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The 2026 FIFA World Cup is the largest in the tournament's history: 104 matches across 16 cities in the United States, Mexico and Canada (40 matches more than the last edition), running from 11 June to 19 July, with an estimated six billion people — roughly three-quarters of the planet — expected to engage with it. For scale, the Paris 2024 Olympics drew around five billion viewers. The magnitude of the audience makes headlines, but the actual impact comes elsewhere: audiences have only a modest national effect, with the main beneficiaries being host cities through tourism, services, and consumption. As a result, the most interesting story may not happen on the pitch but in retail, especially in department stores that are seizing the moment as both a business opportunity and a chance to become cultural destinations. Here's how the biggest names in retail are playing the game.

The economics: large in aggregate, modest in practice

A vast audience, a small footprint

The macroeconomic case for the World Cup is surprisingly thin. The U.S. is projected to gain approximately $17 billion in incremental GDP — less than 0.1% of annual output. Canada's impact is similarly marginal at around 0.1% of GDP. Mexico is the relative winner: with 13 matches generating an estimated $3 billion in economic benefit, the impact represents between 0.2% and 0.5% of GDP, a meaningful uplift by comparison. Mexico is also expected to benefit from tourism, as tightened U.S. immigration controls may dampen international arrivals to the largest host nation. Around 5 million visitors are anticipated in Mexico, generating tourism revenues exceeding $1 billion.

The real commercial action, however, is not at the national level. It is highly localised and concentrated in host cities and in the strategies of brands and retailers willing to invest in the moment.

The sportswear equation

Adidas, Nike and Puma collectively kit out more than 75% of the 48 participating nations. Adidas leads with 14 national teams, followed by Nike with 12 and Puma with 11. With North America accounting for over 40% of Nike's annual revenues, the brand enters this tournament with a structural home advantage and estimates the tournament could generate $1.3 billion in incremental revenue. Adidas projects a comparable $1.2 billion uplift. Retailers stocking Nike products have committed to offering 40% more football merchandise by volume than during Qatar 2022, when an estimated 14.4 million shirts were sold. Projections for 2026 range from 18 to 23 million units, with the three major brands expected to capture 80% of that market.

With the demand for football products largely pre-allocated to mono-brand stores and sportswear retailers, the strategic question for a department store is elsewhere: what to do with a sport they don't necessarily own? Also, what does the World Cup mean for footfall, dwell time, brand perception, and customer acquisition?

El Palacio de Hierro: the full playbook

The tension every premium retailer has to resolve

Football is mass, emotional and culturally democratic. A premium or luxury department store like El Palacio de Hierro is none of those things by default. The instinct to drape the building in tournament colours would lack credibility with customers accustomed to more elevated store communications.

El Palacio de Hierro articulated this tension clearly. With Mexico having hosted in 1970 and 1986 — both woven into national memory — the 2026 edition carries emotional weight. But the company understood it could not wrap itself in soccer colours and claim authenticity it does not have. Instead, El Palacio de Hierro positioned itself as the stage on which the World Cup experience is elevated. The campaign's central premise, "if the World Cup brings the world to Mexico, El Palacio de Hierro sets the stage", aims at reconciling premium and mass through emotion.

Three phases for an unprecedented campaign

The warm-up phase activates Noches Palacio, the store's flagship loyalty promotion. The mechanic (purchases earn coins, coins are redeemed for tiered prizes at the end of each promotional weekend) creates urgency and repeat visits. Crucially, as observed by El Palacio de Hierro in the first days, the promotion has proven to attract both loyal, affluent customers and new entrants, serving as a retention and acquisition tool simultaneously. Live music, performers, F&B programming and World Cup theming transform participating stores into destination experiences.

The pre-tournament phase shifts to experiential and pop-up activation. The standout is a branded pop-up that deliberately juxtaposes brands that do not typically coexist in luxury retail: Adidas, Hisense, Don Julio and Buchanan's. The logic is curation beyond product selling: assembling a premium watch-party environment in which the purchase of merchandise, the consumption of premium spirits, and the viewing of a World Cup match become a single, continuous experience.

The match phase is the most commercially intensive: special gastronomy programming aligned to which national teams are playing on a given day, watch parties in the store's restaurants, and interactive installations, including the Palacio Arcade, a soccer-themed entertainment zone designed to extend visit duration across entire families.

Beyond the in-store programme, two additional initiatives deserve particular attention.

The Yellow Pitch, a publicly accessible soccer pitch built directly in front of the Durango flagship in Mexico City, is the campaign's most provocative element. It requires no purchase and is open to everyone. It is designed to generate organic social content and street-level energy. For a luxury retailer, it is an act of deliberate democratisation: the tension between free public access and luxury equity should result in a new form of brand authority for El Palacio de Hierro.

The luxury city guide, distributed to premium hotels and airport arrival lounges in Mexico City, Monterrey and Guadalajara, functions simultaneously as a tourist service, a brand ambassador and a commercial acquisition tool. It reinforces El Palacio de Hierro’s position as a cultural authority, helping visitors to make the most of their visit.

From New York to Stuttgart: same tournament, different perspectives

Bloomingdale's: the lifestyle and menswear lever

Bloomingdale's approach to the World Cup is to connect several commercial objectives at once: menswear growth, Father's Day gifting, host-city relevance and fashion discovery.

The flagship activation, Game Day with Boss, occupies the 59th Street Carousel pop-up space from June 4 through August 24, a timeline that deliberately extends well beyond the tournament. The assortment of approximately 200 products spans fashion, accessories, beauty, wellness and lifestyle, anchored by around 70 Boss exclusives, including a performance collection developed for the U.S. Men's National Soccer Team. The addition of curated vintage jerseys connects World Cup culture to fashion nostalgia, elevating merchandise into collectable territory.

The format is being replicated across six additional locations near host-city markets (SoHo in NYC, Aventura in Florida, Century City in Los Angeles, Lenox Square in Atlanta and Bergen County in New Jersey), with the SoHo store receiving an expanded version featuring FIFA 1904, a heritage-focused football collection. Father's Day activations on June 13 add a commercial layer, blending food, beverages and wellness experiences with the World Cup framing.

Bloomingdale's experiment suggests that a World Cup activation does not require deep soccer credentials or sportswear-only activations, but rather the definition of its own version of the World Cup. For Bloomingdale's, the answer is a focus on male customers embedded in a lifestyle approach.

Macy's: the inclusive community play

Where Bloomingdale's focuses on lifestyle aspiration, Macy's has built its activation around inclusion and community access. World Soccer HQ is a multi-brand activation spanning Nike, Adidas and Puma, avoiding any single-sponsor dependency. The more distinctive element is the partnership with the U.S. Soccer Foundation, directing investment toward grassroots soccer access in underserved communities. This is not cause marketing in the traditional sense, but an attempt to build emotional legitimacy with a soccer audience that the brand does not yet own.

The activation extends nationwide with live entertainment, athlete appearances, and product customisation events. Macy's is using the World Cup to make a claim about its role in American cultural life, not simply to sell merchandise.

Nordstrom: the sponsor-led merchandiser

Nordstrom's partnership with Adidas takes a different stance, built around product discovery, localisation and a structured cadence of weekly activations across 35 stores. Every Thursday brings new gift-with-purchase offerings and sweepstakes; every other week, an Archive Zone spotlights a historically significant Adidas piece linked to that week's featured country. Weekend programming is aligned to whichever national teams are in focus, a country-by-country journey through the tournament that gives customers a reason to return week after week. The $75 qualifying purchase threshold for customisation events is worth noting.

What about Europe? Breuninger and Manor

Mexico and the United States are not the only countries to reclaim their share of the event. Breuninger's approach is more localised. The Stuttgart flagship has transformed its signature Eduard's Bar into a dedicated sports bar with Adidas for the duration of the tournament. This conversion builds on the store's identity as a destination for gastronomy and community, not just retail, as demonstrated by Breuninger’s annual Fashion x Food events, which bring gastronomy and fashion together. The Adidas partnership, which in 2024 already produced the redesign of the flagship facade for the soccer European Championship, is being extended with World Cup-themed activations across multiple locations: jersey customisation pop-ups, exclusive product drops, and competitions for signed merchandise.

Manor’s One Game, One Love campaign for the FIFA World Cup 2026 features official national team jerseys from Puma, Nike and Adidas, as well as exclusive fan merchandise, lifestyle apparel, and collectable items, to attract sports enthusiasts without losing fashion customers. Creative collaborations, such as the limited-edition Football Bags by Geneva-based designer Joana Bender, anchor the store locally while mixing exclusive products with street style. The campaign’s themed activations and limited-time collections are designed to drive footfall, customer engagement, and cross-category sales during the tournament.

For department stores, the FIFA World Cup 2026 is not about soccer or promotions but about their strategic self-knowledge. The retailers that will emerge strongest are not those with the deepest soccer credentials, but those who answer the question of who they are and what this moment means for them. From that perspective, the World Cup is not a retail strategy or a must-have, but an additional opportunity to show more than just a house of brands and to become a host and experience curator, while increasing repeat visits and dwell time. As such, the initiatives will amplify whatever a retailer already does well, and whatever remains unconvincing.

Credits: IADS (Christine Montard)

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Everlane made transparency its commercial proposition. Shein has now bought the remains of that proposition at a price shaped less by brand heat than by financial distress.

In May 2026, Everlane said it had reached an agreement to be acquired by Shein, the ultrafast-fashion platform IADS examined in its January 2026 Exclusive, ‘The Shein paradox: when digital ultra-fast fashion meets physical reality’. That article documented what happened when Shein tested that ambition at BHV Marais in Paris: 300,000 initial visitors gave way to near-empty floors within weeks, as in-store prices far above the online average undermined the very proposition that drove the brand. The Everlane acquisition extends the same question: can Shein acquire the trust it cannot earn, through a brand once built on radical transparency?

The reported price was about $100 million, although the companies did not publicly disclose financial terms. Six years earlier, Everlane had been valued at $550-600 million. By the time the sale was being discussed, the company had accumulated around $90 million in debt, and common shareholders were expected to receive no payout.

How Everlane weakened before the sale

Everlane, the San Francisco direct-to-consumer label founded in 2010, built its following on minimalist basics and a ‘radical transparency’ proposition: publishing product cost breakdowns, naming its factories, and showing customers how their clothes were made. In March 2020, as the pandemic shut down retail, Everlane laid off 42 of its 57 customer experience workers. Those workers had been organising a union since 2019 and had formally requested recognition weeks earlier. US Senator Bernie Sanders accused the company of using the crisis to union-bust. Three months later, a group of former employees released a document titled “Everlane’s Convenient Transparency,” alleging anti-Black behaviour, unequal advancement, bullying and a toxic internal culture. Everlane’s founder and then-CEO Michael Preysman acknowledged that the company had “urgent work to do to rewrite its code of ethics.”

Everlane was transparent, where transparency supported the brand. Where transparency would have exposed how the company itself operated, it went quiet. That mattered because transparency was not a communications theme for Everlane; it was the reason customers accepted the price. Once that trust broke in 2020, Everlane lost the distinction that had separated it from a crowded field of brands selling clean aesthetics, minimalist basics and ethical language.

Later, the repositioning backed by L Catterton turned that credibility problem into a pricing problem. L Catterton, the consumer-focused private equity firm created through a 2016 partnership between Catterton, LVMH and Groupe Arnault, invested in Everlane in 2020, the same year the culture document broke, and was reported as its majority owner by the time of the Shein sale. Under that ownership, Everlane was pushed upmarket, toward the territory occupied by Theory and Frankie Shop — a poor fit for a brand that had trained customers to accept its prices by explaining what went into them. Moving closer to premium fashion asked those same customers to pay more for a brand whose ethics promise had already been broken.

In 2022, Everlane announced a $25 million term loan from Gordon Brothers. The wording of the announcement presented the facility as support for growth and sustainability. The lender profile told a different story. Gordon Brothers describes itself as a global advisory, restructuring and investment firm. Its retail work has included distressed and restructuring-linked situations, such as Laura Ashley, Brooks Brothers, and Toys “R” Us.

That was a form of convenient transparency in its own right. Everlane disclosed the loan and described it as growth capital. It did not dwell on what it meant for a brand built on trust to depend on a restructuring specialist — a brand that had built its following by showing customers exactly what their clothes cost to make, and was now calling a restructuring facility growth capital.

Everlane had also taken on a $65 million revolving credit facility from CIT Northbridge in September 2022. Together, the two facilities brought its debt load to around $90 million. Revenue had reportedly slipped from $198 million in 2024 toward $170 million by early 2026, while the business was close to breaking even rather than turning a profit on the capital behind it.

By March 2026, L Catterton was reportedly seeking investors to address the debt problem. There were also reports of overdue rents at Everlane’s San Francisco offices. When no investors emerged, the board approved the Shein deal. Preysman had stepped down as CEO in 2021, formally moving into the executive chair role in January 2022, and had left Everlane’s board earlier in 2026. He reportedly found out about the sale from the news.

What Shein bought

Of the arguments behind the deal, the logistics case is the least discussed and the most consequential. Shein’s US model had benefited from shipping low-value parcels directly to consumers. The end of the de minimis threshold (the US duty exemption on packages under $800) for China and Hong Kong changed the equation. Everlane gives Shein something it cannot acquire under its own name in the US market: domestic brand credibility. On the reported numbers, the math is hard to ignore: a $100 million valuation against approximately $90 million in debt leaves almost nothing once the debt is set against the sale price. Shein was not paying a rich price for the romance of 'radical transparency.' It was buying a US brand footprint, domestic operating knowledge, a higher-income customer file and a cleaner story to tell investors.

Maxine Bédat, founder of the New Standard Institute, a nonprofit developing transparency and accountability standards for the fashion industry said Shein was looking for “access to a higher price point, a marketplace that is more higher-end.” Everlane gives Shein a customer it could not easily reach under its own name: older and more affluent.

The IPO logic is also visible. Shein’s listing ambitions have been delayed by scrutiny over labour practices, supply chains, and data privacy. Neil Saunders, managing director of GlobalData’s retail division, described Everlane’s function directly: “Everlane is not revolutionary for Shein, but it does support a narrative of having a more balanced portfolio that can be sold to potential investors during any future IPO.”

Alfred Chang, who became CEO in 2021 following Preysman’s transition to executive chair, has defended the sale by saying Everlane will remain independent, keep its standards and use the partnership to expand its mission. That defence answers the wrong question. A subsidiary can maintain its own sourcing rules while its parent company’s total greenhouse gas emissions rise 81% in a single year. Whether Everlane preserves its ethics policy does not change what Shein ships globally. Sustainability, for Everlane’s customers, will now be judged against the parent company’s aggregate footprint, and that footprint keeps growing.

The supply chain argument… and its limits

Shein’s make-to-sell model produces small batches in response to real-time demand signals, then scales only when data confirm interest. Compared with traditional fashion forecasting, where brands order months ahead, warehouse excess inventory, and mark down what fails to move, Shein’s model can reduce waste per item. Chainge Capital, a supply chain advisory firm, has noted that Shein “makes five and sells five” in an industry that typically “makes ten to sell three,” achieving sell-through rates close to 100% against an industry average where 40-50% of goods end up discounted or unsold.

Analysts argue that the distinction goes deeper: Shein is not simply a faster fashion retailer, but a data-led supply chain business that happens to sell clothing.The efficiency is real, but it is measured per item. At Shein’s scale, the harder question is whether near-100% sell-through reflects responsive demand, or demand continuously stimulated by the pace of assortment refresh.

In 2025, Greenpeace Germany reported that 18 of 56 Shein products tested contained hazardous chemicals above EU legal limits. For Everlane's customers — whose decisions were shaped partly by sourcing claims, material safety, and factory standards — the Greenpeace result is a direct product-safety finding, not a general sustainability concern. It is a direct challenge to the type of product trust Everlane sold. Shein’s absolute greenhouse gas emissions rose by 81% in 2023, growing faster than revenue. Its demand-responsive production may reduce some per-item inventory waste, but it does not offset the footprint of an enormous assortment, high volume, and frequent deliveries: its reported transport emissions rose 13.7% to 8.52 million metric tons of CO2 equivalent in 2024, more than three times the transport emissions reported by Inditex.

This is where Chang’s defence runs into the numbers. A brand can keep its own sustainability language and still sit inside a corporate model whose aggregate impact keeps climbing. Shein may reduce waste on a per-item basis, but Everlane's customers will now judge the brand inside a parent company defined by scale, speed, chemical-risk scrutiny and transport emissions.

The EU’s Ecodesign for Sustainable Products Regulation (ESPR) is about to turn that direction into law. Everlane may be a US brand, but Shein’s European footprint means the combined entity faces these obligations directly. The destruction ban for unsold apparel, clothing accessories and footwear applies to large companies from 19 July 2026, while disclosure rules already apply to large companies, requiring them to report the number and weight of unsold products discarded and the reason for their disposal[19]. Broad sustainability language will not be enough.

Three exits, three numbers - Everlane is now part of a comparison set

Allbirds, the New Zealand-founded direct-to-consumer footwear brand known for sustainable materials such as merino wool and sugarcane-based foam, went public in 2021 and reached a market value of more than $4 billion. In early 2026, it agreed to sell its brand and footwear assets to American Exchange Group for about $39 million. Everlane, once valued at $550-600 million, exited at a reported $100 million, with common shareholders expected to receive nothing. Quince, which sells minimalist clothing essentials, accessories, and home goods with ethical sourcing claims at materially lower prices, raised $500 million in March 2026 at a $10.1 billion valuation.

Swap Commerce, a commerce infrastructure platform working across returns, cross-border commerce and recommerce, captured the failure pattern across several mission-driven brands: “Allbirds, Outdoor Voices, now Everlane – mission-driven brands with genuine cultural cachet, undone not by a lack of purpose, but by a lack of operational foundation. Everlane had the audience, just not the engine.” Quince is the contrast case from the same period: same minimalist positioning, same ethical sourcing claims, but a price point built to compete rather than justify. The Kearney Consumer Institute named the pricing problem: “The biggest challenge with any value-based product is the price has to be right for the right consumer. And Everlane, I think, just was exposed to a category that got crowded.”

The timing of the two deals is worth holding together. Quince raised $500 million in March 2026 at a $10.1 billion valuation. Weeks later, Everlane was being sold to Shein at a reported $100 million, with around $90 million in debt. Quince and Everlane sat at different stages, so this is not proof that cost structure alone sank Everlane. But it does show that capital was still available for minimalist basics with ethical sourcing claims, backing the version that priced more aggressively. Everlane charged a premium for transparency. Quince made transparency part of the baseline and competed on price, though Quince's sourcing claims have yet to face the same scrutiny that broke Everlane's.

What this means for department stores

Inditex can be taken as a point of reference as it did what Everlane could not: it moved parts of the offer upward without losing control of price, speed or inventory risk. Zara's premiumisation has been backed by larger stores, stronger presentation, designer collaborations and a supply chain that can still react within the season. At the same time, Inditex has used Lefties to answer lower-price demand without forcing Zara itself into a direct race with Shein. IADS documented the outcome of a direct test: when Shein opened at BHV Marais in Paris in November 2025, 300,000 initial visitors gave way to near-empty floors within weeks — higher in-store prices and a limited selection could not transfer the endless-assortment, low-price proposition that drives the brand online. That case study is set out in full in IADS Exclusive, ‘The Shein paradox: when digital ultra-fast fashion meets physical reality.’

In 2025, Inditex reported €39.9 billion in sales and €6.2 billion in net income. It has continued to optimise its store base, reducing store count while increasing the weight of larger, better-integrated flagships. Zara has moved parts of its offering upmarket through higher-quality fabrication, designer collaborations, and more premium store environments. At the lower end, Lefties gives Inditex a separate vehicle for price-sensitive demand. Lefties grew 17.44% to €644.81 million in the year to January 2025, moving from a small loss to a profit of €21 million. Inditex is not asking a single brand to cover every price tier at once.

As IADS set out in a previous Exclusive on Zara’s strategic evolution,  Zara’s speed is not a merchandising habit; it is built into sourcing geography. Roughly half of its production is near-shored in Spain, Portugal, Morocco, and Turkey for fast-turning items, with Asia reserved for basics – a dual-speed supply chain that lets the brand react to trends mid-season while competitors are locked into collections planned six months ahead. That architecture is not transferable for department stores if they place wholesale orders up to six months before delivery.

The buying problem and the compliance problem are the same problem: the data ESPR requires retailers to disclose is the same data buying teams need to catch over-ordering before the season closes .A retailer that cannot report its discarded unsold products does not just have a reporting gap — it lacks the inventory visibility that would have caught the excess before it built.

What Everlane’s former CEO and founder concluded

Preysman’s response to the sale was immediate: “appalled.” Within days, he launched Still Radical, a new venture presented as having no venture capital and no private equity.

His diagnosis is clear: private equity killed Everlane. Once L Catterton held majority control, the final decision belonged to investors whose obligations were financial, not philosophical. But this diagnosis leaves too much out.

Preysman ran Everlane for eleven years. He was CEO during the 2020 union controversy. He was the executive chair when former employees documented allegations of racism and toxic culture. He sold his shares to L Catterton in 2020, beginning the ownership transition he now criticises.

Industry observers put part of the problem in founder terms: “When Michael Preysman stepped back after L Catterton took majority control, Everlane lost its centre and never recovered it. The brand’s identity lived inside one person and left with him.”

Everlane’s identity depended too heavily on its founder, and its internal practices did not consistently support its external promise. Both weaknesses were present before L Catterton became the controlling investor. Avoiding venture capital answers the financing lesson. It does not answer the trust lesson. Preysman has not said what happened to the 42 customer experience workers let go in 2020, or what Still Radical would do differently in the same situation.

Here, the timing turns from coincidence to choice: Preysman sold his stake to L Catterton in 2020, the same year the union controversy and the culture document broke. He sold while the brand still carried much of its market credibility. Revenue had not yet collapsed. That makes the timing harder, not easier, to explain away: Preysman exited before the trust damage had fully shown up in the numbers, leaving later owners to manage the financial consequences of a credibility problem that began under his leadership.

Revenue held near $200 million through 2024, including $198 million in that year, so the trust break did not kill the company at once. It capped what the brand could credibly ask from customers. Everlane could still sell accessible basics to people who liked the product. What it could no longer do easily was ask those customers to follow it upmarket on the strength of an ethics-led promise. The damage became terminal when L Catterton pushed prices above that ceiling. Debt that was manageable at $200 million in revenue became harder to carry as revenue fell toward $170 million, and the premium strategy produced no growth. The Shein sale followed from that.

Everlane could publish the cost of a product. It could not show that its ethics held when they were costly.

Credits: IADS (Maya Sankoh)

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Retailers have long drawn on behavioural techniques, nudges, to persuade consumers to purchase. Some have given rise to eponymous concepts like the ‘IKEA effect’ where consumers attribute higher value to products assembled themselves, fostering brand resonance. In digital advertising, nudges include complete-the-look carousels, star ratings, and one-click shoppable ads on social media. However, the implicit assumption is that consumers pay attention to these. But does this remain true in 2026?

Economists now treat human attention as a scarce resource comparable to land, labour, and capital reflecting that attention is finite, rivalrous, and exhaustible. Social media platforms have industrialised the harvesting and monetisation of attention, creating a paradox: the more content floods the environment, the less effective each individual message becomes. In this context of structural overstimulation, brands including Gentle Monster and New Balance are moving from persuading through exposure to cultivating cultural belonging, offering a new angle to a job department store historically used to excel at: shaping their communities’ culture.

The commodification of attention

Nobel Laureate Herbert Simon theorised the “attention economy” in 1971, stating that ‘a wealth of information creates a poverty of attention.’ He identified attention as the finite resource that limits action in information-saturated environments. Attention has emerged as the currency of the digital era where platforms compete for user engagement by deploying algorithms designed to retain monetisable eyeballs. An unending stream of short-form videos ensures that stimulating material keeps individuals scrolling, transforming focus into a coveted commodity. On average, TikTok users spend 58 minutes daily on the platform, but only 1.7 seconds viewing each piece of content, with teenagers toggling between apps every 44 seconds.

Social media platforms have built trillion-dollar enterprises by monetising the extraction of human attention. Platforms offer free services while harvesting personal data (browsing patterns, micro-interactions, location, emotional states) to build behavioural profiles enabling micro-targeted advertising, sold in real-time programmatic auctions. These platforms use variable reinforcement schedules (the same mechanism that makes gambling addictive) through notifications, likes, and algorithmic content serving as unpredictable rewards triggering compulsive engagement

. Shoshana Zuboff’s framework of “surveillance capitalism” calls this converting raw behavioural data into ‘prediction products’ sold to advertisers seeking to influence future purchases. Social media ad revenue grew +36.7% in 2024, with Meta, Google, and Amazon together representing 62% of total worldwide digital ad spending in 2026. Deloitte found that social platforms capture over 50% of US ad spending, with 63% of Gen Z and 49% of Millennials saying that social media ads are most influential on purchasing decisions.

Retail media has emerged as a force in the advertising ecosystem by capitalising on first-party data but does not inherently address the broader issue of attention attrition. Retail media is becoming a priority for department stores, with David Jones investing $250 million in its Amplify retail media arm, Falabella hosting Fmedia Day for brands and sellers, and Breuninger strengthening its retail media infrastructure to address customers and brands. Despite using proprietary data such as purchase histories, search behaviour, and loyalty programme insights, to enable hyper personalised advertising, it is increasingly insufficient to engage already overwhelmed consumers.

AI is simultaneously accelerating attention extraction and disrupting the ecosystem through which it is monetised. Fitch Ratings estimated a 15% decline in global search traffic as of June 2025 due to AI-generated summaries. Bain & Company estimated 80% of internet users receiving answers on search pages without clicking external links, reducing traffic for advertisers by up to 25%. This contributes to the advertising saturation that overloads consumers.

The paradox of saturation is that the more advertising floods the environment, the less each individual advertisement works, desensitising consumers. 74% of users cite intrusive ads as their main reason for using ad blockers, costing the advertising industry $54 billion globally in 2024. Procter & Gamble's 2017 decision to cut $200 million from digital ad spending had no measurable impact on sales. The causes identified included significant spend reaching bots and hyper-targeting creating frequency waste. Algorithmic glut and the relentless extraction of attention, evidenced by the online shopping overwhelm of 78% of Gen Z, is forcing an analysis of the nature of advertising itself.

The post-broadcast era: rebuilding shared meaning

The transition from twentieth-century mass broadcasting to hyper-personalised targeting has fractured the cultural infrastructure that sustained a cohesive monoculture. Historically, universally experienced media and advertising served as shared touchstones that fostered collective discourse; for instance, IKEA's 2017 Game of Thrones mock assembly manual generated a unifying buzz experienced simultaneously by millions. Today, this connective tissue has been eroded by on-demand consumption, algorithmic precision, and platforms incentivised to cater to niche audiences. As traditional cultural gatekeepers have been ousted by engagement-driven algorithms, collective narratives have been replaced with individualised content, dismantling the mechanisms that enabled mass culture.

This dissolution of monoculture was stark by the summer of 2025, which lacked the overarching narratives of 2024’s Brat or 2023’s Barbie that saw retail activations surrounding these cultural moments. While disconnected trends like Pucci dresses and capri pants surfaced without mutual reinforcement in 2025, the era of algorithmic micro-trends like "cottagecore" and "mob wife" collapsed as consumers reject manufactured movements in favour of offline authenticity. As economic pressure and information overload dissolve shared context into individualised fragments, consumers and especially lonely younger generations, are turning to brands that offering the connection created by shared culture.

Culture is the pillar of economic infrastructure that generates trust and social cohesion required to legitimise institutions and ensure commercial transactions. In times of disruption, shared cultural foundation fosters the collective adaptability necessary for economic resilience. Like a power grid provides physical infrastructure, a cultural infrastructure provides the shared meaning for any overarching economic system to function.

Brands and retailers increasingly fill this vacuum as cultural gatekeepers with consumer purchasing decisions no longer driven solely by product features and price; rather, they are tethered to a brand’s cultural legitimacy. Failing to navigate this landscape can result in the social backlash and declining sales following Target's DEI rollback or the criticism surrounding American Eagle's culturally disconnected campaigns. As the metrics of short-term attention become less reliable, department stores must build long-term cultural capital, centring the social cohesion of their consumer base.

The business of belonging

The shift from broadcast persuasion to cultural belonging draws on theoretical frameworks, some that retailers have already been using, operating in concert. “Collective effervescence”, sociologist Émile Durkheim’s concept of unity and shared emotional energy generated by communal gatherings, is being used as a commercial mechanism. When individuals participate in shared rites, they transcend their individuality and produce a sense of collective identity. Brand-engineered analogues of this experience — limited-release queuing events, pop-up activations, community-only drops — trigger emotionally charged group experiences reinforcing brand association.

Pierre Bourdieu's cultural capital theory explains the feeling of knowing a brand's quirks and references which confers status on those who possess subcultural capital. Those who "get it" are elevated; those who don't, aspire to. Social identity theory explains that people partly build their sense of self based on groups they belong to, and this feeling is stronger when they are visibly differentiated from outsiders.

For brands, this produces consumers who feel elevated because others do not understand the reference. Gentle Monster commodified this exclusivity as a private joke with their Bratz collaboration. Absurdist references, including the egg packaging, created meaning understandable only to someone fluent in Y2K nostalgia, Korean fashion culture, and internet irony. Especially for Gen Z, this credentialing creates a strong sense of in-group belonging addressing their need for community.

New Balance: a case study in cultural repositioning

Cultural strategy around brand-driven community-building addresses a genuine need rather than manufacturing belonging. 54% of Gen Z favours brands that make them feel part of a community and 84% of this demographic are more likely to purchase from brands perceived as cool.

New Balance's trajectory from ‘dad shoe’ to Gen Z darling is one of the most studied cultural repositioning cases of the 2020s. Starting from $3.3 billion in revenue in 2020, the brand reached $9.2 billion in 2025, while Nike's revenue fell from $51.4 billion to $46.4 billion over a comparable period.

New Balance did not distance itself from the dad shoe aesthetic to appeal to Gen Z, it reframed its 1990s running heritage when nostalgic styles returned to fashion post-COVID. Curating partnerships with Aimé Leon Dore and Kith, whose community-embedded credibility introduced New Balance to younger and more diverse audiences, it also signed younger sports stars like Coco Gauff and Cooper Flagg to reposition the brand. New Balance maintained its authenticity and used cultural intermediaries to reposition it as ‘cool’ for Gen Z.

