. Employees, empowered by AI’s capabilities, voluntarily take on more tasks, leading to a broader scope of work and a faster rhythm that can blur the boundaries between professional and personal time. While this initial surge in productivity may seem beneficial, it often results in cognitive fatigue, burnout, and a decline in decision quality as the novelty wears off and workloads quietly expand. The authors argue that self-regulation is insufficient and advocate for the adoption of intentional “AI practices”—structured norms and routines that include deliberate pauses, sequenced workflows, and opportunities for human connection. These measures are essential to counteract the self-reinforcing cycle of intensification and to ensure that AI-driven productivity gains remain sustainable and do not come at the expense of employee well-being or organisational effectiveness. 

IADS Notes: Recent research in retail strongly echoes these findings. As seen in January 2026, only a minority of retailers have successfully scaled AI, with workflow redesign and leadership engagement proving crucial to avoid burnout. October 2025 reports highlighted that AI agents are reshaping retail operations, demanding robust oversight and cultural adaptation to prevent overload. September 2025 analysis warned of the risks of over-reliance on AI, while July 2025 demonstrated that human-centric implementation and clear guidelines are key to boosting efficiency without increasing turnover. October 2025 also documented the disruptive impact of AI on retail roles, underscoring the urgent need for upskilling and thoughtful integration.

AI doesn’t reduce work—It intensifies it