Department stores as the infrastructure of cultural belonging

We believe department stores have an underutilised asset in today's fragmented market: institutional continuity. While micro-trends evaporate rapidly and pop culture remains volatile, retailers with decades of brand history can provide stability. Rather than participating in fleeting cultural moments, department stores possess the capacity to function as platforms for multiple communities. Despite being commercially driven, department stores can partly fill the vacuum left by the demise of cultural gatekeepers that allowed the formation of a mass culture. They can strategically define and build on what authenticity looks like for their consumer base, knowing that its impact may not be fully quantifiable especially in the short term. This potential was exemplified by Le Bon Marché’s rock and roll exposition, which fostered intergenerational cultural engagement and shared experiences unintentionally.

The transition from a transactional environment to a cultural hub is quantified in the value of a department store’s retail media network. Culturally resonant networks offer brands an avenue to connect with increasingly rare attentive audiences, elevating a secondary revenue stream for department stores into an asset built upon cultural capital. Behavioural nudges and individualised AI recommendation systems only succeed if consumers are engaged in noticing them. As trust in conventional advertising wanes and AI systems intercept direct searches, capturing consumer focus requires broader relevance than personalisation.

Retailers like Gentle Monster and New Balance built rituals that resonated with communities aligned with what these brands strive to represent, letting influence flow from a sense of belonging. Department stores can leverage their unique institutional continuity to provide a focal point for communities to organise naturally in an increasingly individualised environment.

Credits: IADS (Anchita Ranka)

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

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

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

A two-year structural decline

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

The manager crisis

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

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

The European baseline

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

The best practice gap

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

The management layer and AI returns

AI and the manager bottleneck

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

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

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

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

Training and the 79% benchmark

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

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

The productivity stakes

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

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

Middle-out in practice

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

Engagement as a human investment

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

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

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

Credits: Maya Sankoh

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

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

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

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

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

From ubiquity to optimisation: steering journeys, not channels

The maturity gap

The term “omnichannel” is often misunderstood. As Robert Rooderkerk, Associate Professor at Erasmus University Rotterdam and academic advisor to the IADS, emphasises, omnichannel is not about being present in every possible place at once, but about being present where it matters, delivering value to both the customer and the business simultaneously.

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

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

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

From supporting journeys to shaping them

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

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

Fulfilment as a strategic lever, not an operational afterthought

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

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

The incentive gap

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

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

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

Why existing instruments fail

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

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

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

The omni-cluster: a customer-centric financial architecture

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

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

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

An irreversible strategic choice

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

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

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

Deconstructing the halo effect

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

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

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

Not all categories are created equal

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

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

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

Asymmetric assortment integration: a framework for cross-channel allocation

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

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

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

Rethinking the network: densification and role-based formats

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

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

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

The inherited model under pressure

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

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

The digital extension: marketplace and e-concession

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

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

Unbundling and rebundling

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

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

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

Conclusion: from omnichannel to ecosystem — and beyond

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

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

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

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

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

Credits: IADS (Selvane Mohandas)

PRINTABLE VERSION HERE  

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

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

Architecture: the destination factor

Liberty’s unmatched architectural identity 

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

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

Harrods: when scale becomes a landmark 

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

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

Art experiences: when retail becomes a museum

Le Bon Marché: art programming as a commercial engine

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

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

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

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

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

Bergdorf Goodman windows: a New York institution

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

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

The art of being a merchant: the luxury magnitude

Harrods’ total luxury ecosystem

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

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

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

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

Bergdorf Goodman’s unparalleled curation

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

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

Private labels becoming global brands

Liberty prints: woven into the business model

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

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

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

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

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

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

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

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

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

 When uniqueness is not enough   

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

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

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

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

In search of the right commercial proposition

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

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

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

Credits: IADS (Christine Montard)

Spring 2026 is here, and department stores around the world are making their mark. IADS has brought together the season's standout window displays, in-store installations, and visual moments from members and beyond.

DEPARTMENT STORES WINDOWS, IN-STORE INSTALLATIONS, VISUALS & SOCIAL MEDIA SPOTS

CLICK HERE TO SEE THE 2026 SPRING WINDOWS REPORT

Credits: IADS Team

PRINTABLE VERSION HERE

This is the second article in IADS's series expanding on themes from the January 2026 White Paper DEI at a crossroads in retail. After reviewing the Abercrombie & Fitch business case the focus shifts to the broader US retail landscape.

In 2020, following George Floyd's murder, U.S. retailers launched ambitious DEI programmes and made sweeping public commitments. By early 2026, many had eliminated or scaled back their initiatives, citing changing political realities and legal risks. Target ended its Racial Equity Action and Change initiative. Walmart wound down its racial equity centre. Nike became the first major retailer targeted by federal investigators over its diversity goals.

For U.S. retailers, the stakes extend beyond reputation to legal and financial exposure. Federal contractors face potential liability for maintaining programmes the Trump administration deems "illegal DEI." Yet enforcement remains inconsistent, with conflicting court rulings creating uncertainty about what's permissible. In late April 2026, that uncertainty sharpened. The U.S. Supreme Court's ruling in Louisiana v. Callais effectively ended sixty years of protections against racial discrimination in elections. The Trump administration's executive order barring DEI programmes among federal contractors remained in force despite legal challenges, carrying significant financial penalties for non-compliance.

The political pendulum: From 2020 to "We ended DEI”

On September 22nd, 2020, President Trump issued Executive Order 13950, curtailing federal diversity training. At the same time, America was reeling from nationwide protests over the murder of George Floyd on May 25th, 2020, prompting a wave of corporate DEI commitments. On January 20th, 2021, President Biden rescinded Trump's ban and issued Executive Order 13985 to advance racial equity. The reprieve was short-lived. On June 29th, 2023, the Supreme Court struck down affirmative action in college admissions, emboldening legal challenges to corporate diversity programmes. By the end of that year, eleven states had passed anti-DEI laws; by mid-2025, that number reached 28.

Trump had campaigned against 'woke' business practices, and his return to office brought immediate executive action. In January 2025, he signed two executive orders directing federal agencies to 'terminate any equity-related plans' and investigate private-sector DEI programmes. Executive Order 14173 required federal contractors to certify they don't operate "illegal DEI" programmes, exposing non-compliant contractors to potential treble damages. On February 24th, 2026, Trump declared victory in his State of the Union address: "We ended DEI in America." Yet between Trump's declaration and the reality on the ground lies a picture that is neither as decisive nor as uniform as his words suggested.

Corporate retreats: Target and Walmart lead the rollback

The political pressure of 2023–2025 translated quickly into corporate action. Among US retailers, the rollbacks were neither tentative nor incremental:

• Target: On January 24th, 2025, just four days after Trump's anti-DEI executive orders, Target announced it would end its three-year DEI goals and its Racial Equity Action and Change (REACH) initiative. The retailer stopped participating in diversity indices and renamed its "Supplier Diversity" team to "Supplier Engagement." Seven months later, CEO Brian Cornell stepped down and transitioned to executive chairman. Analysts disagreed on whether the DEI rollback or operational struggles drove his departure .
• Walmart: The nation's largest retailer rolled back several DEI programmes in November 2024, choosing not to renew its five-year racial equity centre and ending supplier diversity goals. Conservative activist Robby Starbuck hailed Walmart's retrenchment as "the biggest win yet. " in the movement to “end wokeness.”

Target's double bind: The ICE crisis

Target's January 2025 DEI rollback was intended to reduce the retailer's exposure to political controversy. 

Operation Metro Surge

In December 2025, the Department of Homeland Security launched Operation Metro Surge, deploying 3,000 federal immigration agents to Minnesota. The Trump administration simultaneously announced a 120% increase in ICE's workforce, adding 12,000+ officers. On January 7, 2026, ICE fatally shot Renee Good, a US citizen. On January 8, ICE agents detained two Target employees—both US citizens—at the Richfield, Minnesota, store in a widely circulated video. Target issued no public statement. Bloomberg characterised Target's silence as "overcorrection," arguing that while Target may have believed silence broadcast neutrality, "to customers and employees, it more likely suggests cooperation or collusion.”

Employee activism and corporate fear 

More than 300 Target employees signed an internal letter urging executives to deny ICE access to Target properties without a warrant. Workers at multiple stores called out sick, fearing for their safety. On January 24th, Alex Pretti, a US citizen, was shot and killed during a Minneapolis protest. The next day, more than 60 Minnesota CEOs (including Target's incoming CEO) issued a cautious letter calling for "de-escalation" but neither condemning the killings nor calling for concrete action. The New York Times reported the muted response reflected "corporate fear of retaliation from the administration.

For Target, the silence contrasted sharply with its vocal 2020 response to George Floyd's murder. The company's trajectory from DEI champion (2020) to DEI sceptic (January 2025) to silent bystander (January–February 2026) illustrated what some call a "double bind": the DEI rollback failed to insulate Target from conservative criticism while alienating progressive customers and employees.

Broader retail impact

Target's predicament was not unique. Federal immigration enforcement targeted retail stores nationwide—Home Depot parking lots became a focal point for ICE sweeps, while hotel chains faced similar pressure: at least one franchisee's decision to decline rooms to ICE agents triggered a public rebuke from the authorities and the severing of its franchise agreement. Consumers organised multi-front boycotts. The "Resist and Unsubscribe" campaign targeted Amazon, Apple, Google, and others for ICE-enabling contracts. Target faced boycotts from both progressives, angered by the DEI rollback, and community members outraged by its ICE silence. Foot traffic fell 2% in Q4 2025.

In Worthington, Minnesota, where one in three residents is an immigrant, businesses reported sales declines of 50–70%. Latino grocery stores remained open but with locked doors, requiring employees to visually confirm that customers were not federal agents. The ICE surge threatened economic viability in communities where immigrant entrepreneurs had revived downtowns hollowed out decades earlier.

Legal uncertainty: When courts and agencies contradict each other

By early 2026, the legal landscape became a patchwork of competing rulings. On February 21st, 2025, a U.S. District Judge blocked key provisions of both executive orders, finding them "facially unconstitutionally vague." Nearly a year later, the U.S. Circuit Court of Appeals delivered a contrasting ruling in a separate case, vacating a preliminary injunction, ruling that Trump could direct agencies to terminate equity-related funding based on policy priorities.

For retailers, uncertainty crystallised when the Equal Employment Opportunity Commission (EEOC) targeted Nike on February 4th, 2026, investigating alleged discrimination against white employees based on Nike's public commitment to fill 30% of director positions with racial minorities. Yet six days later, EEOC backed down from investigating 20 major law firms, acknowledging compliance was "voluntary."

Later that month, the EEOC sued Coca-Cola, alleging that a two-day employer-sponsored networking event violated Title VII because only female employees were invited, excused from work, and paid, while male employees were excluded. The case suggested that the new enforcement climate was not limited to race-conscious targets or hiring goals; it could also reach sex-specific leadership and networking initiatives framed as inclusion efforts.

Private litigation compounded the pressure. A conservative legal strategist filed lawsuits challenging diversity fellowships at major law firms; three subsequently changed their eligibility criteria to allow any applicant to apply. McDonald's settled a lawsuit by opening its scholarship programme to "any student who can demonstrate an impact on or commitment to the Latino community."

The message was contradictory: DEI programmes faced heightened scrutiny, yet government enforcement authority remained contested and inconsistently applied. Federal contractors operated under strict prohibitions while non-contractors navigated murky guidance.

Holding the line or letting go: How department stores responded

Retailers responded with varying strategies. Macy's and Nordstrom maintained DEI commitments and chief diversity officers. Kohl's took a middle-ground approach, rebranding its role to "Chief Inclusion & Belonging Officer" in March 2025 while continuing related efforts. TJ Maxx maintains that "inclusion and diversity have been an important part of who we are." Smaller retailers like Faherty and Mason Dixie Foods publicly doubled down, framing DEI as core to company identity. Costco continues to support DEI initiatives, citing brand value alignment.

For retailers seeking a middle path, the evidence points toward inclusive universalism. Research by NYU suggests that opening diversity initiatives to everyone can encourage allyship, reduce backlash, and engage all employees in an inclusive culture. However, employees from historically marginalised groups may lose spaces for frank peer conversation—requiring acknowledgement of "what's been lost" rather than "toxic positivity."

From rollback to redesign: New DEI frameworks for retail

The question facing retailers in 2026 is not whether to pursue inclusion, but how to do so in ways that are legally defensible, genuinely effective, and able to survive the next political shift.

Levelling vs. Lifting

NYU research distinguishes between "lifting" strategies (targeted programmes for specific marginalised groups) and "levelling" strategies (removing bias from systems so processes become fairer for everyone). While lifting strategies face mounting legal challenges, levelling initiatives—structured interviewing, anonymised résumés, clear evaluation rubrics—create fairer processes and carry less legal risk. "The Supreme Court is never going to say it's illegal for an organisation to level the playing field by removing unconscious bias," a researcher notes.

The FAIR Framework

Inclusion consultant Lily Zheng's FAIR approach (Fairness, Access, Inclusion, Representation) prioritises "outcomes over intentions, systems over self-help, coalitions over cliques, and win-win over zero-sum." Rather than heritage month celebrations, FAIR demands interventions that solve problems by changing systems. Zheng reframes representation itself—shifting from demographic boxes to measuring trust: leaders who, regardless of identity, "understand our needs" and "speak with true understanding of what I care about." This emphasises the development of skills: critical thinking, relationship-building, and handling disagreement.

Targeted universalism

The most powerful concept is targeted universalism, developed by UC Berkeley's Othering and Belonging Institute: acknowledge group disparities while using that understanding to fix shared environmental problems. Zheng illustrates with a company where men dominated leadership but reported the worst well-being, while women had better outcomes but were underrepresented. Rather than framing it as a gender battle, they discovered that the underlying problem was a culture of overwork designed around the assumption that employees had stay-at-home spouses and few responsibilities outside work. Addressing the broken system improved outcomes for both men and women.

This embodies the "curb-cut effect"—when designing for those with the worst experiences, improvements benefit everyone. For retailers: rather than "How do we get more women into store management?" ask "What systemic barriers prevent excellent employees from advancing—and how do those barriers disproportionately affect certain groups?" Solving scheduling inflexibility or childcare support may disproportionately help women and parents while creating stronger talent pipelines for everyone.

As Target's experience illustrates — from DEI champion to rollback to ICE silence — attempts to sidestep inclusion through "neutrality" can backfire spectacularly. Trump's February 2026 declaration that "we ended DEI in America" glossed over a complex reality: while many companies rolled back targeted programmes under legal and political pressure, the work of creating fair, inclusive workplaces continue under different frameworks.

As documented in IADS' 2026 White Paper: DEI at a crossroads in retail, the retailers that weathered this period most effectively shared a common approach: DEI embedded in operations rather than siloed to HR, visible CEO backing, transparent communication during setbacks, and systems redesigned for their most marginalised employees — creating improvements that benefited everyone. The frameworks offered by various researchers suggest a clear direction: not abandoning the goal of fair workplace creation but reshaping how that work gets done. Systems-level changes removing bias don't just survive legal challenges — they build workplaces where everyone can contribute and advance based on actual merit. For retail facing persistent labour challenges and shifting consumer expectations, that is not just ethically sound — it is strategically essential.

By mid-February 2026, as Operation Metro Surge wound down, Target was left rebuilding trust on multiple fronts: with employees who felt abandoned, with customers questioning the company's values, and with a hometown that watched the retailer retreat from civic leadership. The lesson resonates beyond Target: the retailers that emerged from 2025–2026 with both credibility and capability intact were

Credits: Maya Sankoh

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Few retailers conjure such immediate images of glamour, scale, and international cachet as Harrods. Yet behind the emerald-green awnings and gleaming marble halls lies a story of almost two centuries of reinvention. This single-site retailer has grown from a modest Victorian grocer’s shop into a global icon of luxury commerce. Harrods’ journey mirrors the evolution of modern retail itself: a chronicle of shrewd pivots and calculated risks, of disasters turned into opportunities, and of an unrelenting pursuit of the extraordinary in both product and experience.

We took the pretext of a member’s request on Harrods’ points of differentiation to proceed to an in-depth research about the iconic store. More than a department store, Harrods is a case study in how legacy can be leveraged, risks managed, and differentiation sharpened in a marketplace where change is the only constant. IADS CEOs were fortunate to have a behind-the-scenes visit in November 2023 during the General Assembly in London, with Mr G, a colourful character. We blend the notes taken during this visit with the results of thorough research to explore in more depth what Harrods represents today.

From “A small corner shop” in 1849…

Charles Henry Harrod opened his first venture in 1824, at the age of twenty-five: a drapery shop located in London’s South Bank, by then a district of taverns and inns. By 1834, having identified higher margins in the wholesale grocery trade, he pivoted towards selling pre-blended tea. He transferred to Cable Street, on the North Bank, and became recognised for his probity, as he insisted that only tea that he personally tasted could be sold in his premises.

However, the pivot took place in 1849, when Harrod identified an opportunity in Knightsbridge, which was then a semi-rural district adjacent to what would soon become the Crystal Palace grounds for the 1851 Great Exhibition. He leased a single-room shop at 105 Brompton Road to serve visitors to the exhibition, who discovered a merchant willing to dispatch hampers of preserves and teas to Glasgow, Calcutta, or Boston via the nascent railway and packet-boat networks. By 1855, it is said that Harrod employed 15 assistants and started annexing the neighbouring units.

Leadership passed to his son, Charles Digby Harrod, in 1861, who introduced new ideas, including dress fabrics, millinery, a perfumery counter, and, by 1870, a pharmacy. The introduction of fixed prices—still novel in Victorian England—liberated middle-class women from the chore of haggling and allowed them to shop unaccompanied, also accelerating turnover. Sales soared from an estimated £18,000 in 1861 to £118,000 by 1880 (equivalent to €19 million today). Technological innovations kept pace: gas-lit window displays extended trading hours, a lift expedited stock movement, and a pneumatic-tube network whisked cash to a central counting room.

On 6 December 1883, a fire destroyed the building on the eve of Christmas week. Overnight, Harrod rented a disused bakery, re-established departments and still posted a record profit, converting calamity into legend1. To finance reconstruction, he floated his company on the Stock Exchange in 1889, raising £120,000 and retiring days later.

The new board engaged architect Charles William Stephens, who erected today’s building in phases between 1894 and 1905. Innovation became a selling tool: in 1898, the store unveiled England’s first escalator (before the London Underground)—a leather‑belt “moving staircase” with staff waiting at the top with glasses of Cognac to comfort unnerved passengers. Electric lighting was the final touch, with 12,000 bulbs installed on the façade in 1906.

With the building complete, the company shifted focus from architecture to global reach. The Latin motto “Omnia Omnibus Ubique”—“All Things for All People, Everywhere”—was carved in 1908, coinciding with the launch of illustrated catalogues sent abroad. Orders arrived by telegram and, after 1911, by wireless. Export receipts accounted for an estimated 12‑15 % of turnover by the eve of the Great War.

The inter‑war decades burnished the store’s cultural cachet. Society diaries note lunching beneath the newly installed Art Nouveau stained‑glass dome of the first‑floor Georgian Restaurant (1913), where playwright Noël Coward reputedly purchased a baby alligator in the 1920s. Harrods also joined the International Association of Department Stores in 1928. Along with Filene’s from Boston and Printemps from Paris, to name a few, the then IADS members aimed to introduce modern management methods derived from the scientific management movement to their retail format.

During WWII, the Food Halls’ marble counters were sandbagged, and the basement converted into an air‑raid shelter. Despite rationing, the store maintained “Make‑Do‑and‑Mend” workshops and even a couture salon supplying utility clothing that met Ministry of Supply regulations but still permitted discreet elegance.

The 1950s brought optimism and a surge in interest. In 1959, House of Fraser outbid Debenhams to acquire Harrods for £7.6 million. The deal provided the flagship capital for mechanical goods-handling systems, while allowing operational autonomy—a “federal” model of ownership. During that period of ownership, the store was struck by an IRA car bomb, in which six were killed and ninety were injured[2].

House of Fraser sold Harrods (and itself[3]) to Egyptian‑born entrepreneur Mohamed Al‑Fayed for £615 million in 1985. Over the next quarter-century, Al-Fayed spent a reported £400 million on restorations that blurred the lines between commerce and spectacle: the themed Egyptian Hall with its gilded sarcophagi, the opaline-glass Egyptian Escalator, and marble memorials to Diana, Princess of Wales, and Dodi Al-Fayed. Footfall doubled from roughly 12 million in 1984 to 23 million by 1999, fueled by long-haul tourism and the weak sterling of the late-1990s Asian crisis. He pioneered experiential retail: celebrity book signings, Britain’s first in-store Ladurée tearoom in 2005, and the By Appointment personal-shopping suite introduced in 2006, which featured minimum-spend thresholds. Finally, Michael Ward was installed as managing director in 2005.

In May 2010, Qatar Holding, part of the Qatar Investment Authority (QIA), paid about £1.5 bn and invested in modernising the company:

• Harrods.com was launched in 2011, followed by a Mainland-China WeChat storefront in 2018,
• “Superbrands Hall”, a 3,716 sqm “store above the store”, opened in 2014 to monetise shop-in-shop tenancies from Chanel to Audemars Piguet,
• “The Residence”, unveiled in 2020, created a private-members’ enclave rumoured to require a £ 250,000 annual spend covenant.

Today, the Knightsbridge store occupies 92,000 sqm of selling space across eight public floors and 330 departments, supported by 22 branded restaurants and bars. It sells a wide variety of luxury products, from €5,000 per kg rare tea, to yachts or gold ingots (since 2010). Approximately 70% of the floor space is operated on a concession or consignment basis. Following the men’s department transformation and the beauty section renewal with a VIP section unveiled in 2016 at a cost of £200 million, another £200 million rolling refurbishment (2023-26) is reshaping sales floors as “experiential precincts.” The 1,500 sqm lingerie and loungewear hall opened in June 2023 (for £60 million), featuring wellness pods, fitting salons, and a café run by Parisian pâtissier Pierre Hermé. The Dining Hall’s relaunch in autumn 2024 introduced a complete offer of 22 chef-counter concepts—most notably a 12-seat omakase bar by Masayoshi Takayama, which now has a nine-month waiting list, and four distinct food halls (including an on-site chocolate factory and bakery). Finally, the “By Appointment” private-shopping suites on the hidden fifth floor are said to account for roughly 11% of GMV, with an average transaction value exceeding £55,000.

Baseline footfall rebounded to its pre-pandemic base of roughly 15 million visits, with peaks of up to 300,000 daily visitors in the Christmas trading window and the loyalty programme is believed to house 2m members. Revenue density in Knightsbridge is estimated to reach € 29,000 per sqm[4]. Overseas customers generate 45% of sales[5], despite the UK’s abolition of VAT-free shopping. To make sure a specific part of this clientele (Chinese tourists) is properly served even when not in the UK, Harrods opened a private member club in Shanghai in 2024.

Beyond Knightsbridge, the group operates six standalone H Beauty stores, a format of 2,000–2,800 sqm aimed at Millennial and Gen-Z luxury beauty shoppers. A seventh unit, in Chester, is under construction for 2025, followed by Leeds in 2026.

Harrods employs 4,550 FTEs, who follow a rigorous line of conduct to convey the excellence the store aims to represent. However, labour relations remain tricky, as shown by the strike mandate covering 176 shop-floor, hospitality and cleaning employees for the peak Christmas week of 2024 in a dispute over bonuses, service-charge distribution and pay indexation.

…to a diversified powerhouse in 2025

The Knightsbridge store operations, harrods.com, and the adjacent subsidiaries (including other stores, airlines, and real estate) sit within Harrods Ltd, a holding company. It is unclear where the Chinese club operations are located[6].

Full-year 2024 group results show gross transaction value up 6% (£2,25 bn), group turnover up 9% to £988.5, and store turnover up 8% to £898.4 m (+8% vs. LY), the highest in the store’s history. Operating profit edged up to £162.9 million, delivering an 18 % margin, while a one-off £46m pension buy-in trimmed pre-tax profit to £111.5 million. Despite that hit, Qatar Holding, the owner, took a £180m dividend for the second year running. Net cash closed at just over £50 million after capital expenditure of roughly £95m on store refurbishment and digital projects. Measured over four post-pandemic years, sales have compounded at a 27% annual rate and operating profit at a 33% yearly rate, outstripping every Western department-store peer in both metrics. Even after normalising for one-offs, its 18% operating margin dwarfs Western department-store averages (5-10%).

Online sales on harrods.com are estimated to have reached £230 million during FY2024, equivalent to 26% of retail turnover, with mobile devices accounting for 72% of sessions. A smart, RFID-enabled distribution centre at West Thurrock is set to go online in H2 2025, aiming to reduce click-to-ship times to below 90 minutes and eliminate 99% of picking errors. Also, in November 2024, Harrods adopted Global-e’s cross-border platform, localising pricing, payments, and duty prepayment for more than 200 markets. February 2025 marked the launch of an AI marketing partnership with Incubeta; its Seamless Search engine reallocates paid media spend in real-time across PPC, SEO, and social in the UK, US, GCC, and Asia hubs. Loyalty penetration has climbed to 87 % of transactions since the introduction of a new Platinum tier (annual spend threshold £50,000) within the five-level Harrods Rewards scheme. Repeat-purchase frequency averages 3.2 times per year across the Rewards base and 6.8 times for Black-tier members.

Regarding other activities, the aviation cluster—Harrods Aviation (FBO/MRO at Luton and Stansted) and Air Harrods helicopter charter—generated £78.8m of turnover in 2024 and employs 275 staff, feeding ultra-high-net-worth clients back to the retail and property arms. Harrods Estates, the prime-property brokerage, leverages Rewards-tier data but keeps its financials private.

Finally, as of FY2023, the board has incorporated explicit ESG and customer-experience key performance indicators into the audit and risk committee’s remit, aligning management remuneration with decarbonisation and service-quality milestones. Harrods’ inaugural ESG report logged a 2.4% absolute carbon reduction against the 2022 baseline and reiterated the 90% cut goal for 2030. Eighty per cent of lights are now LED, and trigeneration supplies a growing share of on-site energy. Major projects include a £60 million façade and HVAC retrofit—Phase I was completed in Q4 2024—which underpins the pledge to cut Scope 1–2 emissions by 90% by 2030.

What are Harrod’s points of differentiation?

While being unique in the world, Harrods competes in the same league as Selfridges, KaDeWe, Galeries Lafayette Haussmann, Saks Fifth Avenue, Isetan Shinjuku, SKP Beijing, Bergdorf Goodman, Hankyu Umeda, Shinsegae and El Corte Inglés Serrano Madrid. For this reason, we review how the store differentiates from this array of peers from a selection of criteria: real estate ownership, revenue density, the nature of the concession ecosystem, the private client culture, the approach to service and experience, and the loyalty and omnichannel approach.

Harrods occupies a five-acre, Grade II* listed city-block[1] that it controls outright; the 92,000 sqm selling floor was purpose-built for the brand between 1894 and 1905 and has remained under single ownership ever since. This freehold status (acquired in 1921) allows Harrods to avoid rent inflation or landlord risk that has crippled rivals such as KaDeWe, whose 2024 insolvency filing cited “significantly rising index-linked rents” as the key trigger. By contrast, Selfridges’ Oxford Street flagship sits in a separate property vehicle whose £638 million write-down last year illustrates the balance-sheet drag of leasehold real estate.

While Saks Fifth Avenue and Bergdorf Goodman all operate on highly-leveraged trophy real estate (Saks’ flagship alone is mortgaged at a $3.6 bn appraisal), owning the land lets Harrods commit substantial horizons of capital (e.g., a self-funded £300 m restoration of its historic Food Halls, a £200 m womenswear revamp slated to 2026).

Even though some commentators tried to assess department stores’ productivity, often on partial data (which raises questions, see the 2019 Sybarite report), Harrods was often cited pre-pandemic as the most productive department store in the world, outpaced by SKP during the pandemic in 2020-2021.

However, when looking at the details, proceeding to a complete comparison of companies is difficult when it comes to productivity:

•  Selfridges and El Corte Inglés do not publish verified single-store turnover, forcing extrapolations.
• No verified information has been published by Isetan Shinjuku since 2007 regarding its size,
• When it comes to the definition of selling space itself, some groups exclude restaurants or event space, others include them.
• Chinese and Korean department stores quote tax-inclusive transaction value; Western peers report net revenue. Density rankings, therefore, give a directional, not absolute, comparison.
• SKP, Bergdorf Goodman and Galeries Lafayette figures rely on management statements rather than statutory filings.
• In a similar manner, gross transaction value for 2024 for Harrods is only released at the group level, not the store level, which makes the comparison slightly incorrect.

The below chart is a tentative ranking, taking into account the limitations above. While Asian mega-stores and Galeries Lafayette compete with Harrods in terms of sheer turnover, and in sales density by others, Harrods punches above its size in productivity, thanks to ultra-high conversion rates in luxury categories and tourist spending.

Harrods remains the archetype of the concession-first model (estimated to represent 70% of turnover): brands control product, staffing, and visual merchandising, while the store takes a commission or minimum rent, guaranteeing near-zero gross-margin risk and securing the store’s time-bound exclusives. Retail commentators have long noted that, unlike Selfridges’ pop-up-heavy strategy, Harrods “has stuck with its traditional model of in-store luxury brand concessions” as the core of its offer. For instance, on the sixth floor, Harrods boasts the world’s largest Apple concession, uniquely operated by Harrods rather than Apple itself. Harrods is also said to have a model where it provides staff, whose gross salary is passed on to brands, either in full or proportionally, according to their contractual agreement. Similarly Harrods is the only location to house a Tom Ford women’s store outside of the brand’s DOS network.

While Isetan maintains a traditional mix, Selfridges has moved closer to a wholesale and consignment model hybrid to drive newness and curation. Selfridges mitigates its risks by imposing guaranteed sell-through to many wholesale brands, while Bergdorf still carries significant own-buy risk in seasonal fashion. SKP Beijing replicates Harrods’ concession logic. Hankyu and KaDeWe blend concessions with outright buy, leaving them more exposed to markdowns in weak cycles. Harrods is one of the few Western stores that uses the concession structure at the whole-store scale, enabling more than 330 brand-managed spaces, increasing (by delegation) refresh cycles and gross margin.

As put by Michael Ward, “our customers come back as friends. It is not just a question of sales, but relationships.”

In addition to a Chief Customer Officer appointed as early as 2018, Harrods fields more than 3,000 customer-facing staff and formalises elite service through two-tiered programs: By Appointment (fifth-floor personal shopping with a worldwide-known quality of service) and Private Shopping – The Penthouse (invitation-only suites on the sixth floor with separate entrance). Comparable offers exist, but with less spatial grandeur: Bergdorf Goodman’s seventh-floor “BG Salon” occupies less than 10,000 sq ft each, versus Harrods’ full-floor 35,000 sq ft client area. Saks Fifth Avenue club rooms remain a minority of sales. Selfridges offers personal shopping suites on the first and second floors. SKP and Shinsegae run powerful VIP clubs, but none monetises membership as visibly in-store through physical By Appointment suites overlooking Hyde Park. Exclusivity extends to customer engagement, with only 250 elite customers selected by directors, representing 10% of the business.

To cater for the ultra-wealthy, security and exclusivity are paramount at Harrods, with more police on duty within the store than in the surrounding borough, and even a dedicated police station onsite.

In addition, the Knightsbridge flagship is only one profit engine powering a full ecosystem. Harrods operates:

• Harrods Aviation – two London-area FBOs turning over £78.8 m in 2024.
• H Beauty – five suburban beauty-only stores, seeding the brand with younger customers.
• Harrods International – franchised airport units from Heathrow to Shanghai.
• A private member club in Shanghai, opened in 2024, including a tea room, bar and Gordon Ramsay restaurant.

None of the peers has such an integrated private-aviation, specialist beauty chain ecosystem, or overseas club. That allows to provide a very specific experiential ecosystem for the wealthy: in-store, food-to-fork gastronomy (22 restaurants after the Georgian Room relaunch) plus on-site spa, safe-deposit vaults. Granted, Bergdorf and Saks excel at curated fashion edits; Galeries Lafayette and El Corte Inglés leverage tourist tax-free shopping. However, Harrods goes beyond by also providing the ecosystem outside of the store. While Selfridges has flirted with hotel and property development but remains retail-centric, KaDeWe and Galeries Lafayette have few meaningful non-retail subsidiaries, Isetan’s side-lines are largely food halls and credit cards, Harrods layers on aviation, helicopter charter and prime-property brokerage (businesses that add profit streams and feed ultra-high-net-worth clients back to Knightsbridge), enlarging its share-of-wallet beyond a store visit.

Loyalty and omnichannel approach

Harrods’ four-tier Rewards programme—recently augmented by a Platinum layer for clients spending £50 k+ per annum—delivers SKU-level data on approximately 2.8 million active members, feeding dynamic CRM and increasing lifetime spend. Loyalty IDs are linked to 87 % of transactions. Selfridges and Galeries Lafayette have broader membership bases but lower spend thresholds, limiting luxury specificity.

When it comes to online, Harrods has historically resisted a full e-commerce push until it could replicate concession economics online, first with Farfetch. Its 2024 Global-e partnership instantly opened 200+ localised markets while letting brands keep price control—again, landlord logic extended to the cloud. Most continental peers still rely on cross-border marketplaces or border-free shipping intermediaries rather than direct localisation. Selfridges.com and Saks.com are further advanced in terms of volume, yet rely on marketplace inventory models that dilute margin and branding discipline.

As a corollary, the store does not envision promotional activities in a traditional way, but rather as a collection of “theatrical experiences” available at each floor. It is all about leveraging private relationships with customers and creating a feeling of closeness with the store, as the iconic Christmas market or Rihanna launching in person her brand Fenty in 2021 suggest. There are no sales campaign apart from the Harrods Winter and Summer sales which remain very elegant and far away from promotional sales seen in other department stores.

What are the potential risks faced by Harrods?

Harrods’ performance edge rests on a delicate macro-and-micro balance that can be fragile.:

Since January 2021 the UK has refused non-EU visitors a VAT rebate, a decision that has pulled high-spending tourists towards Paris and Milan and cost London’s West End retailers an estimated £220 million in lost sales in the first half of 2024 alone. Internal modelling shared in lobbying documents seen by Walpole suggests that Harrods itself lost roughly £80-90 million of Chinese and GCC spend in FY 2024[1]. As long as the Treasury resists reinstating tax-free shopping, the growth will depend on compensating volume from domestic and US consumers whose currency advantage is already eroding.

Harrods’ ESG report discloses that just 4% of active shoppers account for 28% of revenue. A correction in luxury-equity valuations, further sanctions on Russian or Middle-Eastern elites, or geopolitical tension that curtails Gulf air routes could therefore reverberate disproportionately through top-line sales.

The Qatar Investment Authority has extracted consecutive £180 million dividends in the last two financial years, signalling a possible shift from long-duration capital stewardship to cash harvesting as the Gulf state funds other diversification projects. Should that preference harden, capex headroom for the ongoing £200 million Knightsbridge refurbishment could narrow, forcing trade-offs between experience upgrades and balance-sheet prudence.

Although Harrods has spent about £75 million updating its tech stack since 2018 and completed a 360-degree SAP/KPS customer-data rebuild in 2023, order-management and stock-ledger systems remain largely monolithic. By contrast, Selfridges moved to a micro-service architecture last year and now tasks multichannel teams with fulfilling most web orders inside 24 hours, a KPI advertised internally and in recruitment posts; Harrods’ average sits closer to two days. Lags of that magnitude can become visible to premium shoppers who benchmark their experiences against Farfetch‐style next-day standards.

SKP Beijing booked RMB 26.5 billion (£2.9 billion) in 2023, illustrating how purchasing power and brand exclusivity are clustering in Asia’s mega-malls. The same dynamic is visible in Shinsegae Gangnam and Isetan Shinjuku. If luxury brands choose to allocate limited-edition products on the basis of absolute volume, Harrods could cede pre-launch exclusives that have historically underpinned its differentiation. This is therefore interesting that they have opened a private member club in China, allowing them to leverage this presence to luxury brands and ask for ultra-exclusive collaborations or special editions.

The Knightsbridge block is Grade II*: every structural alteration requires listed-building consent under Westminster guidance, a process that local planning files show can extend beyond eight months for even minor plumbing or ductwork changes. Asset intensity thus stymies rapid re-configuration at a moment when luxury merchandising is shifting from static departments to theatrical, fast-turn “activations”.

The National Crime Agency’s unexplained-wealth-order pursuit of Zamira Hajiyeva, who spent more than £16 million at Harrods, spotlighted the store’s in-house bureau de change and its attraction for high-value cash clients; the case ended in a forced property forfeiture last August. The Financial Conduct Authority has since tightened monitoring of high-value dealers, meaning any lapse in anti-money-laundering controls could trigger fines or even suspension of the currency-exchange licence that lubricates tourist spending.

Conclusion: Harrods, a unique model?

Harrods’ differentiation is not a single attribute but a mutually reinforcing system: debt-free freehold real estate, global-class revenue density, a concession model that limits risk, a service culture scaled through data-rich loyalty, and lateral businesses—from aviation to H Beauty—that diversify earnings while feeding the core brand halo. Said in other words, and using Porter’s resource-based lens, Harrods converts location (Knightsbridge cluster of five-star hotels), hard assets (unencumbered freehold) and organisational heritage (175-year archives) into sustained differentiation. Among the expanded peer set, each competitor can match Harrods on one or two vectors (SKP on revenue, Bergdorf on architectural prestige, Shinsegae on turnover growth), but none combines all of them with the same depth.

Looking forward, management faces a triad of macro uncertainties—modulated Chinese tourism, geopolitical shocks and emergent regulation of high-end consumables—yet enjoys four built-in shock absorbers:

• Sovereign-wealth backing capable of counter-cyclical investment (which can also be a double-edged sword),
• A landlord-concession template that shifts inventory risk (but comes with its own constraints, too),
• A heritage narrative proven to restore confidence (unless, like in the Al Fayed sex scandal, some timebombs emerge),
• An ESG roadmap designed to meet stakeholder capitalism head-on.

Expansion is unlikely to resemble branch proliferation; instead, incremental monetisation of vertical space, deeper data-driven clienteling and selective brand residencies will probably continue to increase sales density.

Credits: IADS (Selvane Mohandas)

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Beauty is no longer simply a category. It has become a strategic cornerstone for department stores, as the category is booming but is also highly challenged. Department stores used to be the primary channel for beauty discovery, but e-commerce and social media have eroded their historical authority. As an example, only 24% of US shoppers now visit a department store to learn about new products. Instead, 71% turn to Sephora or Ulta Beauty, according to a PowerReviews survey. In parallel, department store revenues are declining across much of the sector, and apparel and luxury are facing structural headwinds. Under such circumstances, the relevance of the beauty offer across all its dimensions becomes critical. Galeries Lafayette Haussmann has recently unveiled its new beauty department, the perfect occasion to gain perspective on the current state of beauty in department stores and to address a pressing question: is it possible to evolve the category model?

Floors reborn: department stores bet big on beauty reinvention

Nordstrom: beauty takes centre stage in NYC

The picture is not completely bleak for department stores. As a replenishable category, beauty is structurally resilient. From that perspective, many department stores accelerated their in-store investments to create beauty destinations in an attempt to counter competition from speciality retailers. In August 2025, Nordstrom unveiled its new beauty floor at its NYC flagship store, turning what had been a fragmented experience into a unified beauty destination. Positioned at the main entrance, the rationale is simple: beauty should be the first thing customers see when they walk in.

The new space is organised into distinct but connected zones.

• A large make-up zone at the store entrance with brands like Charlotte Tilbury, MAC and Westman Atelier. The Beauty Bar, a communal space where customers can test products from different brands, attend makeup classes or experiment on their own terms, is a new feature. A dedicated area for emerging brands completes the section.
• Then, the space flows into a luxury and designer zone housing names like La Mer, La Prairie and Dior, each with their full store concept.
• The fragrance area has been doubled in size, featuring a floor-to-ceiling floral installation and an exclusive new technology called “AirParfum,” developed with Puig, which allows customers to discover up to 60 scents without overwhelming the senses.
• Finally, a section oriented towards beauty rituals offers a more open, self-discovery format covering skincare, haircare, body and wellness, with heritage brands like Estée Lauder and newer labels like Tata Harper and 111Skin.

Beyond the products, Nordstrom is investing heavily in service and community with a team of around 100 sales associates, a full-time beauty concierge team for agnostic advisory and a packed event calendar. There is also a medi-spa in addition to 250 free or paid services, ranging from nail and brow services to blowouts. The beauty department now spans 1,670 sqm, more than doubling the previous layout, signalling that the retailer is not just selling beauty products but building a destination.

Macy’s Herald Square classic beauty overhaul

In November 2025, Macy's completed the first phase of a major renovation of its beauty floor at the NYC Herald Square flagship store, the first significant update in over a decade. Interestingly, around 70-75% of the store's beauty customers are locals rather than tourists, making the investment relevant far beyond passing visitors. Once fully finished, the space will span 5,000 sqm and have more than 20 new brand shops.

Right from the entrance, customers are welcomed by big names like Chanel and Dior, as is often the case on beauty floors. The customer journey moves from fashion-house shop-in-shops at the front, through niche brands and luxury skincare, to a trendier multi-brand discovery space at the back. With the current category boom, fragrance remains a key driver, with over 200 references across 65 brands, and Macy's continues to hold the largest share of fragrance sales in the country.

Also, following the beauty trend book, Macy’s adds technology and services to the experience, with AI-powered skin diagnostic tools from Shiseido, an augmented reality headset from Parfums de Marly, and five relaxation rooms. A new space is planned for events such as brand masterclasses and pop-up stores.

Selfridges goes niche: the fragrance hall reimagined

Selfridges has completed a major refresh of its fragrance hall at its London store in February 2026, marking the final phase of a two-year renovation of the entire beauty floor. Fragrance has become Selfridges' fastest-growing category, and the store has decided to lean into that momentum. Placed right at the main entrance, the hall aims to become a world-leading fragrance destination. The selection spans nearly 50 brands, with 75% of the offering dedicated to niche or limited-distribution brands, grouped into three distinct themes: established, contemporary and emerging. More than 30 exclusives are on offer, including names like Discothèque.

Niche houses such as Maison Crivelli, Marc-Antoine Barrois, Initio and Matière Première sit alongside heritage names, giving the space a sense of discovery. Rather than leaving customers to navigate scents on their own, Selfridges has placed knowledgeable sales associates throughout the hall to guide and advise.

Beyond capitals: John Lewis sets a blueprint for beauty in the regions

In August 2025, John Lewis unveiled a major transformation of its Liverpool beauty hall, showing beauty is also a priority in secondary city stores. The department has been expanded by almost 40% to 1,500 sqm. Interactive zones replace some of the traditional counters. The hall now houses 132 premium brands, including 23 new or expanded counters, and introduces exclusive brands such as Fenty Beauty, Trinny London, Byredo and Maison Francis Kurkdjian to Liverpool for the first time. This renovation emphasises service and social shopping to create a seamless integration between in-store atmosphere and online convenience. The transformation is a part of John Lewis's £800 million brand investment and reflects the retailer's success in the beauty category, where sales have grown by more than 40% over the past five years. The Liverpool concept will serve as a blueprint for five additional beauty hall transformations planned in the coming months.

The renovations undertaken by these department stores show that scale matters. Whether it is Nordstrom doubling its beauty footprint, Macy's committing to 5,000 sqm, or Selfridges offering 50 perfume brands, the strategy is clearly to compete with Sephora's depth and curation and the endless discovery possibilities offered by social media. Also, with Nordstrom's concierge team and Selfridges’ fragrance experts, it seems retailers are betting on people to deliver a differentiating, more agnostic beauty experience. In a world where any product can be purchased with a click, expertise and experience are the true differentiators.

Beyond the brand counter: the beauty business model at a crossroads

The Sephora effect: the rise of brand-agnostic beauty spaces

Transforming the traditional brand counters beauty model into more open, experiential spaces is a growing concern on the department store beauty floors. Customers are now accustomed to browsing at Sephora or Space NK and tend to reject the conventional model with brand counters and their staff attached. Instead, they are increasingly expecting retailers to offer them the possibility to explore a range of brands and products with agnostic sales advisors who can guide them across all options. For department stores so far, the question has been more about how to best adapt to this trend than about transforming the brand counter business model. Complementing rather than replacing brand counters, many department stores are developing multi-brand areas. These spaces allow customers to browse freely and touch products. However, they usually offer a limited number of brands, as is the case at the Galeries Lafayette Haussmann store’s space dedicated to emerging and niche brands positioned at the centre of the Wellness Galerie. Dedicated Galeries Lafayette staff help shoppers in their decision. Display tables serve as small pop-up spaces, allowing for brand rotation and product novelty. The space is not big, though it gives a true sense of choice and is successful. Galeries Lafayette recently took a further step toward agnostic shopping by opening a second multi-brand area. In March 2026, they unveiled a 250 sqm “French pharmacy” space (also known as dermo-cosmetics). This time, using a different business model, it is operated by an external partner (Carré Opéra Pharmabest) on a concession basis with staff attached to the partner. Answering locals and tourists’ appetite for French pharmacy with 200 brands (such as La Roche-Posay, Bioderma, SVR, Caudalie, Nuxe, Melvita, Vichy, etc.) and 6,000 references, the launch has been successful with customers filling their baskets with several products at the same time.

A few years ago, Manor also onboarded external partners: L’Oréal for dermo-cosmetics spaces (including brands like La Roche Posay or CeraVe) and Sephora to offer Gen Z customers trendy colour cosmetics brands as well as the Sephora Collection private label. More recently, Manor has moved forward in developing multi-brand areas, with the Green Beauty Lab. The space includes brands such as Glowery, Melvita, Erborian, Weleda and Avril in addition to the dermo-cosmetics brands, organised under four distinct areas: clean, botanical, wellness and sustainable. This concept will be rolled out in ten stores with local adaptations. These examples show attempts to step back, at least in part, from the brand-counter-only model. It offers customers a more agnostic shopping experience and, in the case of Sephora, allows Manor to also carry additional brands which may have been difficult to attract otherwise.

Falabella’s Glow Bar is also a recent example of a multi-brand space. The first 80 sqm pink space gathers 55 brands in skincare, makeup, fragrances, hair care, accessories, dermo-cosmetics and a prominent K-beauty section. Inspired by international benchmarks in beauty speciality retail, the company aims to offer a curated, experiential format focused on trend discovery, including Fenty Beauty arriving in the country for the first time. This launch clearly caters to consumers seeking experience, novelty, expert advice and, most important of all, the freedom to browse and try before you buy.

Galeries Lafayette's three-floor beauty vision

The recent beauty rehaul at the Galeries Lafayette Haussmann store offers more than a French pharmacy space. In fact, the beauty department now spans three floors, a deliberate vertical journey as stated by CEO Arthur Lemoine:

• The -1 floor offers a renewed version of the Wellness Galerie opened in 2022, oriented towards care brands (see more below).
• The ground floor centres on fragrance and makeup. The integration of new hot brands such as Victoria Beckham and Louis Vuitton makeup offerings increased the ground floor appeal. In parallel, they introduced a section of 13 niche fragrance brands, including Bottega Veneta and Creed.
• Creating a destination within the luxury RTW floor, the +1 floor proposes a convergence between luxury fashion, jewellery and beauty with high perfumery spaces for Loewe, Guerlain, Dior, Chanel, Maison Francis Kurkdjian, Officine Universelle Buly 1803 and, from June, Saint Laurent's first-ever beauty-accessories fusion concept.

This overhaul aims to differentiate Galeries Lafayette from competitors by providing an experience that blends luxury and beauty, for a lifestyle feeling and a customer journey that encourages cross-category discovery and higher conversion rates. Now accounting for about 10% of the store’s annual volume, beauty has posted double-digit growth, continuing into 2026. The refurbishment has expanded the beauty selling space to 3,700 sqm, an increase of 500 sqm and brought the total brand count to 440.

The normalisation of wellness

Harrods' closed-door wellness: when retail meets the clinic

Shifts in customer behaviour towards self-care, the relentless need for retailers to diversify into new categories and to add a revenue stream by taking a share of a business McKinsey estimated at around $1.5 trillion in 2020… these are all reasons why retailers have explored wellness. What was initially a blurry category encompassing fitness, nutrition, overall physical and mental health and appearance, is now normalised, with a key question at its core: services as a way to evolve the business model.

First on the trend, Harrods made a bold move in 2017 by opening a closed-door, appointment-only Wellness Clinic on the fourth floor in Knightsbridge, a significant shift in how luxury department stores were beginning to think about beauty and wellbeing. Spanning almost 1,000 sqm, the space was never intended to be a traditional spa or beauty salon. Instead, Harrods’ very own take on wellness was conceived as a high-end, results-driven clinic offering a curated selection of treatments.

The space was designed to feel clinical without being cold, and luxurious without being indulgent. The goal was not pampering but rather treatments with measurable results. The range was unusually wide for a department store. Harrods assembled a multidisciplinary team covering everything from injectables and body contouring to cryotherapy, DNA-based personalised skincare, IV vitamin infusions, and more. A dedicated partnership with a wellness expert brought daily personal training and nutritional coaching on site, with a bespoke programme created exclusively for Harrods clients. The Wellness Clinic also offers dental services, osteopathy, podiatry and physiotherapy. More than simply a new service, the Wellness Clinic, which is still running to this day, was an early and clear signal that brick-and-mortar retail needed to reinvent its purpose, and that experience, expertise and personalisation were the most important reasons to visit a department store. However, it didn’t reinvent beauty in department stores, just evolving and developing beauty services to a scale never seen before

From ambition to pragmatism: Galeries Lafayette’s reality check

Galeries Lafayette also made headlines in 2022 when the Wellness Galerie opened on a whopping 3,000 sqm surface spanning the whole -1 floor of the Haussmann flagship store. It was a step forward in terms of space and share allocated to services compared to products, with an impressive 60%-40% ratio. Galeries Lafayette had an ambitious goal: becoming the destination for well-being in Paris, with a gym studio, a healthy restaurant, a full catalogue of services such as osteopathy, cryotherapy, hyperbaric chamber, meditation, muscle strengthening, yoga and Pilates, infrared saunas, anti-ageing and silhouette-enhancing treatments, nutritional coaching, physiotherapist, nails and brow services and more. The brands embedded in the space were oriented towards care, as exemplified by the multi-brand area (see above) and traditional brand counters such as Barbara Stürm, Augustinus Bader, Clinique and The Ordinary, to name a few.

In March 2026, they unveiled an updated version of the Wellness Galerie. Department store floors are obviously in constant evolution, but this rehaul probably demonstrates how challenging it is to convey the wellness message to customers to maximise service profitability. Maintaining some of the previous services such as massages, anti-ageing treatments, brow and nail salons and the gym, the revamp emphasises a “care” message over the wellness word and adopts a more classic approach to services. Their overall number has decreased, but the most important difference lies in the addition of brands’ three-walls shop-in-shops, large enough to accommodate beauty cabins, doubling the number of treatment rooms to 20 (with Clarins, La Mer, Estée Lauder, Helena Rubinstein, EviDenS, for example).

The contrasting trajectories of Harrods and Galeries Lafayette offer a picture of where wellness stands in department stores, showing the commercial tension at the heart of the “category”: services are expensive to operate, difficult to scale, and require more customer education than products. Harrods' model endures because it never tried to democratise wellness. By keeping its clinic expensive and appointment-only, it defined a niche that aligned with its affluent clientele and price positioning. It did not attempt to reinvent the beauty floor. Galeries Lafayette's original Wellness Galerie was a genuine experiment in rethinking what a beauty floor could be: a rethink of the business model through an extensive catalogue of services. Both a sign of maturity and normalisation of wellness, the 2026 revision also shows how difficult it is to change the business model. As Lemoine describes it, the floor is now capitalising on the right balance between services and products.

The satellite bet: additional commercial models against competition

From anchor to standalone: how Harrods built a scalable off-flagship business

Despite competition from local retailers such as Space NK, The Fragrance Shop and Superdrug, Harrods has long held its position as the UK’s biggest beauty retailer, with a 9.3% share of the national market from a single 8,300 sqm location. In 2019, they announced an ambitious expansion plan with the launch of H Beauty, a new concept of standalone beauty boutiques set to open across the UK. The first store opened in late 2020, swapping Harrods' green signature for a pink aesthetic, deliberately targeting a younger, digitally savvy generation.

The first stores didn’t open in a prestigious city-centre location, but in the suburban shopping centres Intu Lakeside in Essex and Intu in Milton Keynes. The rationale was clear: the flagship in Knightsbridge caters primarily to tourists and an older, wealthier demographic, while H Beauty would be explicitly designed to reach a younger, local consumer base that had shopped previously at competitors. Stores are built around experience and exclusivity, with makeup stations, virtual try-on mirrors and masterclasses, all part of a broader omnichannel vision.

Industry reactions were mixed in 2019: some questioned why Harrods had not chosen a more premium location, while others saw it as a smart and timely move to claim territory before competitors did, aka Sephora (which would enter the market in 2023). What most agreed on was that the success of H Beauty would ultimately depend on the quality of the in-store experience and Harrods' ability to translate its luxury credentials into a format that is accessible to younger customers. In 2026, Harrods operates seven H Beauty stores, demonstrating a successful model that is giving the department store greater control and access over brands.

The limits of the concept: Harvey Nichols' standalone bet failed

Not all department stores were as successful as Harrods. In March 2025, Harvey Nichols announced they would close their only standalone beauty shop, Beauty Bazaar, in Liverpool’s ONE shopping centre. Opened in 2012, the store was originally considered a pioneering concept, as it was the first time a major luxury retailer had created an entirely dedicated beauty and wellbeing space of this kind outside of London. It was supposed to set a new benchmark for what a beauty destination could look like: a single space where luxury retail, social experience and professional treatments could coexist under one roof.

The ground floor brought together established international names and niche and contemporary brands, for depth and discovery. A standout feature was a perfume library designed to let customers explore fragrances freely, with no counter or sales assistant standing between them and the bottles. The +1 floor was more social. A champagne and cocktail bar was surrounded by open treatment areas for pedicures, a hair salon, brow, lashes and nail services. Customers could browse, book treatments, or shop online via iPads, making the floor feel as much like a social venue as a beauty destination. The +2 floor completed the journey with a private spa reminiscent of a five-star hotel.

The department stores’ investments in beauty are striking in their scale and their ambition. The message is consistent: beauty is no longer just a floor, but rather a strategy. Department stores are not simply upgrading a category: with its repeatability and experiential potential, beauty has to stay on-trend, but also becomes an answer when apparel stumbles and luxury fragments and grows increasingly direct-to-consumer.

Away from the brand counter and towards spaces that prioritise the customer's journey, the rise of multi-brand zones points to an industry that has absorbed Sephora's lessons and is acting on them. Partnering with external specialists represents a pragmatic willingness to give away control in exchange for relevance. The wellness chapter offers a more sobering lesson. Galeries Lafayette's Wellness Galerie was visionary. Its recalibration is grounded. Harrods' Wellness Clinic endures, but it is the exception rather than the rule. For most department stores, wellness will remain a layer rather than a foundation. The H Beauty satellite experiments add a final dimension and a possible, yet not universal, growth vehicle to reach demographics that a single store cannot do.

Credits: IADS (Christine Montard)

PRINTABLE VERSION HERE 

Abercrombie & Fitch (A&F) was once the epitome of “cool” for American teens in the late 1990s and early 2000s – a brand built on exclusivity, aspirational imagery, and a very narrow definition of who fits in. Its stores, with thumping music and overpowering cologne, became social hubs for youth and symbolised status for those deemed attractive enough to “wear the moose”. Yet the same exclusivity that fuelled Abercrombie’s rise eventually led to its fall. Controversies over discrimination and a lack of diversity tarnished the brand’s image, leading to lawsuits, public backlash, and a significant loss of relevance.

This is why, in the 2025 IADS White Paper, DEI at a crossroads in retail, Abercrombie & Fitch is cited as a case where DEI was neglected, inconsistently sustained, and ultimately mishandled—resulting in significant reputational, cultural, and operational consequences. Positioned as a lesson from the field rather than an isolated failure, the brand’s trajectory illustrates how progress on inclusion is neither linear nor guaranteed.

This Exclusive examines Abercrombie & Fitch’s history through a DEI (Diversity, Equity, and Inclusion) lens – how an exclusionary culture caused harm, who was most impacted, and what lessons retail and department store leaders can draw from A&F’s reckoning and ongoing turnaround.

The rise of an exclusive brand

A&F’s modern incarnation was crafted in the 1990s under CEO Mike Jeffries, who transformed the 100-year-old sporting goods outfitter into a preppy, sexy, youth-oriented apparel empire. Jeffres’ vision fused Calvin Klein-style provocative marketing with Ralph Lauren’s all-American prep, sold at prices teens could aspire to. The brand cultivated a “cool kids” image at every turn. Stores were designed like nightclubs, with thumping music, dim lighting, and a signature musk (Fierce) sprayed into the air to create an exclusive atmosphere that drew young shoppers. Staff were hired for looks and instructed to appear nonchalant (even borderline snobbish) toward customers, reinforcing the sense that shopping at A&F was a privilege. Teens of the era, lacking today’s social media, took cues from mall culture and A&F’s giant glossy ads to learn what was “in”. In the late ‘90s and early ‘00s, Abercrombie & Fitch became a pop culture phenomenon, defining teen fashion and beauty standards. However, those standards were largely “thin, white, and young”, as described in the Netflix documentary White Hot: The Rise & Fall of Abercrombie & Fitch (2022).

Abercrombie & Fitch’s marketing in the 1990s-2000S glorified and idealised an exclusive image. Stores prominently displayed huge posters of scantily clad, athletic young models (usually white), reflecting CEO Mike Jeefries’ vision of “attractive, all-American” youth. This aspirational branding, combined with dimly lit, music-filled stores and “cool” aloo staff, made A&F a status symbol for some shoppers while implicitly alienating those who didn’t fit the mould.

From advertising to store associates, Abercrombie’s concept of “All-American” was extremely narrow. Former CEO Mike Jeffries infamously admitted that the brand was built on exclusion: “We go after the cool kids… A lot of people don’t belong [in our clothes], and they can’t belong. Are we exclusionary? Absolutely.” In practice, this meant A&F’s public image featured almost exclusively white, fit, conventionally attractive models and actors. The company deliberately did not offer plus sizes for women for many years (women above size 101 or so simply weren’t apart of the target look). In the store environment, “all-American” often functioned as code for white, a reality that would soon lead to serious trouble.

Exclusion by design

Abercrombie’s exclusionary ethos extended beyond marketing; it permeated hiring and operations. By the early 2000s, reports and complaints surfaced that A&F was systematically hiring and promoting based on looks and race. Store managers were under pressure to staff sales floors with what the company deemed “on-brand” people – overwhelmingly white, clean-cut, and slim. Minorities who were hired were often assigned to back-of-store stockroom positions or had their hours cut if they didn’t fit the desired image. In one noted case, a Latino applicant was told he could work in the stock room but not out front with customers, a humiliation he later described in court. The company even had “Look Policy” guidelines forbidding certain personal styles disproportionately associated with nonwhite individuals (for example, banning dreadlocks for employees).

These practices led to a landmark class action lawsuit in 2003 (Gonzalez v. Abercrombie & Fitch), filed by Asian American, Black, Latino, and female plaintiffs. They charged that Abercrombie refused to hire qualified minority candidates for sales jobs, or hid them in the back, solely because they didn’t match the “A&F look.” The case uncovered that recruiting often targeted white fraternities and sororities to pipeline “attractive” (and mostly white) staff, and managers were instructed to maintain the look, even if it meant overt discrimination. In late 2004, A&F settled the lawsuit for about $40 million without admitting wrongdoing. The settlement’s consent decree required Abercrombie to address its biased practices: the company had to implement diversity programs, hire a Vice President of Diversity & Inclusion, bring in 25 recruiters to recruit minority employees, and ensure that marketing materials included models of colour. Essentially, Abercrombie was forced to implement basic DEI measures that, in hindsight, could have prevented the debacle in the first place.

Around the same time, A&F’s marketing provoked public outrage for racism and insensitivity. The brand produced graphic T-shirts with caricatures and slogans that offended Asian Americans – most notoriously a shirt featuring two smiling Asian figures and the words “Two Wongs Can Make It White,” which played on a racist trope. After Asian American student groups organised protests and boycotts, the company pulled the shirts and issued a sheepish apology. But the pattern of operating “in a bubble” with tone-deaf ideas was clear. Abercrombie’s exclusion was so entrenched that even satirists took notice – comedy sketches lampooned the brand’s elite, white image and the unfriendly attitude of its store staff. By the early 2010s, Abercrombie was increasingly seen as out of touch and out of step with evolving social values.

One flashpoint came in 2013, when comments Mike Jeffries had made years earlier resurfaced and went viral. In a 2006 interview, Jeffries proudly embraced “exclusionary” marketing and suggested that A&F wanted only “thin and beautiful” people wearing their clothes. The public reaction in 2013 was swift and negative – petitions garnered thousands of signatures urging Abercrombie to offer larger sizes and to stop “fat shaming” would-be customers. That year, a young activist named Benjamin O’Keefe started a viral petition calling out Abercrombie’s discriminatory sizing and marketing; he urged a boycott until the brand catered to “people of all sizes.” Looking back, O’Keefe said, “They [A&F] rooted themselves in discrimination at every single level.” His campaign captured a growing sentiment that Abercrombie’s once “cool” exclusivity had become ugly and unacceptable.

Impact on people and culture

For those who didn’t fit Abercrombie’s narrow ideal, the brand’s practices were more than just offensive – they were personally damaging. Employees and job applicants from minority backgrounds were perhaps the most directly harmed. Numerous young people had the experience of being implicitly told “you’re not what we’re looking for” because of their skin colour, ethnicity, or features. The 2003 lawsuit included students from Stanford and other colleges who were deeply discouraged after being steered away from customer-facing roles for being Latino, Black, or Asian. This kind of bias not only denied equal opportunity but also inflicted lasting psychological harm on those rejected for who they were. As one plaintiff recalled, “I felt it was because I was a Latino – but there was no one I could report this to at the time.” The legal case finally gave these youths a voice and a measure of justice through compensation and mandated reforms.

Customers were also affected in less quantifiable but real ways. Throughout the 2000s, A&F’s advertising sent a message that only certain people were “cool enough” for the brand – namely, white, athletic, attractive teens. This contributed to a toxic beauty standard that left many young people feeling inferior. Teenagers who were heavier, or of a different race, or couldn’t afford the clothes, often internalised that they “didn’t belong” in Abercrombie’s world. The documentary White Hot: The Rise & Fall of Abercrombie & Fitch notes that the brand “kept those messages pretty overt” about whose bodies and looks were considered right. In an era before body positivity and diversity were mainstream, A&F’s popularity actually amplified insecurities among those on the outside. As director Alison Klayman observed, talking about Abercrombie inevitably brings up personal stories about “body insecurities” and “what it meant to be a young person” bombarded with these images.

Additionally, certain religious and cultural groups clashed with Abercrombie’s policies. A notable example is the case of a Muslim teenager who in 2008 was denied a sales job because she wore a hijab, which violated Abercrombie’s strict “Look Policy” prohibiting head coverings. This led to a lawsuit that went all the way to the U.S. Supreme Court. In 2015, the Court ruled 8–1 against Abercrombie, declaring that refusing to hire someone in order to avoid accommodating a religious practice (like wearing a hijab) was a violation of civil rights law. The Supreme Court decision underscored how discriminatory policies had been literally built into Abercrombie’s dress code, and it further damaged the company’s reputation. By then, what once was sold as the “perfect All-American look” had been widely exposed as a euphemism for prejudice, alienating not only people of color but anyone who didn’t mirror the company’s very limited image of American youth.

The fall : business consequences of a toxic culture

The social and legal backlash against Abercrombie & Fitch ultimately led to significant business problems. In the late 1990s, exclusivity might have helped A&F stand out, but by the 2010s, consumer values had shifted dramatically. A new generation prioritised inclusion and social justice, and they had many more clothing options. A&F’s sales plunged as teens and young adults flocked to competitors that seemed more inclusive or authentic. By the mid-2010s, the once “white hot” brand was losing money and closing stores. Its image was stale – even to its core audience. As one commentator put it, exclusion stopped being cool. Many shoppers simply “don’t spend money where you feel bad about yourself”, and Abercrombie has made a lot of people feel bad

Internally, the company also struggled. After 2004, Abercrombie did make some superficial changes under the consent decree – hiring more people of colour, adding diversity training – but the toxic ethos persisted. Executives like Jeffries did not publicly acknowledge the cultural failings. Former diversity officer Todd Corley later noted that while he managed to increase the diversity of the workforce (A&F went from about 90% white employees to closer to 50% white in roughly eight years), he often lacked full support. Jeffries continued to make tone-deaf remarks or policies that “arguably worked against Corley’s progress”. Indeed, when the court-appointed monitoring ended in 2011, Abercrombie was quick to slip back into old habits in marketing, still featuring almost all-white models in giant store posters. The culture at the top had not fundamentally changed. This tension culminated in Mike Jeffries’ ouster in late 2014 amid slumping sales and mounting public criticism. By then, Abercrombie & Fitch had, in the words of one retail analyst, burned “white hot” and burned out– it had lost the cachet it once exploited, and was left with a battered reputation among both consumers and prospective employees.

Notably, revelations about the deeper dysfunction of Abercrombie’s leadership continued to emerge even after Jeffries’ departure. In 2023, news investigations alleged that Mike Jeffries had engaged in exploitative conduct with models during his tenure. Such headlines reinforce how a company culture that tolerated discrimination and objectification can breed other unethical behaviours. Abercrombie’s fall stands as a cautionary tale: a brand that glorified exclusivity to the point of discrimination sowed the seeds of its own decline.

Turning the ship: Abercrombie’s attempt at reinvention

With Jeffries gone and mounting pressure to improve, Abercrombie & Fitch began a slow turnaround, seeking to transform itself from an exclusionary brand to a far more inclusive one. New leadership took the helm – most notably Fran Horowitz, who became CEO in 2017. Horowitz publicly acknowledged that Abercrombie had to fundamentally change, saying “We are fundamentally a different company than we were back then” and “very focused on diversity and inclusion”. Under her direction, A&F finally abandoned the “cool kids only” playbook and made moves to invite a broader range of customers:

• Inclusive marketing: The company dropped its hyper-sexualised, whitewashed ads. Abercrombie’s campaigns now feature models of many different skin tones, body types, and sizes, emphasising real people and everyday stories instead of unattainable fantasies. This shift aligns the brand with modern expectations – as the director of White Hot noted, Abercrombie’s new imagery “puts them in line with what good business looks like today”.
• Product range and sizing: Abercrombie finally extended its sizing and styles to cater to more body types. It introduced “Curve Love” jeans and expanded women’s sizes beyond the previous limits. By embracing plus-size customers and offering more diverse fits (looser cuts, curvy fits, etc.), the brand signalled that everyone is welcome – a stark contrast to its old stance of refusing to carry larger sizes. These changes not only won back some customers but even created a “cult following” for certain inclusive products like the Curve Love line.
• Workforce & culture: Building on earlier efforts, A&F’s workforce today is much more diverse, and the overt “look” biases have been curtailed. Store associates are no longer hired (or fired) based on a single aesthetic mold. There’s also a greater emphasis on employee experience and openness – a far cry from the days when only one kind of person could thrive at the company. (It’s telling that Abercrombie won several Best Place to Work for LGBTQ Equality awards in the late 2000s under Corley’s guidance, reflecting some cultural growth.) Still, questions remain about how fully the internal culture has reckoned with the past; meaningful inclusion requires ongoing commitment beyond just marketing fixes.

These reforms have started to pay off. By 2021–2022, Abercrombie’s sales had stabilised and even grown, after years of decline. The company’s rebrand resonated with some young adults who rediscovered the label after it shed its old baggage. On TikTok, for instance, the hashtag #AbercrombieIsBack trended as new customers showed off the revamped styles and messaging. A&F’s share price rebounded as investors gained confidence in the turnaround. While Abercrombie will likely never dominate culture the way it did in 1999, it has at least moved from being a case study in exclusion to a case study in redemption through inclusion.

Horowitz’s strategy – focusing on knowing the customer and “meticulously building the product, voice and experience to match their needs” – is essentially a customer-centric approach that couldn’t be more different from the old Jeffries approach. Where Abercrombie once dictated a fantasy to consumers, it now listens and adapts to them. That includes the simple realisation: diversity is a business imperative. In fact, part of the 2004 consent decree was a line from civil rights attorneys noting “Abercrombie now realises diversity makes good business sense”– a lesson it took the company another decade to truly embrace.

Lessons for retail

Abercrombie & Fitch’s DEI journey – from exclusive to inclusive (and still in progress) – offers several powerful lessons for retailers and consumer brands in general:

• Exclusion is not a sustainable strategy: What might create short-term buzz, or a feeling of “elite” coolness, can backfire spectacularly. Catering to a narrow ideal of beauty or identity alienates large segments of potential customers and ultimately becomes a liability as societal values evolve. In retail, coolness is a moving target, but respect and inclusion have enduring value. Brands that hinge their appeal on putting others down are on borrowed time.
• Diversity and inclusion are smart business: Embracing DEI is not just a moral stance but a market opportunity. A&F learned the hard way that exclusion comes with real business consequences. By excluding large demographics (whether through limited sizing, racist imagery, or biased hiring), Abercrombie left money on the table for years. Retailers succeed when customers feel seen and welcome – which translates into broader market reach and loyalty. Companies, from department stores to startups, can take note: an inclusive brand can attract a wider customer base and avoid unnecessary reputational risks.
• Toxic culture starts at the top: Abercrombie’s downfall illustrates how leadership attitudes cascade into company culture. Jeffries’ openly exclusionary philosophy became “baked in” to every policy, from hiring to marketing. Leaders in any organisation must recognise their role in setting the tone. A culture that tolerates discrimination or objectification in any form will eventually face scandal or legal action, as seen with A&F’s lawsuits and even the personal misconduct allegations against its former CEO. Conversely, leadership commitment to inclusion can drive positive change – Horowitz’s approach has clearly helped rehabilitate Abercrombie’s culture and image.
• Accountability and continuous improvement: A&F’s initial responses (settlements, hiring a diversity officer, etc.) were not enough because they weren’t accompanied by genuine accountability or attitude shifts. The consent decree imposed changes, but once external monitoring ended, old habits crept back. True inclusion is an ongoing effort, not a one-off PR fix. Retailers must continuously engage with diverse voices (employees, customers, consultants) to identify blind spots and hold themselves accountable to progress even when public attention wanes.
• Representation matters: One of the simplest takeaways is the importance of representation in both branding and staffing. Abercrombie’s story shows that seeing only one type of person in ads or in sales roles sends a message – and people notice. Modern consumers expect brands, especially mainstream retailers and department stores, to reflect the real diversity of society. This means featuring different races, body types, ages, and abilities in advertising, and ensuring inclusive hiring from the sales floor to the boardroom. Representation isn’t about political correctness; it tangibly impacts how welcome customers and employees feel.

Conclusion: DEI as part of retail resilience

The saga of Abercrombie & Fitch serves as a lesson from the field in how a deliberately cultivated image of exclusivity became a company’s Achilles’ heel. What was once heralded as “aspirational” came to be seen as discriminatory and out of touch. The people most hurt along the way were those whom A&F’s leadership chose to exclude – racial minorities denied jobs, young women shamed for their bodies, individuals whose sense of self-worth took a hit from not “belonging” in the A&F world. In the end, Abercrombie paid the price in lawsuits, lost customers, and a near-collapse of the business.

Yet, Abercrombie & Fitch’s ongoing reinvention also demonstrates that change is possible, if not always easy. The company has begun rebuilding trust by doing what it should have done all along: embracing inclusion as part of its brand identity. As explored further in the IADS White Paper DEI at a crossroads in retail, Abercrombie & Fitch is not an isolated case; it sits alongside other global retail examples that show how progress on DEI can stall, reverse, or regain momentum depending on leadership focus and sustained commitment. Inclusion and diversity are not antithetical to a cool brand – they are the new currency of cool. A&F’s fall and rise underline a broader truth: in today’s world, the brands that thrive will be those that make everyone feel like they belong. Abercrombie & Fitch had to learn this through failure, but others can heed the lesson upfront – exclusivity might sell cologne and T-shirts for a season, but inclusion sells longevity.

Credits: IADS (Maya Sankoh)

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Zara is, by any measure, the archetype of fast fashion. No other brand has done more to define the model: rapid design cycles, vertically integrated supply chains, relentless store expansion. The parent company, Inditex, is valued among Europe’s most capitalised corporations.

Yet something has shifted. Over the past five years, Zara has been reinventing what its stores look and feel like, how they operate, and what they aspire to be. Flagship after flagship, the brand has moved toward larger, locally rooted, experientially rich formats that blur the line between monobrand retail and something that looks remarkably like a department store. The prices remain accessible; the ambition does not.

As the recent flagship openings documented by Newstores, IADS’ retail observation partner, illustrate, this evolution deserves more than a passing glance from department store leaders. Zara is not merely a competitor occupying adjacent real estate in prime urban locations. It is, arguably, the most disciplined and best-capitalised retailer currently converging on the department store’s own territory — in format, in positioning, and in the role it seeks to play in cities. Understanding how it got there, and where it is heading, is not an exercise in competitive anxiety. It is an opportunity to ask what department stores can learn, where they must differentiate, and what they should refuse to concede.

How Zara became a global retail powerhouse

The story began in 1963, when Amancio Ortega, then a delivery boy, founded Confecciones GOA in La Coruña to manufacture women’s bathrobes and lingerie for local retailers, by copying popular designs and selling them at accessible prices. The pivot came in 1975 when a customer cancelled a large order, forcing Ortega to open a store to sell the stock himself.

The inaugural collection featured white blouses and shirts inspired by American preppy style, marketed as fashionable “high-end lookalikes” at prices ordinary Spaniards could afford. The business model was new: Ortega controlled everything from design to retail, eliminating intermediaries. Success came quickly. By 1983, there were nine Zara stores across Spain, and in 1984 the company opened a logistics centre near La Coruña, enabling frequent, small, just-in-time deliveries to stores.

In 1985, Ortega formalised this growing empire by creating Inditex (Industria de Diseño Textil) as the holding company for all operations, built on rapid fashion cycles, tight supply-chain control, and the ability to test, learn, and iterate fast. The brand portfolio expanded through the acquisition or launch of Pull&Bear (1991), Massimo Dutti (1991–94), and Bershka (1998). Yet Zara remained the volume driver and image engine of the group, growing internationally: Portugal in 1988, New York in 1989, Paris in 1990, as a prelude to broader European expansion in the 1990s and Mexico City (1992). By the decade’s end, Zara had entered the Middle East, Latin America, Turkey and Japan, reaching approximately 1,000 retail locations.

In 2001, Inditex listed on the Spanish stock exchange at a valuation of €9 billion; shares surged on the first day, making Ortega Spain’s richest person overnight. The listing funded aggressive growth strategy in Asia, and by 2009, Zara operated in 69 countries, with a store count surpassing 2,000.

By then, Zara had become synonymous with fast fashion itself: global scale, twice-weekly store deliveries, lead times of just a few weeks from design to the shop floor, and a distinctive sourcing strategy. While competitors moved production entirely to Asia for cost savings, Zara maintained approximately 50% of production in “proximity markets”—Spain, Portugal, Morocco, and Turkey—for trendy, fast-turning items, reserving Asian production for basics with longer lead times. This dual-speed supply chain allowed Zara to react to emerging trends mid-season while competitors were locked into collections planned six months in advance.

Operational sophistication went hand in hand with technology. From 2013 to 2015, Zara implemented RFID tagging across its entire network, enabling individual garment tracking, improved stock visibility, click-and-collect services and self-checkout. E-commerce launched in 2010 in six European markets with a deliberately simple interface. A mobile app followed shortly after, and by 2013, online sales had expanded to 106 countries. Today, e-commerce is available in 200 markets through the website, app or partners. At the group level, online accounts for more than a quarter of total sales, with 218 million active app users, 8.1 billion annual visits, and 257 million social media followers — Zara being the primary driver of engagement.

In 2011, Amancio Ortega stepped down as CEO, handing the reins to Pablo Isla. Under his leadership, Inditex reached its peak store count in 2019 with 2,139 locations. The COVID-19 pandemic hit hard: sales fell 44% year-on-year, resulting in a €409 million net loss as store closures were not offset by a 50% surge in online sales in Q1 (however, the company posted a total €1.1 bn net profit for the full year 2020). Inditex responded with massive investment — approximately €2.7 billion in technology and store integration — while earmarking 600+ stores for closure between 2020 and 2024 in China, Spain, France and Germany. The philosophy shifted from maximising store count to a “fewer, larger, better” flagship strategy.

In 2021, Óscar García Maceiras succeeded Isla as CEO, and in 2022, Marta Ortega Pérez—the founder’s daughter—became Non-Executive Chair. Under her influence, Zara began repositioning toward a more premium, “fashion house” identity rather than pure fast-fashion volume play. This translated into price increases in 2023 (without significant customer defection—a sharp contrast to struggles faced by competitors like H&M and Uniqlo with similar moves), designer collaborations (Stefano Pilati, Ludovic de Saint Sernin, Narciso Rodríguez), and a new visual language through the works of fashion photographers like Steven Meisel and Mario Sorrenti. Curation and quality took precedence over sheer speed and volume.

Brand extensions accompanied this repositioning. Zara Beauty launched in May 2021 and expanded into hair care by 2025. Zara Pre-Owned debuted in 2022, offering repair, resale, and donation services as part of sustainability initiatives aimed at luring younger consumers.

Technology investments continued to transform operations — soft-tag RFID now deployed in 100% of stores (and set to cover 90% of products across all formats by Spring/Summer 2026), AI-driven demand forecasting and trend detection, logistics automation and a major new distribution centre near Zaragoza scheduled to open in mid-2026. Online, Zara has introduced an AI-based virtual fitting tool (”Zara Try-on”) that allows customers to generate a synthetic avatar from their own photos and see it wearing real products — already deployed in 43 markets with over 7 million sessions since launch in late 2025. But the most visible changes were in the flagship stores themselves, which became laboratories for customer experience innovation. The Manchester Trafford Centre store (3,200+ sqm) featured automated sorters, assisted checkouts and in-store repair booking. The expanded Hudson Yards location in Manhattan (2,200 sqm) and the Nanjing flagship (2,500+ sqm) showcased Zacaffè — Zara’s in-store café concept — alongside “Fit Check” smart mirrors and apparel vending machines. The Osaka store (2,040 sqm, the 64th in Japan) demonstrated that even in mature markets, Zara saw value in enhanced physical experiences.

Zara stores today: why they matter to department stores

The brand remains the crown jewel of the Inditex group, which also operates Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho. Under the group’s current reporting structure, Zara, Zara Home and Lefties together generated €28.1 billion in FY2025 (year ending January 2026, and up from €27,8 billion in 2024), representing 70% of Inditex’s total revenue of €39.9 billion. As of January 2026, Zara operates 1,500 stores globally — down from 1,550 a year earlier — while total selling space for the Zara cluster grew to 3.18 million sq m (+1.3%), confirming the “fewer, larger, better” thesis. At the group level, gross space increased 5.3% in the year, and the financial trajectory continues to strengthen.

The newest stores are organised into semi-independent sections — women, men, kids, fragrances, Zara Origins, Zara Athleticz — each with its own visual identity but unified by a coherent overall architecture. Technology is embedded throughout: RFID-enabled inventory, interactive fitting-room mirrors, self-checkout, and dedicated areas for online pickup and returns. Each store acts as a mini fulfilment hub, raising complexity in labour planning, backroom capacity and service design.

Flagships aim to become destinations. Experiential elements — cafés, immersive displays — blend retail, hospitality and services. They are increasingly referred to as “monobrand department stores” due to their size and scope. Meanwhile, peripheral or smaller stores, especially in mature European markets, continue to be consolidated in favour of productivity per square metre over maximum coverage.

Zara’s store fleet is converging toward a smaller number of highly invested flagship “magnets”, often in the same urban nodes as department stores, competing for fashion traffic while potentially driving broader footfall to premium retail districts. Fully integrated into the digital ecosystem through their fulfilment and experience capabilities, these flagships also serve as physical engagement funnels for Zara’s online business.

Department store leaders can therefore view Zara both as a competitor and as a benchmark: a vertically integrated, data-rich fashion machine that is deliberately reducing its physical footprint while upgrading every remaining location into a highly choreographed, omnichannel-enabled flagship. Like department stores, Zara is seeking to escape the Shein/Temu low-price race by moving upmarket without alienating its core customers — through improved brand image, upgraded store concepts and elevated décor.

What recent flagship openings reveal: four signals for department stores

Between 2024 and 2026, IADS’ partner Newstores documented a series of notable Zara openings and relocations across Europe and Japan, including the expansion of the standalone Zara Man format — now in its fourth location. Taken individually, each is a well-executed store. Taken together, they tell a far more consequential story: Zara is methodically building the capabilities, aesthetics, and spatial logic that have historically been the preserve of department stores. Four patterns stand out.

The “rooms” logic: a monobrand department store in all but name

Walk into the relocated Zara in Manchester’s Trafford Centre (3,000+ sq m on a single floor) or the new Leeds flagship (4,300 sq m across three floors) and the layout is immediately striking: instead of one continuous selling floor, the space is broken into a sequence of distinct rooms — a baby boutique here, an accessories and handbags shop-in-shop there, each with its own visual register. Newstores’ John Ryan described the Trafford store as “a mall within a mall“. The same principle is at work in Yokohama, where the relocated 2,000 sq m store is organised as a series of boutique-style rooms, with tonal and lighting shifts demarcating womenswear, menswear and younger fashion. Even the more compact standalone Zara Man formats follow this grammar: the recently opened 700 sq m Berlin store in the Mall of Berlin — the fourth standalone Zara Man after Osaka, Rome and South Coast Plaza — is designed as a series of linked rooms across two floors, with Zara Athleticz given its own separate entrance from the mall.

This is, of course, the foundational spatial grammar of the department store: curated worlds under one roof, each with its own identity, connected by a coherent architectural envelope. Zara is now applying it — at scale, under a single brand — in the very retail districts where department stores operate.

Local roots as a premium signal

One of the most striking shifts in recent Zara flagships is the deliberate rejection of a standardised global format in favour of deep contextual anchoring.

In Lisbon, the 5,000 sq m store occupying an entire block on Rossio Square preserves the character of the original building, lending the interior — especially the Zara Home floor — a distinctly Portuguese domestic atmosphere35. The in-store café is a partnership with a local pastéis de nata atelier: a reference that no global playbook could have prescribed. In Madrid, the reopened Calle Serrano flagship deploys an interpretation of Castilian architecture — exposed brick, reclaimed wood, iron and ceramics — with a graduated lighting scheme (darker below, brighter above) that choreographs the vertical journey through the building. The fourth floor hosts “El Apartamento”, a 400 sq m space designed as a curated domestic setting blending Zara Home and clothing36.

In Japan, Zara goes further still. The Osaka Zara Man store wraps its façade in burnt cedar, furnishes the interior with Sunuke wood and antique Japanese chairs, and includes a “Listening Room” where customers can sit and listen to music from custom-designed speakers37. In Barcelona, the new Diagonal flagship — designed with Vincent Van Duysen — inhabits one of the avenue’s traditional buildings, using brushed metal, natural wood, soft stone and exposed timber beams to create what Newstores calls “a restrained sense of luxury“ at mid-market prices38.

For department store leaders, the parallel is direct: the ability to be of a city, not just in it, has long been a defining advantage of the format — think Harrods in London, Le Bon Marché in Paris, or Isetan in Tokyo Shinjuku. Zara is now investing heavily in precisely that kind of local resonance, store by store.

Luxury codes at mid-market prices

Barcelona’s Diagonal flagship raises a question that should preoccupy every department store CEO positioning in the premium segment. As Newstores pointedly observed: what can mid-market competitors be doing when their interiors begin to match — or surpass — those of luxury merchants?

The Madrid Serrano store is explicitly designed to feel like it “fringes on luxury“, a deliberate departure from Zara’s familiar cream-and-brushed-metal aesthetic. In Osaka, the Zara Man store uses Spanish artworks, sculpture and a vintage motorcycle as props — the visual vocabulary of a concept boutique, not a volume retailer. In Berlin, the new standalone Zara Man deploys a palette of black, steel and plain light wood under a blacked-out open ceiling, with a sculptural matt-black staircase linking the two floors — a deliberately minimalist environment in which a restrained number of garments are on display, reinforcing the sense of curation over volume. In Barcelona, the Van Duysen collaboration produces an interior of such restraint and material quality that, absent the price tags, it could pass for a high-end maison.

This is the tangible translation of Marta Ortega’s repositioning: designer collaborations, fashion-house photography, controlled price increases absorbed without meaningful customer defection. The flagships are where the strategy becomes tangible. And for department stores that compete on curation, environment and brand elevation, the gap is narrowing — not because department stores are declining, but because Zara is ascending.

The store as omnichannel infrastructure

Beneath the design ambition, these flagships are also logistical machines. In Yokohama, customers can scan items to check in-store availability, use digital readers to locate products on the floor, and pick up online orders from a robotic pickup point. In Manchester’s Trafford Centre, 20 “assisted checkout” desks replace conventional tills entirely, with contactless payment as the default39. These are not add-ons, they are structural to the store concept.

Combined with RFID-tagged inventory, ship-from-store capabilities, and dedicated online pickup and return zones, each flagship operates as a fulfilment hub that also serves as a beautifully designed retail space. This dual function — experience venue and logistics node — is one that department stores have been pursuing for years, but that Zara now executes with the advantage of vertical integration and a single-brand product architecture that radically simplifies operations.

For department stores: competitor, benchmark, or mirror?

The conventional framing positions Zara as a competitor to department stores. It occupies the same prime urban locations, targets overlapping customer segments, and increasingly deploys the same tools: curated environments, local architectural identity, hospitality elements, omnichannel fulfilment. In cities like Manchester, Madrid, Barcelona, or Osaka, Zara flagships now sit next door to — and sometimes outperform — department stores in terms of design ambition, technological sophistication, and footfall. The competitive overlap is real and growing.

Yet the more instructive lens may be that of the benchmark. Zara’s trajectory over the past five years offers department store leaders something rarer and more valuable than a threat assessment: a live case study in strategic reinvention under pressure.

What department stores can learn

Faced with the twin squeeze of ultra-fast-fashion platforms undercutting on price and speed, and a post-pandemic consumer expecting more from physical retail, Zara did not retreat into either discount volume or digital-only efficiency. Instead, it made a series of decisions that department store CEOs will recognise as familiar ambitions — but that Zara executed with a speed, coherence and capital commitment that few multibrand retailers have matched:

• It shrank to grow: From a peak of 2,139 stores in 2019 to 1,500 in 2026, Zara closed over 600 locations while increasing total commercial space. Every closure funded a larger, better-positioned flagship. Department stores have been debating portfolio rationalisation for years; Zara did it, absorbing the short-term pain and emerging with a more productive, more investable estate.
•  It moved upmarket without losing its base: Price increases in 2023, designer collaborations, fashion-house photography, new store concepts — all signalled a deliberate premiumisation. Yet customer defection remained minimal because the repositioning was grounded in tangible improvements to product and experience, not mere aspiration, and simultaneously customers can still shop access price items. Department stores attempting similar moves — elevating private labels, introducing premium services, curating more selectively — often struggle with the execution gap between intention and perception. Zara closed it.
• It made technology invisible: RFID, AI-driven demand forecasting, robotic pick-up, assisted checkouts, in-store product locators — the technological stack in a Zara flagship is formidable. But none of it is presented as innovation theatre. It simply works, quietly, in the background of a beautifully designed space. This stands in contrast to some department store technology investments, where digital screens and interactive installations can feel bolted on rather than woven in.
•  It turned stores into stories: The burnt cedar façade in Osaka, the pastéis de nata café in Lisbon, the “Apartamento” in Madrid, the Listening Room — these are not gimmicks. They are narrative devices that give each flagship a reason to exist beyond product distribution. They create memory, talkability, and a sense of place. They make the store worth visiting even when customers have no purchase intent — precisely the dynamic that drives discovery, conversion, and loyalty over time.

However, if Zara is a benchmark, it is a bounded one — and understanding its limits is essential for department stores defining their own strategic space.

The limits of the comparison

Zara is, and will remain, a monobrand operator. However skilfully it fragments its offer into “rooms”, collections and sub-brands (Origins, Athleticz, Beauty), the customer walks in knowing they are in a Zara store. The department store’s foundational proposition — the ability to juxtapose dozens of brands, price points and product categories under editorial curation — is structurally unavailable to Zara. This is not a marginal advantage. It is the reason a customer can walk into a department store looking for a fragrance and leave with a coat: the serendipity of adjacency, the productive collision of worlds that no monobrand environment can replicate.

Zara cannot broker trust across categories in the way a department store can. When a department store introduces a new beauty brand, endorses an emerging designer or curates a homeware edit, it lends its accumulated credibility to that selection. It acts as filter, guarantor and tastemaker. Zara can curate within its own universe, but it cannot play this intermediary role across the broader market. In an era of infinite online choice and eroding consumer trust, this curatorial authority — if actively exercised — remains a powerful differentiator.

Zara’s experiential ambitions are constrained by its economics. A café, a listening room, a curated apartment — these are meaningful gestures within a Zara flagship, but they are secondary to the core business of moving product at scale through fast-turning inventory. Zara’s gross margins (59.7%) are built on volume, speed and vertical integration. Every square metre devoted to non-selling experience is a square metre that must be justified against that model. Department stores, by contrast, have historically operated as platforms where experiences — restaurants, spas, cultural programming, personal services, events — can coexist with and reinforce commercial activity. The format is structurally better suited to deep experiential investment.

Zara cannot serve as a community anchor the way a department store can. A Zara flagship, however beautiful, is a retail destination. A department store, at its best, is a civic institution: a place where a city meets itself, where cultural programming, dining, services and commerce intertwine to create something irreplaceable in the urban fabric. This dimension — part public space, part commercial enterprise, part cultural venue — is the department store’s deepest moat, and it is one that no monobrand retailer, however ambitious, can credibly claim.

Conclusion: the experience trap

The fact that Zara’s most ambitious stores are increasingly described as “monobrand department stores” should be read as both a compliment and a warning to the sector. A compliment, because it confirms that the department store model — multi-world, experiential, locally rooted, service-rich — remains the aspirational template for physical retail at scale. Yet it is also a warning: if a vertically integrated group with €11.0 billion in net cash, €6.2 billion in annual net income, a 58.3% gross margin and €10.7 billion in online sales is converging on your format, the bar for execution is rising fast.

The logical response would be to invest even more heavily in experience as a differentiator. Yet this leads to an uncomfortable question: at what point does a department store risk becoming a destination people visit but do not buy from?

If every investment dollar flows toward restaurants, cultural programming, wellness services, co-working spaces and immersive installations — and away from the hard work of product curation, buying excellence, brand exclusivity and commercial edge — the department store may end up as a beautifully curated food hall with a diminishing fashion floor attached. The footfall metrics will look healthy. The conversion metrics will not.

This is not a theoretical risk. Some department store companies have seen experiential investments drive significant increases in traffic and dwell time, without proportional gains in product sales. The experience becomes the product — and the actual product becomes an afterthought.

The antidote is not to retreat from experience, but to insist that experience and commerce remain structurally linked. The most effective department store innovations of recent years share a common trait: they make the act of buying better, not separate from the visit. A personal styling service that ends with a curated selection ready to try. A restaurant on the fashion floor, not in a separate building. A beauty counter where the consultation is the experience and the purchase is its natural conclusion. A homeware floor designed as a series of shoppable rooms — not unlike, in fact, what Zara Home does in Lisbon.

Department stores do not need to become Zara. They cannot, and should not. But they must match Zara’s discipline in portfolio rationalisation, its rigour in technology integration, its boldness in premiumisation, and its instinct for making every store feel inevitable in its city. And they must do all of this while leveraging the one thing Zara can never replicate: the power of being a platform — for brands, for experiences, for communities, and for the irreplaceable serendipity of walking in for one thing and discovering another.

The only question is whether the sector will invest in this with the same conviction that Zara invests in its own.

Credits: IADS (Selvane Mohandas du Ménil)

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Galeries Lafayette’s first Indian flagship store opened in the Kalaghoda district in Mumbai, at the historic Turner Morrison and Voltas House buildings. Indian shoppers were already among the top international clients at Galeries Lafayette’s Paris Haussmann flagship, with India’s luxury market projected to reach USD 85 billion by 2030[1].

Income inequality in India is stark and ever-increasing, resulting in a nascent luxury segment while mass-market retailers are squeezed. Mumbai, home to over 450 billionaires and 142,000 millionaires[2], and the cultural and financial capital of the country, was the logical entry point for Galeries Lafayette.

Despite a later-than-planned opening due to the complexity of restoring heritage buildings, the Mumbai opening of Galeries Lafayette marks India’s first true luxury department store. It results from a seven-year ambition and partnership announced in November 2022 between Galeries Lafayette Group (Paris) and Aditya Birla Fashion and Retail Limited (ABFRL), the fashion arm of India's Aditya Birla Group conglomerate. The deal was structured as a 20-year exclusive franchise agreement, giving ABFRL the sole rights to operate Galeries Lafayette stores across India. Strategic advisory firm Pike Preston served as the deal's advisor on record. The next planned store opening is in Delhi in 2027.

Beyond being a commercial retail space, this opening represents an extension of French cultural diplomacy and is part of strategic and geopolitical cooperation between France and India. By integrating local architectural heritage and hosting joint Franco-Indian initiatives, Galeries Lafayette Mumbai serves as a symbol of deepening cultural ties between the two nations.

India’s luxury market and competitive context

The Indian luxury sector has entered a period of structurally accelerating growth with the personal luxury goods (fashion, accessories, watches, beauty) segment being valued at $10.6 billion[3]. Bain and Altagamma’s 2025 report highlighted a shift in luxury retail, in which the Middle East, Latin America, Southeast Asia, India, and Africa combined represent a market value of around €45 billion in 2025, matching Mainland China in scale.

The competitive narrative in India's luxury retail market has been framed as ‘Ambanis vs. Birlas’. Reliance Brands Limited (RBL), owned by the Ambani family, manages a portfolio of 90+ brands, including Balenciaga, Bottega Veneta, Versace, Jimmy Choo, Valentino, Tiffany & Co., Burberry, and Ferragamo. It absorbed Genesis Luxury, the original broker that brought Western luxury to India, and operates Jio World Plaza, the country's most advanced luxury mall, located in Mumbai. Its digital arm, AJIO Luxe, extends brand access nationally. In January 2025, RBL also secured the franchise for Saks Fifth Avenue in India.

Aditya Birla Group built its luxury presence through The Collective (India’s original multi-brand luxury store with 12 locations and 85 brands) and through equity stakes in Indian designers, including Sabyasachi, Tarun Tahiliani, and Shantnu & Nikhil. It now operates Galeries Lafayette Mumbai, India’s first multi-brand department store model with over 250 brands in a luxury South Mumbai heritage location and plans to open a location in Delhi by 2027.

Tata Group defines Indian luxury hospitality through Taj hotels and operates Tata CLiQ Luxury, India’s leading digital luxury marketplace.

Further to this, India faces a key structural constraint: a lack of luxury malls. India has precisely three genuine luxury malls: DLF Emporio (Delhi), DLF The Chanakya (Delhi), and Jio World Plaza (Mumbai). In March 2026, DLF’s head of luxury retail reported zero availability despite 15 top-tier brands ready to enter immediately. DLF Emporio’s planned expansion (doubling to 320,000 sq ft) will not be ready until the end of 2028. This bottleneck is a significant constraint on the speed at which the market can absorb demand — and it is one reason the Galeries Lafayette location strategy (a standalone heritage building rather than a mall) is particularly notable.

Architectural localisation and Franco-Indian programming

Galeries Lafayette’s Mumbai store is located in the heart of Kalaghoda, one of Mumbai's most culturally and architecturally significant districts, neighbouring flagships for Hermès, Christian Louboutin, and Sabyasachi. The store spans 90,000 sq ft (approximately 8,400–9,000 sqm) across five floors, plus a dedicated basement Beauty Hall. The ground floor is dedicated to leather goods and accessories, with luxury womenswear on the first floor, contemporary womenswear on the second, menswear and tailoring on the third, and streetwear and concept retail on the fourth. The rooftop terraces of both buildings are earmarked for future dining offerings.

Architecturally unique, the store spans two restored century-old heritage structures — the Turner Morrison Building (a colonial-era, arched neoclassical building originally built for a British trading company) and Voltas House (a mid-century modernist post-independence industrial building) — which have been physically interconnected through a new architectural insertion. This is one of India's first major façade-retaining renovation projects.

The store was designed by Virgile + Partners, blending Parisian and Indian design motifs. The result is a distinctive retail interior; key design features include a life-size Cupola inspired by the French observation balloon L'Intrépide (1796), which floods the central atrium with natural light, an elliptical ‘Jardin de Paris’ staircase with hand-embroidered wallpaper created by Indian artisans and lotus-motif parchinkari stone inlay at the ground-floor entrance, inspired by the Taj Mahal’s craftsmanship. Three Indian artists, Sheehij Kaul, Reshidev RK, and Aashika & Tanishaa Cunha (from Plane Crazy Studios) were commissioned for permanent in-store works.

Beyond retail, the store has positioned itself as a cultural destination bridging France and India. Starting in November 2025, Galeries Lafayette Mumbai displayed rotating art installations, live activations and pop-up shows.

In February this year, the store also hosted a flagship event for the India-France Year of Innovation 2026, attended by two French government ministers (Roland Lescure, Minister of Economy, and Éléonore Caroit, Minister Delegate for Europe) and featured a collaboration with contemporary Indian artist Ankon Mitra. During the same time, Galeries Lafayette Mumbai participated in the India Design ID 2026 fair in New Delhi (the second edition of ‘Art de Vivre à la française’), reinforcing its cultural presence ahead of the planned Delhi store.

Brand selection and specialised services

The pace of brands’ market entry in India has accelerated dramatically. 27 new international brands entered India in 2024 (nearly double the 14 in 2023), with 56% from EMEA, led by France and Italy. 2025 entries include Messika (via The Chanakya), Chanel Beauty on Nykaa, Stella McCartney (via RBL), Maje (Jio World Drive, via RBL), and Kilian Paris. French luxury group SMCP (Sandro, Maje, Claudie Pierlot) entered via Reliance in 2023, with its first Sandro store opening in Mumbai in January 2025. The 2026 pipeline includes Lululemon (via Tata CLiQ), Abercrombie & Fitch/Hollister (via Myntra), and Off-White.

Indian designer labels are closing the revenue gap with global players at a striking pace. By Fiscal Year 2025, Sabyasachi reached ~INR 500 crore in revenue, Tarun Tahiliani ~INR 350 crore, and Manish Malhotra INR 308 crore, exceeding Gucci India (INR 265 crore and down 17% YoY) and Christian Dior India (INR 257 crore and down 3% YoY)[4].

At opening, Galeries Lafayette Mumbai carried over 250 brands with approximately 70% of the assortment exclusive to India, and 200 brands entering Indian retail for the first time. Notable India-firsts include Coperni, Patou, Marni, Valextra, Diptyque, and Parfums de Marly. Indian designers confirmed at launched included Bodice (Ruchika Sachdeva), Dhruv Kapoor, Almost Gods, Hemant & Nandita, Rococo Sand, Verandah (Anjali Patel Mehta), Chorus (by Chanakya atelier), Misho (jewellery), Deepa Gurnani (jewellery), plus Sabyasachi and Tarun Tahiliani[5].

Services offered at the store include personal styling and personal shopping appointments, private reception lounges and VIP client spaces, in-store concierge services, and seasonal cultural programming and live activations. It will also offer special wedding-season services, a key focus given India’s luxury wedding market and valet parking services, catering to Mumbai’s car-travel culture.

Cultural dynamics and the Indian luxury consumer

The purchasing behaviour of Indian luxury consumers is heavily influenced by cultural traditions and a growing appetite for experiences. The $50 billion Indian wedding market is a primary catalyst, driving over half of all gold jewellery sales and prompting large-ticket spending across fashion and hospitality. For these key celebratory occasions, consumers show strong cultural loyalty to homegrown designers like Sabyasachi and Tarun Tahiliani, whose revenues now rival or surpass major European fashion houses operating in India.

Geographically and digitally, the Indian luxury consumer is also evolving. While Mumbai and Delhi-NCR remain crucial hubs, luxury consumption in non-metro cities is booming, driving over 50% of all luxury e-commerce sales. Automobiles constitute the largest and fastest-growing luxury category in India[6]. Within personal luxury goods, watches and jewellery dominate the category, alongside a rapidly growing beauty segment.

However, domestic luxury shopping faces a structural hurdle: high import duties and a 28% Goods and Services Tax mean luxury goods can cost up to 40% more than in markets like Dubai, leading many wealthy Indians to systematically shop abroad. The India-EU and India-EFTA trade deals are the first policy changes in decades to address this directly. Galeries Lafayette’s response is to align pricing with Dubai levels where possible.

For those shopping domestically, especially newer entrants climbing the luxury ladder, Galeries Lafayette can act as an accessible premiumisation gateway, offering a less intimidating experience than mono-brand boutiques. During the launch, Galeries Lafayette’s international development director Philippe Pedone also acknowledged that more local brands would be added.

Galeries Lafayette’s Indian market roadmap

Galeries Lafayette’s entry into Mumbai marks the group’s strategic pivot away from competitive Western markets (highlighted by the July 2024 closure of its Berlin store) and toward high-growth regions like Asia and the Middle East[7]. With a global ambition to increase international revenue from 10% pre-pandemic to 25% by 2030, India sits at the core of this strategy alongside markets like Dubai, Doha, and Macau. The immediate next phase for the Mumbai flagship involves completing its experiential offerings. While food and beverage concepts were not operational at the November 2025 launch, CEO Arthur Lemoine confirmed that rooftop dining will launch in 2026, with the Parisian dining concept La Cantine du Faubourg in advanced talks for the space.

Beyond the Mumbai flagship, Galeries Lafayette’s roadmap in India relies on both physical footprint expansion and digital penetration. A second flagship store in New Delhi, spanning approximately 5,500 square meters within the DLF Emporio complex, is now targeted for 2027 following developer timeline delays. To capture the growing wealth and demand outside major metro areas, the brand also plans to launch a dedicated e-commerce platform aimed at consumers in Tier-2 and Tier-3 cities.

Ultimately, the long-term success of this expansion will lean on its partnerships. By leveraging Aditya Birla Group’s deep connections with homegrown brands and continuing to act as a conduit for Indian-French cultural diplomacy, Galeries Lafayette is positioning itself not just as a foreign retailer but as a deeply integrated platform bridging global luxury with India’s evolving consumer landscape.

Credits: Anchita Ranka

[1] Galeries Lafayette to open its first store in India amid luxury boom

[2]Hurun-India Wealth Report 2025

[3] India Luxury Goods Market Size, Share, Trends and Forecast by Product Type, Distribution Channel, End User and Region, 2026-2034

[4] Indian luxury brands close revenue gap with global players in FY25: Rediffusion report

[5] Galeries Lafayette Bows in Mumbai, a Major Step for Retail in India

[6] Experiential luxury, cars and beauty driving Indian luxury market

[7] ‘The timing is finally right’: Galeries Lafayette arrives in India

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CLICK HERE TO SEE THE PRESENTATION OF DE BIJENKORF ROTTERDAM

For 155 years, De Bijenkorf has stood as one of the Netherlands’ most recognisable retail institutions. Yet the past decade has tested the department store, from ownership shifts and pandemic shocks to repeated reorganisations and a push to reconcile heritage with profitability. The IADS had the occasion to visit the Rotterdam store. This article walks through the company’s history and the store floor and asks whether De Bijenkorf can create true excitement among its customers. Store pictures are attached to this article.

155 years of history

De Bijenkorf: the beehive of commerce

Founded in 1870 in Amsterdam, De Bijenkorf has breifely been a member of the IADS in 1930. Everything began when Simon Philip Goudsmit opened a small haberdashery in Amsterdam, a modest origin that gave the company its Dutch name, “the beehive,” and its early reputation for quality goods and service. Throughout the late 19th and early 20th centuries, the business expanded from that single shop into a full‑scale department store in Amsterdam, adding product categories and services and establishing itself as a city‑centre destination for middle- and upper‑market shoppers.

Since 2011, the department store has been owned by the Selfridges Group.1 The group was owned by the Weston family, who now also own Fortnum & Mason and Primark, among others, until 2022, when Central Group and Signa Holding acquired it.

In 2013, De Bijenkorf launched its “premium experience” strategy, investing more than €200 million in five years: the goal was to transform the business to reach a higher international standard in terms of brands, services and shopping experience. Five stores were closed to focus only on those able to convey the premium message. De Bijenkorf now has seven stores2 and a patisserie in Amsterdam. The e-commerce branch opened in 2009 to serve the Netherlands and, from 2019, has expanded across Europe, with German, French, Austrian and Belgian websites, and has communicated heavily on social media.

Covid financial impact

2020 was supposed to be a great year for De Bijenkorf, as it was turning 150. The pandemic prevented any celebrations, and total sales fell by 22%. De Bijenkorf online sales grew by +53% in that same year, offsetting a part of the overall loss and allowing the company to announce an operating profit of €19,4 million (falling down from €77,8 million in 2019).

De Bijenkorf reported an operating loss of €33.3 million in 2021, despite a 10% increase in sales. This poor performance was attributed to rising costs and Covid-related closures during the 2021 winter. However, analysts wondered whether the Central Group and Signa Holding would focus solely on the jewel in the crown, the Selfridges London location, or also help the other names, such as De Bijenkorf.

2023 brought the Dutch luxury department stores 6% more visitors, but this increase did not translate into sales growth. However, thanks to restructuring measures, they managed to increase EBITDA by 37% and their operating profit to €7 million. Thirty-seven in-store managerial roles and 15 job cuts at HQ were announced, along with the discontinuation of e-commerce activities in France, Germany and Austria due to rising costs.

In 2024, managerial turmoil emerged with CEO Matthijs Visch stepping down after less than six months, amid ongoing transformation challenges and recent ownership changes. In 2025, Central Group appointed fourth-generation Chirathivat family member Sean Hill as the new CEO of De Bijenkorf, strengthening the family’s control over the company.

Ongoing restructuring

In January 2026, De Bijenkorf announced another reorganisation due to challenging market conditions, leading to 167 job cuts (110 in stores, 57 at HQ) out of around 2,400 employees. The company said it would reduce HQ and in-store positions, with a strategic focus on operational efficiency, local relevance and creating customer desire through an enriched shopping experience. Also, this restructuring is not considered a response to declining sales, as the company recently reported a profitable year, but rather a proactive measure to address rapidly changing and challenging market conditions.

The Rotterdam store: architecture, heritage and retail

Marcel Breuer’s masterpiece

Architecture is key to department stores. While tourists visit the Galeries Lafayette dome as one of Paris most important landmarks, the De Bijenkorf department store is also one of Rotterdam’s architectural and cultural retail landmarks. Designed by Marcel Breuer, it is an important piece of post‑war modernist architecture. The building was developed and built in the 1950s and is today protected as a national heritage site. Breuer’s design for De Bijenkorf expresses the mid‑century modernist language he is known for: strong geometric volumes and a carefully resolved façade treatment. The building is an urban object in concrete and stone and was conceived as part of the city’s reconstruction after World War II bombing, making it a symbol of renewal. The store’s public face historically included notable artworks, such as the Naum Gabo outdoor sculpture associated with the building, underscoring the project’s ambition to integrate architecture, art and public life. The store is a simple rectangle and has 5 selling floors, including the basement.

A walk through the store: departments, concepts and highlights

- Ground floor

Bringing natural light into the ground floor, numerous exterior openings make the building visually and physically porous to the street. This explains the pleasant, airy feeling visitors note when on the ground floor. Cosmetics and beauty products account for about two-thirds of the floor, with leather goods, jewellery and sunglasses completing it. The main entrance opens onto a cosy and busy café (with a Venchi Italian confectionery shop) filled with natural light, and Chanel, Dior and Charlotte Tilbury beauty counters, among others. These are completed by a multi-brand area for K-beauty and niche brands on the other side of the entrance and directly visible from the street. There is also what they call the “Beauty Studio”, a nicely executed small area selling minis and a De Bijenkorf €59,95 beauty set that includes around 10 small-format products from brands such as Olaplex and Dr Jart+.

Four luxury full-concept shop-in-shops (Gucci, Saint Laurent, Louis Vuitton and one under construction) occupy one side of the building. Other leather goods brands include Lauren, Chloé, Jacquemus, Marc Jacobs, Jérôme, Dreyfus, Isabel Marant, Furla, Michael Kors, Coach, Longchamp and more. Jewellery and watches include Emporio Armani, Swarovski, Diesel, and a diamond brand, making this the only luxury brand in this section. An engraving station completes this department.

- First floor

The floor is dedicated to women’s fashion. Brands like Etoile Isabel Marant, Ba&sh, Sandro, Weekend Max Mara, Sessun, American Vintage, Max & Co have shop-in-shops located on all four walls of the floor. They are equipped with “soft” concepts, similar to those at Le Bon Marché: a semi-personalised wall featuring the brand logo and brand colours and a personalised piece of furniture. The floor centre is organised in four multi-brand parts, without brand personalisation:

•  Luxury and affordable luxury brands such as Burberry, Moncler, Acné Studios, Zimmermann, Ami Paris, The Frankie Shop and Jacquemus.
• An outdoor section with puffer jackets, on sale at the time of the visit.
• A premium/contemporary section with Scandi brands such as Ganni, MSCH Copenhagen and Neo Noir.
•  A nicely executed denim section with a ceiling influenced by the former NYC Whitney Museum, a famous building by Marcel Breuer.

Two dressing rooms are placed between each shop-in-shop along the 4 walls. The layout is airy, well organised and invites browsing.

- Second floor

The floor is home to women’s shoes, lingerie, hosiery and kidswear. The floor also hosts a restaurant called “The Kitchen,” with windows that open onto the outside. The shoes section is premium-oriented with brands like Jonak and Unisa. The only luxury names include Isabel Marant, Chloé and Balenciaga. Lingerie and hosiery feel more packed, and offer brands such as Skims, Calvin Klein, Aubade, Simone Perèle, Hanro, Falke and more. A Björn Borg activewear pop-up store completes the offerings.

The kids’ wear zone is split between toddler and teen assortments. On the toddler side, the assortment is quite upscale with a few brands like Burberry and Stone Island. The most notable features are a large and personalised Donsje Amsterdam shop-in-shop and Jelly Cat soft-toy offerings, with no staff to convey the product experience. The teen section, geared toward boys, features brands like Tommy Hilfiger, Polo Ralph Lauren and Les Deux. The dressing rooms are designed to be appealing to kids.

- Third floor

The top floor is the home, luggage and gift floor. It has five sections: kitchen (appliances, cookware, glassware and tableware), bed and bath linen, home decor, luggage and, finally, a multi-product gift section. Kitchen appliances include KitchenAid, Ninja, Sage and a multi-brand coffee maker section. Cookware includes brands like Le Creuset. Tableware and glassware are a multi-brand area featuring Villeroy & Boch, Ittala, and Serax soft shop-in-shops. A small food section with products such as nice olive oil bottles completes the kitchen section.

Home scents with a Rituals shop-in-shop and a Marie-Stella-Maris counter help transition to the home textile section, which includes labels such as Ralph Lauren, Marc O’Polo, Yves Delorme and the store’s private label. Home decor is a mix of textiles (cushions and throws) and colour displays with vases and small objects. The section is well executed and quite inspirational. Luggage has a large section with Samsonite, Tumi and Rains backpacks.

The gift area is quite significant and includes fashion books, children’s books, books on the Netherlands, fashion and culture press, plush toys, Lexon gadgets, small objects, adult 3-D puzzles and a Stanley shop-in-shop. A large area dedicated to stationery and experiential gift boxes completes this section. The floor suffers from insufficient lighting and requires renewal.

- Basement

Also accessible from the subway, the men’s department is in the basement and organised into four parts: the luxury section; shoes; suits and formalwear; and finally, streetwear, contemporary and casual brands (including Represent, Diesel, and Ralph Lauren). The men’s shoes assortment is more luxury-oriented than women’s, with brands like Maison Margiela and Amiri. A well-executed large sneaker wall is also part of this section. The multi-brand luxury RTW includes Dior, Burberry, Givenchy, Stone Island and more.

A small De Bijenkorf Museum about the store’s heritage and history is available at the subway entrance in the basement. Not attractive at all, it obviously fills a part of the store that is difficult to display products in or monetise.

Too polished to surprise: execution needs emotion

Overall, the store is airy, tidy and clean with great execution, and it boasts a few initiatives. However, this is not enough to give flair and excitement to the dwelling and shopping experience.

Invisible services

The store offers many services advertised online, but unfortunately, not advertised or even made visible in-store:

- Beauty advice is available with personalised beauty and skincare consultations.

• Repair services, from garments to watches.
• Dyson services focused on delivering the full Dyson experience. Only a Dyson hair product corner is available on the ground floor.
• Mail ordering service and ship-from-store for Louis Vuitton, Gucci and Saint Laurent products.
• Exclusive VIP appointment for Louis Vuitton, Gucci and Saint Laurent.
• Sneaker cleaning, including steam cleaning, manual cleaning of upper material, laces washing, stain removal and freshener treatment.
• Alteration and made‑to‑measure service.

Services have become increasingly important to the overall retail experience. Many services have been developed from personal shopping, private lounges, personalisation or express delivery. Sneaker cleaning and repair services, for example, have become a staple for some brands. Golden Goose is probably one of the best business cases in that area. Their Repair Hubs available in flagships attract younger customers who want to learn more about their favourite shoes and sneakers. While it may create a buzzing atmosphere, Golden Goose repair services can enhance the brand image and generate additional turnover.

Cross-selling efforts

Cross-selling comes top-of-mind to many department store executives, as the multi-category model should offer more opportunities to sell accross several categories. Playing by the book, a few cross-selling initiatives are scattered across the store. For example, the women’s fashion floor features a pink kiosk offering Stanley cups, Assouline travel books, and trinkets. The kiosk is well-executed, featuring a mannequin and a nice look and feel. However, it is the only one of its kind on the entire floor, insufficient to foster storytelling.

Experimenting with cross-selling and local relevance, another example sits on the men’s fashion floor. Taking cues from Ramadan, a table offers Turkish-style delicacies, nice coffee cups, beauty products from Istanbul, chocolates and other gifts. Also in the men’s department, a display mixes men’s accessories with Stanley cups. Finally, on the home floor, several tables mix scents with bath linens.

The missing ingredients: visual drama and storytelling

Overall, the store is nicely displayed, and everything is played “by the book.” However, there is no excitement, very little storytelling. In other words, something’s missing. First of all, the store lacks the kind of messiness that could give customers the impression of a treasure hunt. But this may be incompatible with the store’s impeccable maintenance. Also, there are not enough mannequin groups featuring inspirational looks throughout the store. It seems the store removed walls and most partitions some years ago. On the bright side, it creates a nice as-far-as-the-eye-can-see effect, but maybe they went too far, as it misses more visual stops than the display elements and the few remaining partitions can create on their own. There are two places with interesting “visual breaks” though: the Beauty Salon, thanks to its pink furniture and partitions, and the denim section, thanks to its lighting and furniture that differ from the rest of the floor.

Also, at the time of the visit, the store wasn’t really featuring a strong marketing campaign. There were in-store references to Ramadan, with a few Eid Mubarak (happy holiday) messages scattered throughout the store, but they were too few and discreet to create a cohesive narrative (though it is understandable that religious content may be difficult to promote). The windows featured a marketing theme, “Maak Plezier” (translating to “have fun”), with yellow geometric flowers and blue columns. Unfortunately, the in-store displays include too few related props to add enough flair and decor to the store. Finally, unlike sister company Selfridges with The Corner Shop, it seems De Bijenkorf doesn’t really have a pop-up store programme, as nothing remarkable was featured. Only a Björn Borg pop-up was identified on the second floor.

So, what’s missing is storytelling brought by striking marketing campaigns. Recent strong and successful marketing campaigns include those from Bloomingdale’s. They now have three or four campaigns per year, including Christmas, Spring and Fall. For example, in October 2024, they launched the first of this kind called “From Italy, With Love.” It was a two-month retail event celebrating Italian fashion, design, cuisine and culture. This campaign truly created an immersive customer experience. Moreover, the campaign’s in-store experience at the flagship store was particularly noteworthy. Shoppers were greeted with Italian-themed visual merchandising. The “Mercato” pop-up store offered gourmet Italian products, while installations throughout the store feature travel posters, Roman columns, and whimsical decor, including large-sized tomatoes and lemons. This is exactly what’s missing at De Bijenkorf.

The strengths of the De Bijenkorf Rotterdam store are clear: standout architecture, a well-curated tenant mix and tidy displays. The problem is not execution in the narrow sense; it is the absence of emotional resonance and storytelling that turns visits into memorable experiences and occasional shoppers into regular customers. Recent profitability and efficiency measures buy time, but they will not create desire. De Bijenkorf’s next phase must fuse preservation with experimentation. That means making services visible and experiential, treating Breuer’s building as a stage for seasonal, immersive campaigns, and using pop-ups and cross-category storytelling to reintroduce the thrill of discovery, the very essence of department stores.

Credits: IADS (Christine Montard)

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CLICK HERE TO SEE THE PRESENTATION OF HYUNDAI APGUJEONG

During the last IADS Mid-year meeting in Seoul in June 2025, member CEOs had the opportunity to visit several Korean retail landmarks, including the much-acclaimed The Hyundai Seoul. To provide them with a complete understanding of the specificities of the Korean market, a visit to Hyundai’s first-ever department store in Seoul, in the Apgujeong neighbourhood, completed the tour.

Interestingly, this visit generated the highest number of questions, as this visit allowed all visitors to understand the weight of the VICs[1] in the traditional Korean department store business, to an extent well beyond what is experimented in other retail markets.

This Exclusive aims at understanding the specificities of this store and what it tells about high-end Korean retail. A picture report completes this article.

Hyundai’s first-ever department store

Hyundai Department Store’s roots trace to Keumgang Development Industries (established in 1971) within the Hyundai Group, which opened the Ulsan Centre (now known as the Hyundai Department Store Ulsan Dong-gu) in 1977. This first foray in retail allowed the acquisition of enough know-how to open a department store.

The first unit to be opened was the Apgujeong store, in 1985. This area, an upscale neighbourhood in southern Seoul, is situated along the northern edge of the Han River within Gangnam-gu. Such a choice was visionary: starting from the late 1980s onward, Apgujeong catalysed Gangnam’s premium identity and became synonymous with high-end living, fashion-forward retail, and premium medical and beauty services offered to affluent and trend-conscious HNWIs living in the vicinity. In fact, even though the area is now facing competition from other zones nearby, such as Cheongdam and Seongsu, Apgujeong’s identity today remains closely tied to the emergence of modern Korean consumer culture and the rise of domestic brands.

In comparison, rivals Lotte and Shinsegae opened their first flagship stores in the central Myeong-Dong area, not far from the town hall, and both strategically addressed tourists and the commuting population coming and going from their offices. Hyundai differentiated itself early by placing its flagship in a wealthy residential catchment rather than a central business and/or tourist district. However, even though the choice of the location was wise, Hyundai was not the first-comer in Apgujeong: since 1979, Hanwha was already operating a department store, called “Hanyang Shopping Center”, which would become after a significant upgrade in 1990 as a response to Hyundai, the Galleria department store, first under the name Galleria Fashion Hall, and then, starting 1994, Galleria Luxury Hall[2].

At launch, the Apgujeong Hyundai store boasted the first POS system in Korea, and included a cultural centre, supporting a community-driven strategy and a service-based model, well before “experience” was a thing in retail. This allowed the creation of a strong followership from local customers and loyalty among surrounding VICs, attracted by features such as the “sky garden” (a rooftop including a private club) and several lounges dedicated to specific VIC tiers. Even though Hyundai kept on opening new stores in the city and nationwide, until reaching the current total of 14 locations, Apgujeong remains a prestige location for Hyundai, very differentiated from the more recent The Hyundai Seoul one, and a point of reference for luxury brands.

Since its opening, the store did not go through significant structural changes, except the cultural centre, which has been rebranded CH 1985 and now serves as a boutique cultural space, and the B1 food hall renovation in 2023, where a 6,750 sqm “Gastro Table”, a premium dining concept curated with chef-driven counters and notable dessert brands, was opened (B2 was also renovated at this date).

Visiting the store

The store's second basement level (B2) is dedicated to a surprising assortment for this floor location: women's contemporary and children's fashion, niche and rare perfumes (the luxury brands are on the ground floor), sports and lingerie. The women’s fashion area includes Maison Kitsuné, Ganni, Sandro, A.P.C., Maje, Time (a Hyundai private label), System (a Hyundai private label), Alice & Olivia, Tom Greyhound (the Hyndai-owned Handsome Corporation’s fashion multi-brand concept) and others. The kids' offerings lean towards the luxury side, featuring brands such as Baby Dior, Fendi Kids, and Moncler Enfants. In the meantime, customers can find Nike and Adidas in the sports section, nearby a prime selection of fragrance brands such as Officine Universelle Buly and Creed. To complete the picture, a variety of cafés and restaurants dot the space, with a Nespresso shop and other appliances featured in between.

We found this B2 floor surprising for two reasons. The first one being the assortment, which is very eclectic (and allows to finds brands ranging from Adidas to Baby Dior, Nespresso or Officine Bully). The second one is its positioning in the store as the B1 floor is entirely dedicated to home and food. In fact, given the fact that most customers drive to the store, it is expected that this floor captures their attention while coming from the parking lots (B4, B3). It is notable that the shuttle pods (Hyundai offers a free shuttle service for residents of Apgujeong[3]) and the directly connected Apgujeong subway station go directly into B1, and not B2.

The first basement (B1) focuses on food and living, integrating a gourmet space, a general 1,650sqm-wide  supermarket with self-service and fast POS options, and a food court (“Gastro Table”) that positions food as experience: chef-led counters, elevated service (table delivery instead of self-pickup), and a greener, garden-like interior. In the first six months following its 2023 launch, sales reportedly increased by ~24% and customer counts by around 30% year-over-year, thanks to new experiential offerings, including a premium wine bar accessible via a booking system. The “living hall” features everything to equip homes, from decoration items to beds (Tempur) and sports appliances (running mills).

The ground floor is dedicated to beauty, fragrance and accessory luxury brands, including Chanel, Hermès, Louis Vuitton, Gucci but also hard luxury names such as Cartier and Bulgari. Most of the top luxury brands operate multi-story stores with access to the first floor and, in some cases, also to the second floor. Despite relatively low ceilings, the area features an interesting design with centrally placed escalators (where Jacques Marie Mage sunglasses are sold) and a large atrium.

The first floor features luxury fashion, including foreign names (Golden Goose, Off-White) seen as a point of differentiation and coming on top of the high luxury brands, as well as watches and jewellery (Rolex, Buccellatti, Jaeger Lecoultre, etc..), complete with a luxury lifestyle offering (a large space facing Chanel is dedicated to Astier de Villatte). All brands are deploying their brand concept in three-walled retail units.

The second floor is dedicated to women’s fashion, featuring a mix of international and Korean brands, including Jacquemus, Loewe, Isabel Marant, and MMQ, alongside Colombo and Henri Beguelin. A multi-brand store, Mué, and a series of F&B spaces further enrich the floor.

On the third floor (+3), men's fashion is represented by Gucci and Dior, completed by a lifestyle offering (Bang & Olufsen, Tumi). The adjacency strategy aligns Theory with Zegna, Canali, and across from Solid, Time, and Ralph Lauren. The floor also features a golf wear section, catering to both men and women, with licensed brands such as Lanvin Blanc and APC Golf.  A café by Tom Dixon adds a touch of sophistication.

The fourth floor (+4) houses restaurants and home appliances.

VICs are the secret sauce at Hyundai Apgujeong

While execution is great, especially in the newly renovated B2 and B1, and keeping in mind that luxury represents a significant share of the business in this location, visiting the Apgujeong store is not as out-of-the-ordinary as The Hyundai Seoul (which has made experiential retail and discovery a cornerstone of its strategy) is. In addition, the store is small and feels as such: the six floors from B2 to 4F in total only represent 33,000 sqm, to be compared to the Hyundai Seoul store, the largest in Seoul, with 89,000 sqm of retail space.

And yet, even when taking these elements into account, the productivity of the store is remarkable: it has consistently outperformed the KRW 1 trillion threshold every year since 2021 (€0.6bn) and has been reported during the visit to have achieved a KRW 1.2 trillion performance in 2024 (€0.75bn), making it the 7th best performing store in the Korea in terms of sales (the first place being held by Shinsegae Gangnam with a turnover of €1.83 bn and the second by Lotte Jamsil, €1.8bn).

Many visitors scratched their heads to understand how such a store could achieve these levels of sales before realising the importance of the VIC business in Korea.

This customer segment, which often represents less than 5% of customers, generates around half of Korean department stores revenue. In a country where personal luxury goods spending reached KRW 21.8 trillion (€22bn) in 2022, nearly double since 2014, dependence on VICs has become structural and is a cornerstone of the business for some stores such as the Apgujeong one. With US$ 325 in luxury spending per capita, South Koreans rank ahead of Americans (US$ 289) and far ahead of Chinese (US$ 55).

Who are the VICs in Korea?

The pool of VICs rests on a solid wealth base: the country counts 7,310 ultra‑rich individuals (net worth ≥ USD 30 million) and nearly 1.15 million dollar millionaires, growing 5.6% per year. This increase contrasts with demographic erosion and explains the continued raising of thresholds for VIP programmes. Shinsegae, Lotte and Hyundai today recognise as VIP any customer spending at least KRW 4 million per year (€2,400), but their upper tiers now require up to KRW 150 million (€90,000) for Hyundai (“Jasmin Black”), KRW 120 million for Galleria (“PSR White”, €72,000) or KRW 70 million for Shinsegae (“Diamond”, €42,000).

Demographically, the VIC cohort has become younger. Those aged 20–39 accounted for less than 15% of big spenders in 2015; they form more than 30% in 2024 at Hyundai Pangyo, while several Shinsegae branches located in young‑household catchment areas exceed 40% VICs under 45. This generation shows high disposable incomes (KRW 60–80 million net annually), values “flex culture” and engages in ostentatious display on social media. The low birth rate amplifies this phenomenon: without heavy family burdens, discretionary budgets concentrate on luxury, travel and wellness.

Bain & Co identifies three structuring trends explaining the importance of these customers in Korean retail:

• An income polarisation and the rise in financial wealth despite macroeconomic stagnation,
• A generational extension, with Millennials & Gen Z representing half of the new entrants,
• The sophistication of programmes, which have moved from simple discount benefits to lifestyle, investment (money, art and jewellery) and international networking platforms.

By 2030, they anticipate 4–6% annual growth of the luxury market, but heavier loyalty costs (lounges, events, data analytics) that could push chains to monetise certain services or pool infrastructures.

A look at what a VICs can get in Korea…

VIC purchasing behaviour has evolved over the past ten years. Between 2015 and 2024, the VIP share of department store sales rose from about 25–30% to 43–51%, depending on the chain, despite the rise of e‑commerce. Average per‑capita spending grew by nearly 70%, driven by jewellery‑watch categories and by the resale market, now a vector of up‑trading. The pandemic acted as an accelerator: deprived of overseas shopping tourism, Koreans repatriated their spending to domestic flagships, forcing retailers to multiply private salons, food‑art‑wine events and logistical services (two‑hour delivery, express alterations).

Shinsegae cultivates scarcity: six VIP tiers, including “Trinity”, limited to the top 999 clients (> KRW 230 million per year, i.e. €138,000). Holders access the Trinity Lounge (Gangnam) and cobranded experiences with Michelin or Sotheby’s. The group bets on entertainment (Shinsegae Academy) and on heritage integration: “The Heritage”, a historic bank building transformed into a private club, blurs boundaries between retail, culture and investment. Result: VICs generate 45% of sales, with 3.7% more members in 2024, despite the increase in thresholds.

Lotte, conversely, has widened the base with an “Entry VIP” tier (KRW 20 million per year, €12,000) but tightened the top (“Avenuel Prestige” around KRW 280 million, €169,000). More than 5% of its clientele concentrates more than half of the sales. Young VICs are courted via boutique‑hotel vouchers, fine‑dining experiences and NFT‑Art masterclasses. Lotte also mobilises its ecosystem (Lotte Duty Free, Lotte Hotel) to offer a full value chain, particularly attractive for foreign customers whose share exceeds 10% in certain flagships.

Galleria positions itself in pure ultra‑luxury. Its Apgujeong hall, reconfigured in 2022, raised the VIC share to 51% of sales, a national record. The “G Premium/PSR White” programme (≥ KRW 120 million, €72,000) gives access to the country’s largest VIP Lounge: 2,000 sqm, panoramic view, art gallery and a cellar of 3,000 bottles.

Hyundai, on its side, adopts an experiential strategy. The Hyundai Seoul dedicates 40% of its area to event spaces; its “Black” and “Purple” lounges, accessible from KRW 150 million, include a monthly lifestyle programme (contemporary art, tastings, indoor golf). At Pangyo, those under 40 already make up a third of the super‑tier, with spending growth of +31% in 2024. Hyundai has also formed a cross‑services partnership with Hankyu (Japan) to offer, from 2026, reciprocal benefits to their VICs.

…and at Hyundai Apgujeong

At Apgujeong, Jasmin VICs and Black Jasmin VICs each have dedicated lounges, even on the rooftop, and access to the ultra-private Atelier bar overlooking the rooftop garden. The store is said to have become a gathering place for the wealthy of the area. During the visit, no one was particularly impressed by the lounges. And yet, to qualify, customers need to spend €42,000 for the Jasmin status and €94,000 for the Jasmin Black one.

However, what drives Apgujeong’s outsized sales is not the lounges themselves but the operating system behind them: priority allocation of constrained luxury SKUs (especially watches & high jewellery), appointment-based clienteling that pre-matches inventory to named clients, and reciprocity platforms that extend benefits (and allocation access) across partners abroad. In practice, top-tier members are offered previews and pre-orders, receive same-day alterations and white-glove delivery, and are routed to high-margin categories where ticket sizes compound—often closed inside private rooms with brand staff plus store client advisors. The VIP architecture (tiers, thresholds, lounges) is the front end; the economics come from supply control, client data, and partnership rails that ensure the right pieces reach the right clients at the right moment—consistently.

Seen through the lens of Hyundai Apgujeong, what sets Korea apart is not that a single store operates with ultra‑high thresholds for its top clients, but that an entire market does. Across Hyundai, Shinsegae and Galleria, top‑tier VIP cut‑offs now sit between roughly KRW 70 million and KRW 150 million a year, and these are transparent, published criteria, not opaque invitation‑only rumours. In isolation, Harrods or a top U.S. flagship may approach similar spend bands for their most rarefied clubs; in Korea, multiple chains systematise that bar nationwide and pair it with hard benefits (dedicated lounges, concierge teams, allocation access, and even reciprocity abroad through partners such as Hankyu and Sands China). That is the remarkable part: VIC economics are not a corner case—they are the operating system. In this system, Apgujeong’s “small but sharp” format—hard‑luxury heavy, relationship‑dense, and embedded in one of Seoul’s deepest wealth pools—makes perfect sense. It doesn’t need the theatrics of The Hyundai Seoul to outperform; it needs the right clients, the right inventory, and a membership architecture calibrated to very high spend by global standards—and in Korea, that architecture is market‑wide.

Credits: IADS (Selvane Mohandas du Ménil)

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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

PRINTABLE VERSION HERE 

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)

PRINTABLE VERSION HERE 

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)

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)

PRINTABLE VERSION HERE

The IADS Academy programme, a 30-year-old tailor-made mentoring workshop open only to our members’ high potentials, promotes cooperation and future orientation. Over the years, the IADS Academy has trained 200+ executives from 29 companies in 22 countries, some of whom reached top positions in member and non-member companies (for IADS member companies alone, 4 CEOs).

Every year since 2020, IADS member CEOs have defined the question they want the Academy cohort to work on. In 2020, the Academy group examined the COVID-19's consequences. In 2021, the topic was about the definition of an omnichannel P&L. In 2022, the cohort focused on improving the profitability of Private Labels. In 2023, the topic was about the skills of the future. In 2024, the group addressed the question of an AI decision-making tool for department stores. Finally, the 2025 topic was: How to become better merchants: from intuition to data-driven decisions.

For more than a century, the department store merchant has been defined by mastery of numbers and product: margin discipline, inventory velocity, vendor leverage. Those skills built retail empires. Today, they no longer guarantee relevance.

This IADS Exclusive outlines the insights the Academy cohort studied, considered, and developed throughout the journey to their final presentation. The Academy examined the paradox at the heart of contemporary department stores: organisations rich in data, experience and infrastructure, yet constrained by misalignment, inertia and outdated success metrics. As traditional optimisation logic collides with 21st-century uncertainty, the role of the merchant is being quietly but fundamentally rewritten. From curator of product to Experience Architects, from data accumulation to decision clarity, the next era of merchant excellence demands a redefinition of skills, scope and accountability, to learn when to trust data, when to trust intuition, and how to orchestrate both in service of the customer.

The merchant reimagined: beyond buying and selling

Caught between eras: department store legacy meets disruption

The modern merchant operates in a state of tension between traditional success metrics (margin management, inventory turns, vendor relationships) and uncertainty. Economic, geopolitical headwinds and supply chain disruptions have shifted from exceptional events to baseline assumptions. As a result, historical competencies are necessary but insufficient.

The paradox emerges most clearly in companies’ data inventories. Department stores have extensive data and analytics infrastructure, yet performance gaps persist due to conflicting strategic priorities and the absence of a clear hierarchy or integration. The constraint is not data scarcity but alignment failure. This misalignment manifests across functions. Finance teams optimise for profitability and cost containment. Buying teams prioritise assortment productivity, vendor relationships and margins. Store operations focus on traffic conversion and labour efficiency. Marketing aims to build brand awareness and drive customer acquisition. Each function interprets organisational priorities through its operational lens.

The department store model faces additional structural pressures. The concession model dominates in some markets. While it delivers breadth and margin, it can alter talent development pathways. When fewer merchants practice full P&L accountability for inventory risk, recruiting and developing buyers with accountable buy-and-sell-through capability becomes progressively more difficult. Organisations become biased toward space allocation proficiency over the buying acumen that historically defined merchant excellence.

Simultaneously, brand ecosystem volatility accelerates. The lifecycle of emerging brands with rapid spike-and-fade patterns complicates buys, allocation models and space planning. Blockbuster brands deliver scale but limited differentiation. Niche players offer uniqueness but operational complexity. Merchants must navigate this while budgets contract, P&L scrutiny intensifies, and larger periods of discounts erode full-price sales.

Beyond spreadsheets: the Experience Architect

The response to these pressures cannot be incremental optimisation. As suggested by the Academy cohort, the transformation centres on repositioning the merchant from product curator to Experience Architect, a new strategic role where selling products becomes the means, not the end, and building authentic consumer intimacy becomes the focus.

Working closer to the marketing teams, Experience Architects serve as content curators, both online and offline, and ecosystem orchestrators. They are involved in the entire consumer experience from start to finish. They use AI and other technologies to enhance team effectiveness while creating unique interactions for product discovery and purchase. They coordinate suppliers and partners to deliver exciting experiences. Using live data and insights, they adapt trends, market shifts and consumer behaviour.

Yet scope expansion carries risks. How far should the merchant scope extend beyond products to include experiences, services and cross-selling? While historic merchants like Selfridges owned responsibilities far beyond products and numbers, the Experience Architect is more of a cross-functional, enterprise role rather than a siloed function. They pilot mission-oriented agile teams focused on customer missions rather than category silos.

Decode, automate, orchestrate, delight: the new merchant skillset

The Experience Architect role requires capabilities beyond traditional merchandising competencies. Four foundational pillars can define merchant effectiveness in volatile environments:

• Decode the customer: merchants must unveil their motivations, emotions, track emerging signals, not only purchases. The shift is from analysing what customers buy to understanding why they buy.
• Automate to elevate: AI and automation can absorb routine tasks, freeing merchants to focus on strategy. From that perspective, McKinsey research suggests automation will significantly impact planning, pricing and inventory replenishment, shifting merchant focus from data collection to interpretation and action.
• Orchestrate connected offers: merchants must craft value propositions and curate assortments serving distinct missions and needs. This also extends beyond channel management to encompass omnichannel optimisation.
• Delight at speed: the capability to adopt continuous test-and-learn rhythms, move quickly on trends and create moments that surprise and build loyalty. This represents a fundamental shift from seasonal cycles to real-time responsiveness.

Moreover, modern merchants require a new set of skills: stronger data interpretation skills, strategic thinking, cross-functional collaboration across merchandising, design, marketing, and supply chain, technological proficiency, and a deeper understanding of consumer psychology.

However, the skills progression is non-linear. Early-career merchants typically rely more on data than intuition as they build foundational knowledge. Experience gradually strengthens intuition, as a “muscle strengthened by experience,” as suggested by the Academy participants. Senior merchants may operate at a 70% intuition-30% data, reflecting accumulated pattern recognition, not reduced analytical rigour. The intuition-data-driven balance also depends on company culture and data availability.

The art-science balance: when to trust data and when to trust intuition

Understanding when each approach excels

The Academy cohort discussed the intuition-versus-data debate and acknowledged that “gut feeling" and "hard numbers" are often still opposed. The usual framework for when intuition deserves trust requires a somewhat predictable environment, opportunities to learn through significant practice, and high-quality, rapid feedback. In retail merchandising, core customer behaviours (seasonal shopping patterns, category preferences, price sensitivity) show sufficient regularity for pattern recognition. However, volatile factors such as emerging brand lifecycles, social media trends, and economic disruptions introduce unpredictability. But this is not a reason to avoid considering intuition. Even analytics-obsessed organisations recognise that there is more to significant strategic decisions than data alone. For example, Google, an early adopter of big data, had the intuition that self-driving cars were possible well before data was available. Intuition also plays a significant role in Google’s Project X, the department inventing and launching “moonshot” technologies.

Ultimately, intuition excels at generating hypotheses, interpreting context and identifying weak signals that data can miss. Data excels at detecting patterns across large datasets and maintaining consistency in application.

In risk environments, alternatives, consequences and probabilities are known. Also, optimisation and statistical thinking are paramount. In uncertain environments, variables themselves are unknown. Retail increasingly operates under genuine uncertainty rather than quantifiable risk, yet the industry somehow continues to apply 20th-century optimisation logic to 21st-century uncertainty.

This suggests equipping merchants with scenario-based heuristics rather than purely algorithmic recommendations. For example: "If returns spike 10% in week one, investigate manufacturing quality." Such rules may outperform complex models by acknowledging uncertainty and enabling rapid human response, rather than waiting for sufficient data to clarify patterns.

From data-driven to decision-driven retailing

Data-driven decision-making pitfalls exist. They share a common root: treating data as self-interpreting rather than requiring thoughtful evaluation. The belief that gathering more data and feeding it to powerful algorithms alone can reveal truth and create value is a dangerous mistake. IADS Academic Advisor, Professor Robert Rooderkerk from RSM Erasmus University, reinforced this perspective during a lecture with the Academy cohort by differentiating data-driven and decision-driven approaches:

• Data-driven organisations ask "what data do we have?"
• Decision-driven organisations ask "what decisions need to be made and what data supports them?"

Retail analytics maturity shows when the question is not about existing data but about the decisions to be made and the data supporting them. Rooderkerk introduced a five-level analytics maturity model that most organisations struggle to ascend:

• Descriptive (what happened), where most organisations remain stuck.
• Diagnostic (why it happened).
• Predictive (what will happen).
• Prescriptive (how to make it happen).
• Autonomous (continuous optimisation).

In fashion merchandising, the art-science tension is definitional, not problematic. Creative instinct and aesthetic judgment remain foundational. In that environment, data provides guardrails and validation, not replacement. A healthy friction between creative push and analytical prudence drives optimal outcomes. An 80/20 balance emerges: most products should be commercially driven with data validation, while a smaller portion serves creative, aspirational brand-building that accepts lower immediate returns for long-term positioning.

The three pillars for execution: organisation, curation and experimentation

Structures that enable rather than constrain

Organisational structure powerfully shapes decision quality, yet structure alone cannot compensate for cultural dysfunction or misaligned incentives. The Academy's comparative analysis across department stores revealed structural similarity despite differences in scale and geography. Most organisations maintain 3-8 hierarchical buying levels, 1:1 buyer-to-planner ratios at operational tiers, and separation between buying (product selection, vendor relations) and planning (financial planning, allocation, inventory management).

This separation introduces inherent tension. Buyers and planners share KPIs but operate under different functional leadership, which can create conflicting priorities. Multiple hierarchical layers delay decisions. When multiple buyers handle a single brand across categories, brand message coherence suffers. Yet the structure also offers advantages: clear career progression, defined responsibilities, collaboration, and team-level business ownership.

During a brainstorming session, Doctor Christopher Knee, IADS Honorary Advisor, encouraged piloting mission-oriented agile teams composed of a buyer, marketer, analyst, and operator, focused on customer missions rather than category silos. Yet Olivier Bron, Bloomingdale’s CEO and Academy Mentor, cautioned against structure obsession. The imperative is "process over structure", fixing how plans cascade end-to-end rather than redrawing org charts. Brand-facing decisions must translate seamlessly through marketing, floor execution, staffing, training, and storytelling. Finally, mutual misunderstandings undermine execution. Stores underestimate market work intensity for buying teams, and merchants underestimate store-level constraints. Joint accountability for success and failure must span functions.

The curation imperative: MediaMarkt vs. Coolblue

Rooderkerk shared a powerful example of the choices retailers and merchants face: the contrast between MediaMarkt and Coolblue (a Dutch electronics retailer) crystallises a fundamental strategic choice facing retailers. MediaMarkt is a legacy player with 1,000+ stores, 75% of revenue from physical retail, and aggressively pursuing a marketplace model. To illustrate this strategy, they added 50,000 SKUs from third-party sellers in nine months, with some categories reaching 50% marketplace fulfilment. The strategy intentionally reduced owned inventory by eliminating low-rotation SKUs. Trade-offs emerged immediately: scale and capital efficiency versus loss of control over fulfilment and inconsistent customer experience.

Whereas MediaMarkt is betting on marketplace breadth, Coolblue, a digitally native company expanding its physical presence, curates depth. Coolblue’s curated assortment has already significantly increased store revenues. They developed a “consideration matrix,” a decision tree organised by consumer-relevant attributes (brand, price, performance, use case) rather than margin tiers. A dynamic dashboard tracks SKUs, unique SKUs sold, average price, gross margin, return rate, sales growth, customer satisfaction and market share. The result: Coolblue reduced online SKUs from 30,000 to 20,000 while increasing sales and gaining market share. Their NPS exceeds 75, rivalling Apple. This shows merchant success lies not in offering more, but in knowing precisely what not to offer and why.

This case encapsulates the Experience Architect mandate. Merchants must deeply understand customer decision processes (consideration matrix), continuously monitor comprehensive performance metrics (dynamic dashboard), make disciplined exclusion decisions that require conviction, and maintain cross-functional alignment to deliver experiences that justify a high NPS.

Building a culture of experimentation: test (and fail), learn, scale

One of the Academy findings was that alignment, not data scarcity or tool sophistication, is the primary constraint. Organisations possess customer data, but they lack consensus on how to interpret priorities and make decisions. The diagnostic exercise that the Academy cohort recommended exposes this reality:

• Document every significant organisational priority,
• Have each senior leader independently articulate the end goal for each priority,
• Share assessments to expose misalignment,
• Use findings to build alignment before deploying tools or processes.

Without this alignment, sophisticated analytics generate conflicting signals that paralyse action. Finance, buying, operations, and marketing optimise for different outcomes, each believing they serve “the customer.”

Cultural transformation proves essential yet gradual. The Academy participants embraced a "failing fast and cheap" framework: rapid, small-scale testing of concepts, in which failures generate learning without existential risk, and successes can be scaled. This requires reframing failure from career risk to learning opportunity, a shift that demands psychological safety.

Booking.com and Netflix exemplify this approach through systematic, collaborative, codified experimentation cultures. A/B testing controls for self-selection. Experiments are jointly designed by the business and analytics teams. Results are recorded in searchable repositories and iterated based on cumulative insights. This is decision-driven analytics: experiments test specific hypotheses about customer behaviour rather than exploring data in search of patterns.

The path forward: turning merchant philosophy into operational reality

Beyond traditional metrics: rewriting KPIs to reward relationships over transactions

The Academy cohort identified a fundamental KPI shift, going from “what the customer does for the organisation” (sales, margin, conversion) to “what the organisation does for the customer,” Customer Lifetime Value (CLV). This is not semantic repositioning, as it requires new performance reward systems, broader metrics to include creativity and impact alongside financial results, and the integration of customer-focused KPIs across the organisation.

CLV naturally lengthens time horizons. Merchants managing quarterly sales targets would probably make different decisions than those optimising lifetime customer relationships. CLV rewards differentiation over discounting, service quality over transaction speed, and brand experiences over commodity fulfilment. It aligns merchandising incentives with marketing (brand building), operations (service, delivery) and finance (sustainable profitability).

However, CLV implementation faces obstacles. Calculating robust CLV requires integrated data across online and offline channels, attribution models that handle omnichannel journeys, cohort analysis that segments customers, and patience to accumulate sufficient data before models stabilise.

The transitional approach uses dual metrics: maintain traditional transaction KPIs (essential for immediate accountability) while building CLV measurement capability and progressively increasing its weight in merchant evaluations, then in company-wide evaluations. This parallels the art-science balance: traditional metrics provide guardrails and CLV metrics guide strategic direction.

A merchant’s playbook: where data decides and where intuition leads

During the course of the 9-month programme, Academy participants developed an 8-stage merchant product lifecycle framework mapping where science should dominate, where intuition should lead and where integration should create value:

1. Pre-market remains science-driven: analysing past performance, financial guardrails and SKU frameworks that prevent undisciplined buying.
2. Go-to-market requires a shift from transactional negotiation to intuition-driven curation. Balancing financial constraints with customer-centric instincts and emotional connection. This is where merchant taste matters.
3. Post-market order writing: best practice merges with pre-market analysis for integrated planning.
4. Post-buy operations remain science-driven: inventory flow optimisation, allocation algorithms, vendor coordination, logistics efficiency.
5. Product education, where lies an opportunity for change from the usual approach (fact-heavy technical data) to a renewed approach explaining emotional connection and why customers should buy: storytelling that contextualises the product within customer aspirations.
6. Visual directives: this part should also change from a historical approach, where consistency and uniformity prevail, to a new approach: storytelling vehicles, immersive narratives, cross-category storytelling that creates experiences rather than product displays.
7. In-season maintenance: reducing reactive dashboard monitoring to real-time trend chasing, bold bets, and experimental inventory management. Data enables rapid response, and intuition determines what trends merit amplification.
8. End-of-season reset remains science-based (margin management, clearance optimisation, inventory disposition) but informed by richer in-season insights.

This lifecycle clarifies where to invest in analytical automation (stages 1, 4, 8) versus human judgment enhancement (stages 2, 5, 6, 7). It prevents the dual errors of over-automating creative stages and under-automating operational stages.

AI that empowers merchants’ intuition

So far, AI cannot replace human intuition and imagination. These capabilities are part of the Experience Architect mandate. The Academy's final positioning on AI is pragmatic: AI handles routine analytical workflows, liberates merchants for "art" (storytelling, partnership building, curation, intelligent risk), accelerates brand scouting and assortment optimisation while keeping final judgments human.

Knee offered clarification: AI represents high-speed calculation, not intelligence. Value is handling repetitive tasks, freeing merchants for creative/strategic work. The danger lies in the “it wasn't me, it was the technology” abdication, where AI recommendations serve as accountability shields. Knee recommends building AI sandboxes for safe experimentation: controlled environments where merchants test algorithmic recommendations against their judgment, calibrate confidence based on results, and develop intuition about when to override.

However, imagination and intuition are often underdeveloped and impulsive. To elevate their decision-making processes, organisations should codify and foster the necessary human decision-making skills:

• Rejecting simplistic dataism: effective decision-making means integrating AI in a more human-led process, not only relying on data analysis and algorithmic optimisation.
• Ensuring decision-makers “get their hands dirty” with direct engagement with stakeholders.
• Making implicit skills like intuition explicit through reflection and training. Experiential learning questions can be: what was my first reaction, where did I rely on individual or collective experience, where did I supplement my experience, what mental shortcuts did I rely on to simplify the decision?
• Fostering psychological safety where diverse perspectives can thrive,
• And finally, building hybrid systems that combine human and AI strengths.

The Academy's transformation from "how do we become better merchants?" to "how do we become Experience Architects who use data to inform intuition and intuition to interpret data" represents a maturation from capability focus to purpose focus.

When participants asked CEOs, "How do you want your customers to feel?" during the Academy final presentation, the collective answer was: inspired, valued and cherished. Achieving this requires transcending transactions. Discovery must feel personal. Every visit should spark emotion. Customers must feel part of a community. The merchant's purpose is to put customers at the heart of every decision, with their experience guiding organisational purpose.

This is not soft aspiration disconnected from commercial reality. It is the integration that makes commercial success sustainable. Data tells merchants what customers did. Intuition helps explain why they did it and what they might value next; merchants often need to know what customers want before they do.

The department stores that will thrive are those that resolve the paradox not by choosing between intuition and data, but by building organisational architectures in which both inform every decision. The merchants who will succeed are those who match this sophistication not by replacing their judgment with algorithms, but by cultivating the capability to let data inform intuition and intuition guide which data matters. That integration, commercially grounded, customer-obsessed, and continuously evolving, defines merchant excellence in the age of both big data and irreplaceable human insight.

Credits: IADS (Christine Montard)

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CLICK HERE TO SEE THE PRESENTATION OF KAI TAK

Twenty-seven years after the last plane departed from Hong Kong Kai Tak airport, the area is landing again, this time as an ambitious experiment in mixed-use reinvention. Kai Tak isn’t your typical Hong Kong retail story of luxury flagships and tourist-driven consumption. Kai Tak’s developers are betting on a different vision: that Hong Kong’s future shoppers want integrated lifestyle destinations where retail is just one layer of a richer experience. They bet that families, sports enthusiasts and residents, not just mainland tourists, can anchor successful commercial developments.

As Hong Kong faces retail challenges with local consumers increasingly shopping and spending time in mainland China, Kai Tak represents a bold bet on experiential retail and community-centric development. To find out, the IADS visited the Kai Tak area and its retail anchors, Kai Tak Mall, Airside, and The Twins. Pictures are attached to this article.

The Kai Tak area: ground zero for reinvention

The early vision

The Kai Tak area was initially named after two businessmen, Ho Kai and Au Tak, who imagined the Kai Tak Bund Project in the early 1920s to address the housing shortage resulting from the influx of immigrants in Hong Kong following the 1911 revolution. In response, Kai and Tak envisioned developing an upscale residential area to attract wealthy immigrants looking to settle in Hong Kong’s Kowloon Bay. The ambitious project never came to fruition due to economic difficulties. The site was later purchased by the government, first leased to an aviation school, then converted into a Royal Air Force base, and eventually became an airport. In 1936, the first passenger plane landed at Kai Tak International Airport. The airport closed in July 1998, when operations moved to the Chek Lap Kok location.

The masterplan: Kai Tak Development (KTD)

After the airport relocated, the Hong Kong government planned urban development for the former airport site. Project planning began in 1992-1993 with an initial proposal of a “City Within a City” covering 580 hectares. After these preliminary ideas and studies, the Hong Kong government began planning and developing from 2004 to 2006.

KTD includes a multi-purpose sports complex, a park and an 11-kilometre promenade (the largest harbourfront park in Hong Kong), the Kai Tak Cruise Terminal, hotels, a housing estate, public transportation connections (MTR), and commercial and entertainment construction projects.

With a total gross floor area exceeding 14,400,000 sq ft. (1,34 million sq.m.), the project planned to accommodate 86,000 residents in 30,000 housing units (including 13,000 constructed as part of public housing estates), with a projected population reaching 134,000 by 2036. The area was also planned for an estimated 80,000 professionals across 11.4 million sq ft (1.06 million sq m). In 2019, the total development cost was estimated at approximately HK$100 billion.

Where the city breathes: parks, promenade and play

Overall, KTD covers more than 320 hectares. One-third of the project is dedicated to public and open spaces, providing Hong Kong with a unique space for socialising and relaxing. The Kai Tak River has been created, representing a 2.4 km green corridor. Occupying 3 million sq ft. (280,000 sq.m.) of land, the Kai Tak Sports Park is the largest sports venue in Hong Kong. The complex includes a 50,000-seat stadium, a landmark in the area, large open spaces with free sports equipment, such as muscle benches and climbing walls, and a health and wellness centre. The park is easily accessible through the MTR. In 2024, New World Development (also the owner of K11) sold its stake in the park operations to parent Chow Tai Fook Enterprises (CTFE), after posting its biggest-ever loss.

From courts to galleries: How Kai Tak Mall and Airside recast retail

The commercial development of Kai Tak has been relatively slow, compared with the 17 residential sites sold in the area in 2019. At that time, the government had only sold two commercial sites: one to Nan Fung Group (to build the Airside project) and one to IADS member Lifestyle International (to build The Twins). At the outset, in addition to retail space, both sites were set to deliver over 2 million sq ft (186,000 sq m) of new office space. Other retail and commercial developments followed.

Game on: Kai Tak Mall “sportainment” formula

Part of the Kai Tak Sports Park, Kai Tak Mall represents Hong Kong’s first “sportainment” retail concept, targeting families seeking entertainment and dining experiences, sports enthusiasts and athletes, event attendees (concerts and sports competitions held in the stadium) and the local community in the growing Kai Tak district. It is a hybrid destination that combines retail, sports, entertainment and dining experiences:

• Building on the Sports Park’s mission of athletic development, the Kai Tak Mall represents 700,000 sq ft of retail space and features many sports brands over three buildings. This includes Adidas, Nike, New Balance, Decathlon, FILA, National Geographic Apparel, FanTown, LI-NING, Salomon, Liverpool FC, PUMA and Skechers. A supermarket, Mannings and Watsons beauty retailers, as well as Uniqlo and sister company Gu, complete the product offer. The mall achieved an occupancy rate of over 80% as of June 2025.
• Sports are everywhere in the area with badminton, beach volleyball, table tennis, pickleball, soccer, a climbing wall, tennis, basketball, fitness, running paths and more.
• Entertainment is meant for the whole family with a large Epicland playground for kids, a NAMCO Japanese game centre, a bowling alley with 40 lanes, the city’s tallest rock climbing wall and the first sports-themed amusement park JOYPOLIS SPORTS outside Japan. This park offers ninja-inspired sports and the integration of SEGA’s SONIC.
• Dining options with 72 restaurants and eateries from Japan to Korea, China and Europe, from speciality coffee to dumplings and pizza.

The mall opened in 2024 Q2, during a challenging period for Hong Kong retail. Also, it represents a strategic evolution in Hong Kong’s retail and an alternative to traditional shopping centres. It creates an integrated lifestyle destination that leverages sports culture, entertainment and community engagement. Kai Tak Mall capitalises on the rise of experiential retail and family entertainment spending. Finally, it benefits from limited competition in the sports-themed mall segment.

Airside: shopping, art, cinema, surf, and pets

Developed by Nan Fung Group and designed by architecture firm Snøhetta (known for designing many Aesop and Holzweiler stores), Airside is a 1.9 million sq. ft. (176,000 sq m.), 47-storey mixed-use development, including retail and offices. It self-defines as Hong Kong’s first “culturetainment” destination, combining culture, retail, entertainment, and outdoor activities.

The mall is 700,000 sq ft (65,000 sq m) and the home of city’super premium supermarket, international lifestyle brands such as Tesla, Nespresso, Muji and Miele, as well as homegrown brands and shops catering to the needs of both pets and owners. These include a pet groomer, pet clothing stores and a pet washing and supply store.

In terms of culture, the mall offers a 10,000 sq ft (9,000 sq m) art space, GATE33 Gallery, featuring curated exhibitions. The mall also showcases art pieces by emerging and renowned artists. Completing the culture offerings, the MCL Airside Cinema has seven theatres accommodating up to 900 pax. Around 40 dining options are available, including Asian and international cuisine, speciality bakeries, cafes and outdoor dining. Entertainment also includes Hong Kong’s first large-scale indoor surfing centre.

In addition, Airside boasts nearly 18,000 sq ft (1,700 sq m) of outdoor areas, including an elevated garden, an open-air theatre, an educational urban farm, green spaces, and pet-friendly areas. Airside is also equipped with environmentally friendly facilities, including rainwater harvesting, a waste-sorting management system, an intelligent bicycle parking system, a district cooling system, and up to 850 electric vehicle charging parking spaces. As a result, Airside is the first building in Hong Kong to receive seven of the most recognised green and smart building certifications.

The upcoming Cullinan Sky Mall

Scheduled to open at the end of 2025, Cullinan Sky Mall is an upcoming mixed-use retail complex developed by Sun Hung Kai Properties, Hong Kong’s largest property developer. The mall is the retail podium of the massive Cullinan Sky residential development, accounting for 1,490 units across five towers. The mall will account for 220,000 sq ft (20,000 sq m). Its four-storey format will guarantee human-scale vertical circulation. Finally, it will have direct MTR access and a captive affluent base, as residential pricing indicates a high-income target.

The Twins: two towers, two plays

The Twins is a 1.1 million sq ft (102,000 sq m) retail complex developed by Lifestyle International, consisting of two symmetric 22-storey towers. The development represents a strategic dual-brand approach. Tower I houses the SOGO Kai Tak department store, while Tower II features SNDO, an innovative lifestyle mall concept opening in phases from Q4 2025 through 2026. The Twins offer over 700 tenant spaces and 500+ brands spanning fashion, dining, lifestyle services, and cultural experiences.

The project has been LEED and BEAM Plus Platinum pre-certified, which rewards green building. Key highlights include:

• Energy-efficient MEP (Mechanical, Electrical, Plumbing)
• Renewable energy sources
• Air quality thanks to the enhanced ventilation system.
• Connection to the district cooling system, a large-scale, centralised cooling infrastructure eliminating the need for cooling towers
• Water quality and usage
• Sustainable construction
• Electric vehicle support and accessibility for disabled people.

SOGO: 16 floors of everyday premium

Opened in November 2024, the Japanese-style department store spans 16 floors, from the basement to 15F, plus two floors of 500-car parking and five floors of SOGO offices. Each floor has its own architectural design, reflecting the product categories and adding surprise to each level:

• Cosmetics and beauty on B1 and GF: with 110+ brands, the space is East Kowloon’s largest beauty and skincare zone with a comprehensive selection of international brands as well as Korean beauty brands. The ground floor also hosts accessories brands such as Tory Burch, Hogan and Coach. The basement offers beauty rooms for facials and a beauty academy studio.
• Women’s fashion, accessories and lingerie live on 1F and 2F. The light-filled SOGO café completes the floor offerings.
• Men’s fashion and accessories live on 3F and 4F. From 1F to 4F, both women’s and men’s fashion mix apparel, shoes, jewellery and accessories.
• 5F is fully dedicated to sports with a distinctive stadium-like striped floor. Golfwear, which has become very popular, is not part of this floor but lives on the 3F with casual men’s fashion.
• 6F is for babies and kids: it hosts Hong Kong’s biggest baby mart. A large baby-changing room is available for parents. The floor also offers clothing and a large toy section with many trinket vending machines.
• Home goods span on 7F, 8F and 9F, from appliances, cookware and tableware on 7F to bedding, furniture and travel products on 8F, and luxury tableware, decoration and a VIP lounge on 9F.
• The TT site is for curated exhibitions on 10F.
• 12F, 14F and 15F are for restaurants.
• 13F is for Sky Koen, an outdoor space.

The department store is positioned in the premium-to-affordable luxury price point. Contrary to the Causeway Bay store, SOGO Kai Tak doesn’t include luxury brand concessions (aside from the Chanel, Dior, etc beauty counters. This raises questions, as many residential areas are targeted to affluent citizens. SOGO’s Thankful Week promotion was held at the time of the visit.

SNDO unfolds food, fandom and finds

First of all, SNDO’s architectural and interior designs are impressive. Rising 22 storeys, SNDO was imagined by Japan’s design firms CURIOSITY and MOMENT. With this opening, Lifestyle International aims to broaden its reach to a broader audience, focusing on experiential retail.

The name SNDO is inspired by the Romanised spelling of the Japanese word “Sando” for “sandwich”, reflecting the addition of shopping, dining, entertainment and services offered by the mall. With curated thematic zones, SNDO aims to create one-of-a-kind experiences across the floors (the building was not fully open at the time of the visit):

• B1 will showcase Freshmart+ food hall gathering over 40 brands across multiple categories from hot food, sushi and sashimi, confectionery, a Japanese bakery, health and wellness products, to daily essentials. With a 4-metre ceiling, the space will be airy and ideal for activities such as wine tastings. Designed as a miniature Japan, Freshmart+ will also introduce signature products and cultural activities to deliver immersive culinary and entertainment experiences.
• GF welcomes Xiaomi, its first store in East Kowloon, combining retail and service.
• agnès b.’s brand-new concept store on 1F brings together fashion, the popular b.CAFÉ and b.FLEURISTE floral shop. Upcoming launches also include BYREDO, Marc Jacobs, TUMI, and other premium brands.
• The upper retail floors are divided into 3 concept zones anchored by atriums that can be used for events. The 6F, 7F and 8F take inspiration from a Japanese shopping street that features local speciality shops and serves as a cultural gathering space. This zone will feature pet-themed vendors and a Japanese lifestyle bookstore, SNDO READS, offering the largest selection of Japanese books in Hong Kong. Spanning 20,000 sq. ft., SNDO READS interweaves art, literature and artisanal items. Forums, themed events, and workshops will be held regularly, serving as a stage for brand pop-ups and product launches, extending reading into lifestyle.
• The 9F is home to TT HALL. Mirroring TT SITE in Tower I, TT HALL is a multi-functional venue with five distinct spaces totalling 22,000 sq ft. (2,000 sq.m.) that will host cultural performances, concerts and community events.
• Hong Kong’s first official THE GUNDAM BASE (the official retail concept from Bandai Namco dedicated entirely to Gundam Plastic Models and Gundam franchise merchandise) will showcase exclusive models and limited-edition items, accompanied by exhibitions and dedicated events. As one of Japan’s most valuable media franchises, it should draw significant young male traffic to SNDO. More than a store, THE GUNDAM BASE is considered a pilgrimage destination for Gundam fans and a complete cultural experience.
• The 12F, 14F and 15F will offer F&B concepts, mirroring Tower I.
• 13F is for Sky Koen, an outdoor space, mirroring SOGO’s Sky Koen.
• 16F to 20F will be for lifestyle services.

The retail transformation of Kai Tak represents more than just new shopping centres, it signals a shift in Hong Kong’s approach to urban development and consumer engagement. By integrating sports, culture, entertainment, and community spaces with traditional retail, developments such as Kai Tak Mall, Airside, and The Twins aim to create destinations rather than mere transaction points.

Their success hinges on the continued residential build-out bringing 134,000 residents to the area by 2036, and the ability of these experiential concepts to maintain relevance as consumer preferences continue to evolve. However, Kai Tak’s retail story is still being written. If successful, it could provide a blueprint for future Hong Kong developments and demonstrate that in an era of e-commerce dominance, physical retail can thrive by becoming something more: a cultural and experience hub and a community gathering place. The former runway may have closed, but Kai Tak’s retail ambitions are just taking off.

Credits: IADS (Christine Montard)

Printable version here

The 2026 edition of the NRF Big Show took place from 11 to 13 January 2026 (a day shorter than the previous editions). It was, again, a record-breaking show, with more than 41,000 visitors from 100 countries and 564 speakers. Notably, this was the largest Expo ever, with 33,500 sqm dedicated to 1,025 exhibitors. This constant expansion might explain why the NRF is now a global fair, with an Asian edition (Singapore, launched 2 years ago), a European edition (Paris, launched last September), and, soon, a Middle East edition in Riyadh (planned for March 2027).

The recent changes in U.S. international policy did not deter foreigners from coming: more than a third of visitors were non-US, with the largest foreign delegation from Brazil. The total number of foreigners has decreased, however, compared to the previous editions.

As usual, there was a strong sense of excitement, fuelled by good overall retail sales and a good holiday season: according to the CNBC/NRF retail monitor, the strong December numbers brought total 2025 retail sales to an increase of 5.08% over 2024.

One could wonder however if the NRF Big Show still addresses retailers: while the event opened with the chairmen of BJ’s Wholesale Club and DICK’s Sporting Goods, one of the most commented keynote was the one gathering the CEO of Walmart, John Furner, with the CEO of Google and Alphabet, Sundar Pichai, and in the Expo, “agentic AI” was on everyone’s lips. Also, Microsoft’s and Google’s booths were spectacularly larger than their spaces in previous editions. While, as usual, the energy was palpable during the event, at least in the first two days, there was also a sense that many retailers based in the city did not show up due to a lack of time, or simply because the real retail conversations were increasingly taking place in side events. It felt as though tech and retail were no longer moving hand in hand, but were increasingly taking parallel trajectories, with tech eating retail, best illustrated by the large ChatGPT advertisement atop an iconic small store in the Village.

This focus on tech, for sure, continues to leave room for other global fairs interested in the “traditional” side of retail, such as Euroshop.

What follows is a subjective selection of conferences, news, and stores that we believe could be interesting to our members, as we try to cut through the noise and self-promotion. All conferences include a short recap of our 3 key takeaways.

Conferences recaps 

A year after being appointed, REI’s CEO on driving growth, community, and innovation

Since taking the helm of REI —a 87-year-old co-op with nearly 25 million members—in February 2025, Laughton has been drawn to the company’s mission-driven culture and the opportunity to leverage its distinctive assets for future growth. The co-op structure, free from investor or equity-owner pressures, allows REI to make decisions centred on long-term health and member value rather than short-term financial returns.

Upon joining, Laughton embarked on an extensive listening tour, engaging with employees, store teams, distribution centres, and vendor partners. She solicited feedback from 15,000 employees, revealing a strong desire to maintain REI’s culture, mission, and values, while also recognising that the culture must evolve and the company must sharpen its strategic focus for the future.

This process led to the development of “Peak 28, Ascending Together,” a three-year strategic plan built around four pillars:

• Delivering an authentic, culturally relevant assortment;
• Elevating the service experience to foster emotional connections in an increasingly digital world;
• Reinventing the membership programme to engage the co-op’s vast member base;
• Evolving the company’s culture to be more connected, focused, and trailblazing.

Laughton underscored that cultural evolution is foundational—no strategy can succeed without it.

Interestingly, and echoing IADS’ research on DEI (link to our White Paper), Laughton’s first months were marked by controversy over REI’s endorsement of a political appointee. She responded by retracting the endorsement and issuing a public apology. While Laughton highlighted the importance of transparency and vulnerability in leadership, she also reaffirmed REI’s steadfast commitment to diversity, inclusion, and access to the outdoors for all, even amid external pressures, showing that DEI remains a tightrope to walk.

Signature initiatives like “Opt Outside,” which encourages employees and consumers to spend time outdoors, remain central to REI’s identity. Laughton indicated that while the company will continue to support such traditions, it is also focused on authentic, mission-aligned impact work, particularly around climate change, access to public lands, and environmental stewardship. The Cooperative Action Network, which mobilises REI’s members on advocacy issues, exemplifies the co-op’s ability to drive large-scale engagement, with over 600,000 participants sending more than 2 million messages to elected officials.

A key differentiator for REI is its “Green Vest” expertise—15,000 passionate employees across nearly 200 stores who serve as trusted guides for outdoor enthusiasts. Laughton is focused on extending this expertise beyond physical stores by integrating Green Vest testimonials and videos into digital channels and leveraging this knowledge in marketing campaigns. The goal is to create emotional connections and community, positioning stores as hubs for outdoor lovers and reinforcing REI’s brand in an era where transactions are increasingly digital and commoditised.

On the role of AI-driven commerce, Laughton acknowledged that while AI will touch every aspect of retail, technology alone will not be the differentiator. Instead, human connection and trust—embodied by the Green Vests—will set REI apart. She recognised the dual challenge and opportunity of AI-driven disintermediation, emphasising the need to balance participation in external AI-driven platforms with the preservation of unique experiences on REI’s own channels. Laughton stressed the importance of clarity about which content and expertise remain exclusive to REI and which can be shared more broadly.

Difficult decisions have been necessary to ensure the co-op’s long-term financial health, including restructuring the travel and outdoor experiences business. The recent partnership with Intrepid Travel reflects a shift toward a more financially sustainable model and offers new benefits to members. Laughton is committed to further evolving the membership program, focusing on emotional resonance and member value, as well as the co-op's financial viability.

IADS’ takeaways:

1. Digitising human expertise is the antidote to commoditisation. In an era when digital transactions are becoming the norm, REI’s primary defence is its "Green Vest" associates. For retailers, the lesson is that "human touch" shouldn't be confined to offline interactions; it must be content-engineered into the digital journey to build trust and community that algorithms cannot replicate.

2. Selective openness in the age of AI Laughton presents a nuanced approach to AI-driven commerce: recognising that while retailers must participate in external AI platforms (to be found), they must also aggressively protect their "owned" experience. Retailers need to clearly define what content and data they are willing to share broadly with AI agents and what high-value expertise must remain exclusive to their own channels to remain a destination, not just a data source for a bot.

3. Purpose-driven strategy requires financial realism and vulnerability. Even mission-driven co-ops are not immune to market realities or cultural backlash. Laughton’s restructuring of the travel business demonstrates that retailers must sometimes outsource operations to save the mission.

Building the store of tomorrow: the FairPrice Group’s approach 

Established in 1973 through a tripartite collaboration between the Singaporean government, the labour movement, and business, FairPrice was designed as a co-op to moderate the cost of living and ensure daily essentials remained accessible and affordable for Singaporeans. This foundational mission remains central, even as the group has evolved into a diversified omnichannel powerhouse, commanding 60% of Singapore’s grocery market and serving one million customers daily in a country of six million.

Operating in a small yet highly competitive market, FairPrice faces formidable rivals, including Amazon, Alibaba, Lazada, Shopee, and Grab. The group’s strategy for maintaining and extending its leadership is anchored in making life “easy”—easy on the wallet, easy on the experience, and easy on the planet. This philosophy drives relentless process improvement, investment in omnichannel technology, and a commitment to sustainability. A major pillar of FairPrice’s strategy is also the development of its private label business, now the largest CPG company in Singapore. The private label division operates as a standalone business, reporting directly to the CEO rather than the chief merchant, and is staffed with talent recruited from leading CPG firms. This structure enables FairPrice to compete head-to-head with established brands, offering 3,500 private-label products across 70 categories and leading in 28 of them. The company has a rigorous approach: it advances products only if they win blind taste tests and launches them at a 15% discount to market leaders.

E-commerce, while initially dilutive to the P&L, is considered non-negotiable. Omnichannel behaviour is now the norm, with 70% of customers engaging across both online and offline channels, and digital baskets are five times larger than physical ones. By leveraging the FairPrice app in-store, the company has dramatically reduced e-commerce acquisition costs by leveraging natural store traffic to drive digital adoption. Integration with Singapore’s national ID system enables segmentation down to the individual, powering increasingly sophisticated personalisation and predictive analytics.

AI is at the heart of FairPrice’s next phase. Tools like Grocer Genie and Vision AI are deployed to support store managers and associates, providing real-time task management, workforce optimisation, and actionable insights across inventory, customer service, and more. The “Store of Tomorrow” concept, piloted in Singapore, features smart trolleys with personalised shopping assistants, electronic shelf labels, geofenced promotions, and vision-powered cameras that monitor stock, detect anomalies, and even flag unusual customer behaviour such as pilferage. These innovations have yielded measurable results, including a 17% increase in basket size and significant improvements in operational efficiency and customer satisfaction.

FairPrice’s approach to AI is pragmatic and inclusive, focusing on upskilling existing staff rather than replacing them, and using technology as a recruiting advantage in a tight labour market.

IADS’ Takeaways:

1. Structural independence is key for private label dominance. FairPrice treats its private label not as a procurement sub-function, but as a standalone CPG business that reports directly to the CEO. The lesson for retailers is to organise and resource private labels like independent brands rather than just low-cost alternatives.

2. Physical stores are the ultimate digital acquisition tool. While e-commerce can dilute margins, FairPrice offsets high Customer Acquisition Costs (CAC) by using its physical stores to drive app adoption. This proves that the physical store’s role is evolving into a cost-efficient recruitment centre for the digital ecosystem.

3. AI must deliver measurable "basket lift," not just efficiency. FairPrice’s investment in AI moves beyond backend efficiency to direct revenue generation. Their "Store of Tomorrow" pilots—utilising smart trolleys and personalised shopping assistants—validate the business case for in-store tech: it shouldn't just reduce labour costs; it must also visibly increase the average transaction value.

Lessons from a winning value-fashion retailer 

Kiabi’s focus (a French value-fashion retailer offering affordable clothing and accessories for the whole family) is shifting toward becoming a service-oriented organisation, developing new brands, and launching a range of initiatives to support and engage customers in more meaningful ways.

Despite the intense competition and the rise of disruptive players like Shein, the company maintains a disciplined focus on its own vision and customer base, rather than being drawn into public debates or reactive strategies. In France, where demographics are challenging (there are 600,000 births annually and Kiabi addresses two-thirds of them), the imperative is to continuously support and accompany families, prioritising their needs and experiences over direct confrontation with competitors.

Innovation is a constant, with testing and experimentation both in stores and at headquarters. The company is leveraging its large workforce and retail footprint to drive service excellence, recognising that the future of retail lies in the quality of in-store experiences and the ability to build lasting relationships with customers:

• Kiabi’s service strategy is exemplified by the launch of the En Famille Plus  Additional services include second-hand collection for toys, childcare products, and clothing, all designed to make life easier for families.
• The rise of second-hand business models is particularly notable, with 21% annual growth, and Kiabi is actively developing new services around resale, collection, and community engagement.
• Kiabi has also built a large and active community, growing from 100,000 to 300,000 members in just eighteen months, and has empowered these ambassadors to promote the brand and earn commissions through referrals.

The approach to AI and digital transformation is pragmatic and measured. While there is recognition of the hype and promise surrounding AI, there is also a healthy scepticism. The focus is on real-world impact and tangible results, rather than being swept up in the latest trends.

While the company is exploring new platforms like TikTok, it remains cautious, weighing the logistical complexity and potential return on investment before committing fully. The focus remains on identifying weak signals and emerging needs, particularly in mental health, to ensure the company continues to support families in relevant and impactful ways.

IADS’ Takeaways:

1. Service-first strategy as a defence against ultra-fast fashion. Rather than trying to outpace disruptors like Shein on speed or price alone, Kiabi is pivoting to become a "service-oriented" ecosystem. This shifts the value proposition from a transactional commodity (cheap clothes) to an indispensable family partner, creating a moat.
2. Community as a sales channel. Kiabi has successfully industrialised word-of-mouth by empowering customers to act as ambassadors who earn commissions. This, combined with growth in second-hand business, demonstrates that circularity and community engagement are now significant growth engines, not just CSR side projects.
3. Pragmatism over platform hype. Kiabi offers a counter-narrative to the "innovate or die" frenzy. Instead of chasing every tech trend, they focus on "weak signals" within their specific demographic (such as mental health needs). The lesson is to prioritise deep relevance to the core customer’s reality over the logistical complexity of adopting every new platform.

Operating fashion in the U.S. vs. Europe: the great divide 

Grunberg, North America President of Tory Burch and with experience at Célio and Lacoste, provided a nuanced analysis of the transatlantic differences in retail culture and the evolving priorities for growth in the American market. She emphasised that European brands often underestimate the complexity and diversity of the U.S. market, mistakenly believing that success in their home country will translate directly to the American context. Superficial familiarity with the U.S.—a few trips to Disney or New York—does not equate to a deep understanding of American consumers, distribution networks, or retail operations.

She highlighted the necessity for brands to fundamentally rethink their strategies when entering the U.S., rather than simply copying what worked in France or Italy. Product-market fit, marketing narratives, and distribution models must all be adapted to the unique characteristics of the American landscape, which is defined by its vast size, regional diversity, and complex mix of wholesale and direct channels. Success requires a willingness to “tweak and adapt” rather than overhaul, but also a recognition that what resonates with American consumers may differ significantly from what resonates with European audiences.

Regarding growth, Grunberg observed that, after years of heavy investment in digital and omnichannel infrastructure, the U.S. market is now at a crossroads. While digital development remains crucial, the operational costs of physical expansion—driven by rising labour and real estate costs—are increasingly prohibitive. Nevertheless, the most successful brands are accelerating their physical presence, including digital-native brands that are now opening stores and outlets to complement their online business. In the U.S., outlet stores are a particularly important channel, often more so than full-price retail.

When it comes to in-store experience, she was candid in his assessment that, with few exceptions, the U.S. market is not especially innovative compared to Europe. Most stores, from entry-level to luxury, struggle to deliver the level of service and technological integration that would set them apart, and she sees little breakthrough innovation in the mainstream U.S. retail landscape.

IADS’ Takeaways:

1. Avoid the "tourist trap" strategy. Grunberg warns against the dangerous assumption that superficial familiarity with the US (through travel or the media) equates to market understanding. Success requires a specific "product-market fit" strategy that acknowledges the U.S. not as a monolith, but as a diverse, complex landscape.
2. Outlets are a primary channel, not just clearance. Unlike in many European markets, where outlets are often secondary clearance mechanisms, Grunberg highlights that in the U.S., the outlet channel is often more important than full-price retail. Retailers entering the U.S. must treat outlets as a strategic growth engine. Furthermore, despite rising labour and real estate costs, physical expansion remains a necessity, with even digital-native brands aggressively opening brick-and-mortar locations to drive growth.
3. The "service gap" is a competitive opportunity. Contrary to the perception that the U.S. is the pinnacle of retail, Grunberg argues that the mainstream U.S. market is "not especially innovative" in terms of in-store experience and service compared to Europe. Most U.S. stores struggle with high-touch service and tech integration.

Is there too much enthusiasm for AI? 

Both Julia and Malfoy expressed scepticism about the proliferation of AI solutions: while there is significant investment and technical achievement—such as robots capable of sorting socks—the practical utility and business value of many innovations remain unclear. The market is saturated with AI-branded solutions that often lack clear differentiation or tangible impact. Just like Del Rey in another conference, they highlighted the challenge of distinguishing between genuine advances and superficial applications, with Julia noting that the term “AI” is now attached to everything from climate solutions to consumer electronics, making it difficult to discern real value.

He also emphasised that, despite the hype, the most meaningful progress in AI is occurring in highly specialised, domain-specific applications. While general-purpose generative AI has captured attention, it is the emergence of smaller, more focused agents—descendants of concepts dating back to the 1980s—that are beginning to deliver real results. These specialised agents, orchestrated to work together, are more efficient and impactful than large, generic models, especially when tailored to specific business needs.

The conversation turned to the importance of use cases and the difficult need to identify concrete, high-value applications for AI, rather than deploy technology for its own sake. One of the most significant challenges identified is the need to educate teams about what AI is—and what it is not:

• There is widespread anxiety among white-collar workers about being replaced by AI, particularly in intellectual professions. Julia stressed the importance of framing AI as a tool for cooperation, not competition, and of promoting the concept of “augmented intelligence” rather than replacement. The analogy was drawn to robotics, where the most successful outcomes have come from human-machine collaboration, not automation alone.
• They rejected the notion that AI will make professional expertise obsolete, arguing instead that the future lies in the cooperation between human specialists and AI tools. The message to young professionals is clear: invest in mastering craft, continue learning, and embrace AI as a means to enhance, not replace, expertise. The most valuable outcomes will come from the synergy between domain knowledge and intelligent systems.

Implementing AI at scale remains “very difficult,” according to Malfoy. The foundational requirements—clean, well-structured data, robust IT infrastructure, regulatory compliance, and clear objectives—are non-negotiable. Without these, AI projects are doomed to fail or deliver only marginal returns. But, even with these elements in place, measuring productivity gains is complex, as calculating the true impact on productivity and ROI is challenging.

IADS’ Takeaways:

1. Shift focus from generic models to specialised agents. While general-purpose Generative AI gets the headlines, the real business value lies in specialised, domain-specific agents. Retailers should stop chasing broad "AI-branded" solutions and instead invest in smaller, focused agents that are orchestrated to work together on specific business problems.
2. Reframe AI as "Augmented Intelligence" to secure adoption. The biggest barrier to implementation isn't technology, but workforce anxiety about obsolescence. Leaders must explicitly reframe AI as a tool for collaboration and augmentation, not replacement. The message should be that deep domain expertise is more valuable, not less.
3. The "boring" foundations are non-negotiable.Scaling AI is described as "very difficult" because it exposes foundational weaknesses. Before deploying advanced agents, retailers must ensure the "unglamorous" prerequisites are in place. Furthermore, retailers should be prepared for the reality that measuring the ROI and productivity gains of these systems remains complex and often elusive.

What AI can and can not do for department stores 

When looking at past innovations—barcodes, RFID, e-commerce, and even blockchain— some, like e-commerce, fundamentally reshaped the industry, while others were more fleeting or limited in their practical value. AI, however, was described as a new “electricity,” a foundational technology with the potential to drive efficiency, performance, and entirely new business models. The panellists agreed that, unlike previous cycles, AI’s reach will be universal, affecting all age groups and business functions, with a faster and deeper adoption than the internet revolution.

A key theme was the necessity for AI vision and governance to originate at the highest levels of the organisation, with leadership setting strategy and cross-functional teams executing on it. AI cannot be siloed within IT or digital departments; it must permeate the entire enterprise, breaking down traditional barriers between functions such as merchandising, supply chain, and store operations. The most successful transformations will be those that foster a “team of teams” approach, enabling data and insights to flow freely across the organisation.

However, the transformation is as much about people and change management as it is about technology. Pairing technologists with business and HR leaders was cited as essential to ensuring that AI initiatives align with company values, mission, and the realities of workforce transformation.

On the technical side, the discussion highlighted the importance of data quality and taxonomy. While many organisations worry about “dirty data,” the real challenge is often the lack of a clear framework for structuring and interpreting data. The emergence of small language models tailored to retail taxonomies offers hope for making sense of complex data environments, but panellists cautioned that AI is not a magic wand—organisations must still invest in foundational data work.

The conversation also addressed the distinction between AI-native and AI-applied solutions. Legacy systems, even when incrementally improved with AI, are constrained by their architecture and processes. True step-change gains—such as a 90% reduction in the cost of product data management—require a generative, AI-native approach that reimagines processes from the ground up. The panellists argued that while incremental productivity gains are valuable, the real opportunity lies in leaving the door open for reinvention.

For department stores and multi-brand retailers, the panellists identified both back-office and front-office use cases as low-hanging fruit for AI deployment. The complexity of managing vast product assortments and databases can be dramatically reduced with AI, freeing up resources to invest in customer-facing innovation and store experience. However, the panellists warned against cutting sales staff or store investments, noting that such moves can trigger a downward spiral of declining service and relevance. Instead, the goal should be to optimise operations and reinvest savings in areas that enhance the customer experience and brand differentiation.

The discussion acknowledged the existential pressures facing department stores, with AI seen as a matter of survival. The traditional advantage of choice and curation is eroding as the internet evolves, but AI offers a way to manage complexity and restore the value proposition of the physical store. The panelists emphasised the need for bold change management, drawing lessons from Amazon’s startup culture and warning against decision-making by committee, which can stifle innovation and agility.

IADS’ Takeaways:

1. The "AI-native" leap vs. incremental improvements. A critical distinction must be made between "AI-applied" (adding AI to legacy systems) and "AI-native" (reimagining processes from the ground up). While applying AI to old architectures yields incremental gains, AI-native approaches can deliver step-change returns. Retailers are urged to look beyond small productivity boosts and leave the door open for total process reinvention to achieve genuine scale (probably easier said than done).
2. The reinvestment mandate: don't cut the front line. For department stores and multi-brand retailers, AI offers massive "low-hanging fruit" in managing back-office complexity. However, the panellists issue a stern warning: do not use these efficiency savings to cut sales staff or store investments. Instead, savings from back-office AI automation must be reinvested in the front office to enhance the customer experience and differentiate the brand.
3.  Governance must break silos with a "Team of Teams".AI cannot be successfully deployed if it is siloed within the IT or Digital department. It requires a "Team of Teams" approach driven by top-level leadership that breaks down traditional barriers. Furthermore, to avoid the "decision by committee" trap that stifles innovation, technical teams must be paired directly with HR and business leaders to ensure data flows freely.

Beyond “agentic AI”, autonomous business models 

Drawing on three years of research into companies investing in agentic and physical AI, Vala Afshar, Chief Evangelist at Salesforce, argued that every company faces disruption from an autonomous version of itself. His thesis is that without digital labour—whether agentic or physical—companies will struggle to compete and win. His examples drew on autonomous cars, which are now deployed in real-world environments, such as San Francisco, Phoenix, Austin, and London, where Waymo cars—retrofitted Jaguars with $100,000 in technology—operate without human drivers. Adoption is rapid, and the cost of AI-first vehicles is dropping dramatically: Tesla’s CyberCab targets a $36,000 price point, compared with $150,000–$200,000 for earlier models. The point is that an AI-first car is significantly different from a traditional car: there is no longer a need for a steering wheel, gas pedal, rearview mirrors, or even a cockpit, since the car drives itself. The latest AI-first cars no longer have these features: in China, trucks are now designed without human accommodations, further reducing costs and increasing efficiency[1].

His provocative and interesting question was: which “steering wheels, gas, or brake pedals” must business leaders remove from their operations to fully embrace AI-first principles?

For him, the transition to autonomous business models unlocks nonlinear optionality: employees freed from routine tasks can focus on higher-value activities, and companies can scale in new ways. At Salesforce, AI agents now handle customer support in 15 languages, raising first-contact resolution rates from 61% to 77% in just four months. The company is now semi-autonomous, with hundreds of agents deployed across sales, service, commerce, and marketing functions. Afshar stressed that AI is no longer just a tool but a colleague—akin to Tony Stark’s Jarvis in Iron Man—requiring organisations to upskill and reskill their workforce to collaborate effectively with digital agents[2].

IADS’ takeaways:

1. Move from "retrofitting" to "AI-first" design. 

   Just as the automotive industry is shifting from retrofitting existing cars with sensors to building vehicles with no steering wheels at all, retailers must stop simply bolting AI onto legacy processes and identify the retail equivalents of "steering wheels and brake pedals"—outdated operational steps or hierarchies—that can be removed entirely to build a more efficient business model.

2. Digital labour is essential for competitive survival. 

   The Salesforce example—where AI agents increased customer service resolution rates from 61% to 77% in four months—suggests that, for retailers, AI shouldn't just assist humans, but autonomously handle high-volume tasks (in multiple languages and functions), allowing human talent to focus on high-value, complex interactions.

3.  Treat AI as a colleague, not a tool.

   Retailers need to shift their cultural mindset to view AI as a "colleague" rather than a utility. This requires a significant investment in upskilling the workforce to collaborate with these agents. Furthermore, retailers must prepare for a future in which their primary "interface" with customers may be through an AI agent rather than a traditional app or website.

The key AI priority for brands: conversational commerce capabilities, on their premises

 Jason del Rey, recognised by the NRF as one of the 25 people shaping retail’s future, brought a somewhat specific, more immediate, and more grounded perspective than other guest speakers who were trying to predict the future and convince everyone of it.

He started by making a distinction between genuine innovation and “vaporware” in the AI space: while consumer research and product discovery are already being transformed by AI-powered apps and smarter e-commerce sites, there is a proliferation of startups—particularly in the AI-driven SEO and product search space—where much of the investment is chasing unproven concepts. He emphasised the need to separate hype from real value, especially as new players and platforms emerge.

He also contrasted the strategies of retail giants Walmart and Amazon in response to the rise of AI:

• Walmart is partnering with AI companies to ensure its products are well represented in AI-driven shopping experiences, aiming to become the default supplier as conversational commerce matures.
• Amazon is taking a more insular approach, blocking external AI apps from scraping its data and developing its own AI assistant, Rufus, and shopping agent, Buy For Me. Amazon’s strategy includes scraping external sites to fulfil customer requests, a move that has sparked controversy among small businesses.

Del Rey predicted that Amazon will continue to pursue its own path for as long as possible, while Walmart’s openness to partnerships may position it advantageously if AI-driven commerce becomes mainstream.

He also highlighted the rapid evolution of the retail funnel, with platforms like ChatGPT, Perplexity, Google Gemini, Anthropic’s Claude, and Microsoft Copilot vying to become the primary entry point for product research and, increasingly, transactions. These platforms are experimenting with conversational commerce, where consumers may transact directly within an AI chat, bypassing traditional search and even retailer websites. Del Rey noted that while social media companies have struggled to make in-app transactions work, the current wave of AI-driven conversational commerce could be different, though the outcome remains uncertain.

For incumbent retailers, Del Rey’s advice was clear: while it is worthwhile to experiment with emerging AI platforms to ensure products are discoverable, the critical priority is to deliver a smart, conversational experience on their own digital properties. He recounted a personal experience with Home Depot, where the difficulty accessing product information on the retailer’s site led him to use ChatGPT for a faster, more accurate answer. This, he argued, is the existential risk for retailers: if their own sites cannot match the intelligence and responsiveness of AI platforms, they will quickly fall behind as consumer expectations shift.

IADS’ takeaways:

1. The "owned experience" is the urgent battlefield. While much attention is paid to how products appear on external AI platforms, the immediate existential risk lies on the retailer’s own website. Retailers must urgently upgrade their on-site search and discovery tools to be as "smart" and conversational as the general AI bots; otherwise, consumers will bypass the retailer’s digital storefront entirely for research and decision-making.
2. Divergent ecosystem strategies: fortress vs. federation. Retailers must observe and choose between two emerging strategic paths. Amazon is pursuing an isolationist "fortress" strategy. In contrast, Walmart is betting on a "federation" model. Smaller retailers need to decide whether to protect their data (Amazon-style) or syndicate it widely to capture traffic from the new wave of AI search engines.
3. Distinguish "vaporware" from funnel transformation. Del Rey cautions against the "hype" of unproven AI startups (especially in SEO), advising retailers to focus on where the consumer behaviour is actually shifting: the top of the funnel. With platforms like Perplexity, ChatGPT, and Gemini potentially replacing traditional search engines as the primary entry point for product discovery, retailers must prioritise visibility on these major platforms rather than chasing every new AI commerce tool. The shift here is towards "conversational commerce" that actually works.

How LVMH is leveraging data and digital 

LVMH’s approach to artificial intelligence is defined by the commitment to elevating creativity and the singularity of each maison. The group’s AI strategy is rooted in four core values: creativity, excellence, entrepreneurship, and positive impact. As such, AI is positioned as a tool to amplify creativity, support the pursuit of excellence, empower individual entrepreneurship within every role, and ensure responsible, human-centred innovation.

The AI transformation at LVMH is structured around inclusivity and scale, with the “AI for All” initiative designed to engage every employee across more than 75 maisons. Each maison is encouraged to develop its own AI transformation plan, tailored to its unique culture and business needs, while the group identifies common priorities—commerce, marketing, and operations—where best practices can be shared and scaled. Creativity remains a sensitive and central domain, approached with caution to avoid homogenisation. AI supports designers in exploration and rapid prototyping, freeing them to focus on the emotional and narrative aspects of their work, while client advisors are empowered with documentation and insights to deepen their personal relationships with clients.

A defining feature of LVMH’s AI journey is the intentionality and discipline with which it is pursued. Rather than adopting a scattershot approach, the group prioritises initiatives that align with strategic business needs and the unique DNA of each maison. Projects are evaluated against three criteria: the size of the opportunity, the genuine potential to elevate the client experience, and the legitimacy of LVMH or the maison to win in that space. Only those that meet all three are pursued, ensuring focus.

“Agentic commerce” is being redefined by LVMH and Louis Vuitton as a means to build intimacy and long-term relationships, not just facilitate transactions. The vision is of a digital concierge that orchestrates every aspect of the client’s journey—across stores, online, events, and experiences—anticipating needs and preferences, and creating a seamless, context-aware narrative.

Maintaining the authenticity and singularity of each maison is paramount. While technology and best practices may be shared behind the scenes, every brand retains its own vocabulary, tone, and cultural touchpoints. Responsible AI is a cornerstone, with a charter and governance structure in place to ensure trust among employees, creatives, and clients. Each maison has responsible AI officers, and the group’s approach is as much about building trust as it is about compliance.

IADS’ takeaways:

1. "Omnipresent yet invisible": technology as a substrate, not a spectacle. LVMH designs tech to be invisible, serving solely to amplify human connection and creativity. For retailers, especially in high-touch or premium sectors, this means AI should not be the interface itself but the backend engine that empowers staff (client advisors) to deliver hyper-personalised service, with the technology never being the focal point of the customer experience.
2. Decentralised execution with centralised values. 

   With over 75 maisons, LVMH avoids a one-size-fits-all AI mandate. Instead, they encourage each maison to develop its own AI roadmap tailored to its unique DNA. This "federal" model enables agility and brand distinctiveness while leveraging the group's scale for backend synergies.

3.  Rigorous filtering: the "three criteria" rule.

   LVMH rejects the "scattershot" approach to innovation. Every AI initiative must meet three strict criteria: the size of the opportunity, the potential to elevate the client experience, and the legitimacy to win.

AI without semantic capital is of no use 

Pedersoli noted the omnipresence of “agentic” AI applications at the NRF: every vendor, across every layer of the customer experience, is now selling AI-driven solutions, and the investment in AI-embedded startups has surged—Goldman Sachs reporting that more capital was raised in the first half of 2025 than in all of 2024. Yet, despite this exuberance, the reality on the ground remains sobering: most companies are still struggling to achieve positive ROI from their AI deployments.

The core reason, Pedersoliargued, lies in the distinction between knowledge and context. While AI promises to help organisations manage and disseminate knowledge more effectively, knowledge itself is not a static repository of documents, PDFs, or wikis. Rather, it is the living way an organisation interprets its environment, reacts to change, and makes decisions. Most companies still operate on tribal knowledge—“ask Sarah, she knows”—rather than on systematically captured and codified expertise.

Pedersoliexplained that the traditional knowledge pyramid—data, information, knowledge, intelligence—has been disrupted by large language models. These models have commoditised the middle layers, ingesting vast amounts of generic data, but lack the specific organisational context that gives knowledge its true value. Every company now has access to powerful models and abundant data, but what remains scarce—and what constitutes the new competitive moat—is the unique context, decision logic, and semantic capital that define how a company understands its business and makes decisions.

Semantic capital, as he defined it, is not simply metadata or tagged documents. It is the explicit encoding of an organisation’s unique definitions, processes, and judgment—what constitutes a client, a good client, a risk, or an opportunity—into ontologies that are machine-readable and actionable by AI. The challenge for retailers and brands is to map their tribal knowledge, extract it from key individuals before it is lost, and build domain ontologies not for static knowledge bases, but for integration with LLMs and AI systems. This means making the company’s meaning, logic, and signature visible and searchable to machines, enabling true orchestration and continuous innovation.

Pedersoli emphasised that the winners in retail and beyond will not be those with the “best” AI model, but those who succeed in making their unique meaning and context machine-readable and computable. The sustainable competitive advantage will come from the ability to encode and orchestrate semantic capital—transforming the tacit, tribal knowledge that has long defined organisational success into explicit, actionable intelligence for the AI era.

IADS’ Takeaways:

1. "Semantic Capital" is the new competitive moat. In a world where every competitor has access to the same powerful LLMs and generic data, the only true differentiator is organisations’ unique context—their "Semantic Capital" (the specific, codified definitions and logic that define the business). Retailers must stop relying on generic models and start explicitly encoding their unique business logic into machine-readable ontologies to gain a competitive edge.
2. Shift from "tribal knowledge" to "machine-readable context". Most retailers currently run on "tribal knowledge" (e.g., "Ask Sarah, she knows"), a critical vulnerability. To succeed with AI, companies must extract this tacit knowledge from key individuals and codify it.
3. The ROI gap is caused by a context deficit. Despite record investment in AI startups, most companies are failing to see positive ROI because they are feeding generic models with generic data. The path to ROI lies in feeding these models with the company’s specific "decision logic"—transforming generic processing power into specific, actionable business intelligence.

A subjective selection of innovative startups - AI 

The FIRA organised a curated tour of the “Innovators Showcase”, a selection of 48 international companies already operating and with commercialised solutions. Out of the 11 companies presented, here is a curation of the curated list:

• NXN Labs : an AI digital production company for fashion. They offer AI-generated on-model images in 20 seconds according to the brief, which works very well for A/B testing (they already have customers in fashion, jewellery, sunglasses). On-model images can be turned into videos, and they can also generate full-campaign images (50 shots, according to the specs), in a week. Customers: Vince, JD Sports.
• Refabric: AI used for concept-to-collection processes, allowing the creation of collections in a digital version and pre-selling them before launching into production. Another European company offering this service is Athena Studio.
• Cimulate: integrates LLM models with the retailer’s product database at the search step of the customer journey to return a selection that exactly matches the natural-language request.
• Brandback: While the main activity is to enable resale directly in retailers’ D2C stores, their new product, glara.ai, optimises product visibility across an AI platform (ChatGPT…)
• Unistop Tech: an AI-powered retail machine, allowing to offer context-related cross-selling services, and with storage options starting at 200 SKUs / 2,000 units, and the possibility to sell anything, from frozen food to fresh items, or fashion accessories.
• New Black: A contextual commerce platform for customers and employees, fully integrated, from the POS devices to the e-commerce website, allowing sales staff to know everything about their customers when they come into the store (not to be mistaken with Le New Black, a French company offering showrooming tools).

A review of new stores opened in 2025 

Must sees 

Bloomingdales 59th Flagship store

What: The entire store is elevating its offering to deliver a modern luxury experience unseen in the U.S.

Why it is important: It’s not only about how it looks, but also how it structures itself, and the services associated. Also, it’s an IADS member.

Bloomingdale’s is undergoing a comprehensive overhaul of its physical spaces and a strategic repositioning of its luxury RTW and shoes floors, under the helm of architect Bernard Dubois3.

The renovation includes replacing the iconic black-and-white checkered floors with hard-wood floors, a new aesthetic with multibrand areas developed in colour blocks, and new store types: Chanel has opened the first duplex at Bloomingdale’s, integrating footwear and ready-to-wear. This duplex sets a precedent for the year, with the entire floor being reimagined to accommodate new brands and concepts. The store is also reopening its windows to flood the space with natural light, creating a vibrant and welcoming environment. The new fitting rooms, constructed with premium materials, further underscore the commitment to an elevated customer experience. The overall approach is to create a differentiated universe that stands apart from the traditional Bloomingdale’s experience and offers a unique alternative to the typical American department store model, such as Saks or Bergdorf Goodman.

Another key pillar is enhancing customer service, particularly in personal shopping. Dedicated spaces and apartments for personal shoppers are being introduced, offering a level of exclusivity and comfort not found elsewhere in the U.S. market. Approximately twenty cabins will be available on this floor alone.

Looking ahead, the ground-floor renovation is scheduled to begin in 2027 and is expected to take 2 years.

Printemps New York

What: A radically different proposition, designed to be an ‘apartment store’ rather than a department store.

Why it is important: An interesting way to overcome structural store complexity by going radical in the retail proposition (but transferring the complexity onto sales staff).

The notion of “apartment store” design leverages the building’s complex shape by dividing the space into a series of rooms, each with its own unique atmosphere. Rather than organising the store by brand, the layout is structured around consumer types or moments in the customer’s day. The ground floor, for example, features a “playroom” offering more affordable items and a vibrant palette that encourages interaction and discovery.

As customers move deeper into the store, they encounter the “salon,” which houses luxury brands and evokes a more traditional, affluent ambience. The design here incorporates elements that reference French heritage, such as flooring inspired by the Palace of Versailles, creating a sense of connection and nostalgia. The beauty section, located in a challenging, long corridor, was transformed into a visually compelling area that exceeded initial expectations in both aesthetics and sales performance.

Further inside, the “boudoir” is dedicated to high-end jewellery and evening wear. The “Red Room,” initially considered for a restaurant, ultimately became the Shoe Salon. However, its dramatic design has overshadowed the merchandise, and lighting constraints—due to the building’s protected status—have presented operational challenges, as all lighting must originate from the floor and is limited in voltage.

Staffing strategy is closely integrated with the store’s spatial organisation. Employees are assigned to specific rooms but are encouraged to accompany customers throughout their journey, ensuring continuity of service and deeper engagement. Sales performance is tracked by individual staff members rather than by department, allowing for a nuanced understanding of customer behaviour and product mix. The store’s merchandising approach deliberately avoids price segmentation, instead promoting a mix-and-match philosophy in which affordable and luxury items are displayed together, reflecting contemporary consumer preferences.

Visual merchandising is highly dynamic, with the team updating displays twice a week to maintain a sense of novelty and urgency. Although product deliveries occur only twice weekly and in small quantities, this approach creates a perception of constant newness and scarcity, motivating customers to make immediate purchases.

The store culture emphasises autonomy within a broad framework, granting staff significant freedom to interact with customers, including the option to sit and have coffee together. This empowerment is supported by a robust incentive programme that includes hourly pay, bonuses for individual and store-wide targets, additional rewards for specific products, and special recognition for reaching significant sales milestones, such as the first million in sales.

Finally, when it comes to VICs, the store does not have a dedicated space per se, but has access to the private terrace located in the luxury residential building where it is located (leading to some negotiations with the residents from time to time).

Macy’s ground floor

What: The Cosmetics area has been revamped.

Why it is important: Not groundbreaking, but more efficient.

Macy’s has significantly renovated its cosmetics department, introducing a modernised, clearly segmented environment that hosts standard collections from major luxury houses like Dior, Chanel, and Saint Laurent. While the floor features varied brand activations—including a Saint Laurent perfume vestibule, a Burberry pop-up, and counters for Tom Ford and Prada—certain areas face challenges; notably, a Popmart installation situated near the escalators suffers from limited visibility and low engagement at the time of visit (but rumours said that it was all the rage during Christmas).

Meta Lab

What: The only place to buy the new Meta sunglasses with AI-powered lenses.

Why it is important: The location in front of LV and Bergdorf Goodman (which was totally empty at the time of visit). The intersting in-store experience. Paradoxically, customer frenzy and an inefficient sales process.

Meta Lab presents an experiential retail concept centred on extended product trials and accessory customisation, enhanced by complimentary amenities. However, the customer journey is characterised by significant wait times and a notable absence of immediate information regarding pricing and availability.

Target SoHo

What: The store was revamped to convey a new, more fashionable image.

Why it is important: The store hits half of its target. While the ground floor is interesting, there is nothing much groundbreaking downstairs.

The new Soho Target location features an experiential entrance tunnel showcasing current collections, though the accompanying display layout presents challenges for product location. Beyond this, the store offers a streamlined grocery department and a technologically enhanced cosmetics section, distinguished by automated packaging and diagnostic skin analysis capabilities. However, there are many great merchandising little ideas here and there.

Dossier

What:  A nice boutique selling high-end perfumes knock-offs.

Why it is important: You think this will not generalise if successful?

Dossier positions itself as an accessible alternative in the fragrance market, specialising in high-fidelity replications of luxury scents alongside a proprietary collection. The sales strategy primarily targets consumer familiarity with established perfumes rather than abstract olfactory preferences, guiding customers toward affordable analogues of specific designer fragrances.

Nespresso new flagship 

What: The new experiential place allowing the brand to evangelise and capture new customers.

Why it is important: Forget about sales per sqm, it’s all about catchment.

Nespresso’s flagship employs a dual-level strategy designed to cultivate the American market through education and immersion. While the ground floor focuses on transactional efficiency and sustainability messaging, the lower level operates as an experiential lounge. This space encourages dwell time via self-guided tastings and expert support, effectively shifting the customer journey from simple acquisition to deep sensory discovery and brand engagement.

Try to see if your schedule allows  

The Poke Court

What: A brilliant execution and a place to gather to buy and sell Pokemon cards.

The Poke Court in Manhattan serves as a comprehensive hub for collectors, offering dedicated facilities for the valuation, exchange, and purchase of both vintage and sealed trading cards. Complementing its inventory of imported memorabilia and collectables, the venue distinguishes itself with a communal entrance area designed to foster active trading and engagement among enthusiasts. Notable for the crowd and the feeling of an elevated adult experience.

Buck Mason

What:  A “Cali cool”, US-only (for now) fashion brand, with already 7 stores in Manhattan.

Originating in California, Buck Mason has expanded its retail presence—including a significant footprint in New York—to offer both men’s and women’s apparel characterised by a mid-century Americana aesthetic. While the brand utilises a mix of domestic and international manufacturing, it maintains a premium positioning with pricing to match its focus on stylish staples and leather goods. The physical locations stand out for their curated, relaxed environments, offering complimentary amenities and high-touch service to evoke a distinct West Coast atmosphere. Interesting feature: customers are encouraged to help themselves in the bar, for free.

Whole Foods Daily Shop

What: the everyday grocery iteration of Whole Foods

Nothing special for Europeans, but this format is a new feature in the U.S. Whole Foods Daily Market employs a compact format emphasising health and sustainability, though its use of open refrigeration appears to conflict with these environmental goals. The location features automated cleaning but eschews modern self-service and anti-theft technologies in favour of traditional, staffed checkout lanes and a minimal security presence.

Los Angeles Apparel

What:  The new brand from Dov Charney, founder of American Apparel.

Los Angeles Apparel serves as a revival of the American Apparel aesthetic, prioritising heavy-weight, domestically produced cotton basics. The retail environment adopts a warehouse concept, merging the sales floor with visible inventory storage to emphasise volume and variety. While the brand maintains a provocative visual identity through its art direction and staff attire, the product assortment remains focused on vibrant apparel and accessories, notably excluding footwear and outerwear.

Tecovas 

What: A much-focused brand with a clear universe.Tecovas presents a comprehensive western lifestyle concept in Austin, merchandising footwear ranging from standard leather to premium exotics. The retail experience is distinguished by an inclusive hospitality strategy that offers complimentary beverages to all visitors to foster a welcoming environment (all salespersons are licensed to serve alcohol). This service-oriented model is further enhanced by on-site customisation capabilities, including leather branding and hat shaping, designed to drive customer engagement and conversion.

Aritzia

What: A Canadian luxury brand, going to the U.S. with a Flagship-only policy for New York.

Expanding from its Canadian roots into the U.S. market in the early 2000s, Aritzia has solidified its position in the affordable luxury sector through a massive flagship development. That strategy, notably in Manhattan, integrates hospitality via in-store cafés that enforce a strict "no-laptop" policy to curate a specific social environment.

Service standards vary notably across Aritzia’s Manhattan portfolio, with significant disparities in hospitality and expertise observed between the Flatiron and Midtown locations. Operationally, the retailer has implemented biometric authentication protocols to streamline employee system access.

They also enforce a no-picture policy, which sets the brand apart from the other retailers in the U.S., where this is usually not an issue.

Lululemon

What: Their brand-new store concept.

Under the direction of its new CEO, Lululemon has unveiled a pilot concept in SoHo that prioritises luminosity and spatial fluidity. This two-story flagship departs from the previous layout to offer an expansive, community-centric environment, anchored by localised visual merchandising and the introduction of "Directors of First Impression." The customer experience is further elevated through integrated amenities, including in-fitting room charging stations, interactive goal-setting displays, and on-site accessory customisation.

Reading about them in the press is enough 

Easyplant

What: an amusing concept based on selling plans.

Easyplant recently opened its first proprietary pop-up, noted for its meticulous execution and design. The brand, known for its autonomous self-watering planters, has since expanded into a permanent U.S. location on 76th and Columbus. This flagship offers a comprehensive suite of botanical services—ranging from delivery to repotting—designed to facilitate effortless home gardening.

The pictures were taken on the last day of the pop-up.

TM:RW

What: A new boutique for high-end tech, with a profusion of screens to explain all products.

TM:RW establishes a striking, ultra-modern presence in Times Square, offering high visibility and an eclectic inventory that ranges from affordable gadgets to discontinued high-tech hardware. The retail experience relies heavily on digital interfaces and holographic displays, necessitating a labour-intensive service model focused primarily on technical product demonstration rather than brand narrative. One may wonder how long this model will last (remember B8ta?).

Meadow Lane

What: A high-end grocery store launched as the “Erewhon of New York”.

Meadow Lane presents a compact retail concept featuring a diverse, high-priced inventory ranging from confectionery and spirits to caviar and fresh produce. The store suffers from an ambiguous brand identity and an unclear value proposition, functioning more as a retail novelty than a cohesive luxury grocer. Consequently, this lack of strategic focus raises significant doubts regarding the location's long-term commercial viability.

Brooks Brothers new Flagship 

Brooks Brothers' global flagship, which debuted in May 2025, adheres to a strictly traditional aesthetic that evokes a 1990s retail sensibility rather than a modernised brand vision. While the custom suiting department attracts clientele, the two-story location is characterised by low traffic and a static atmosphere, failing to project the vitality expected of a newly opened retail destination.

Banana Republic Archives

Banana Republic Archives presents a curated selection of vintage and second-hand apparel in its SoHo store, sourced both internally and externally. However, the collection lacks detailed provenance regarding item age or collection history, and the pricing strategy appears disconnected from the perceived value, suggesting the initiative functions primarily as a marketing exercise rather than a robust archival offering. Also, that’s just a rack!

Another Tomorrow 

Founded by former finance executive Vanessa Barboni Hallik, Another Tomorrow prioritises radical supply chain transparency, offering European-manufactured garments with granular traceability to the raw material source. The brand’s retail strategy integrates commerce with community engagement, utilising its flagship space to host rotating art installations and events that leverage the founder’s extensive network.

Credits: IADS (Selvane Mohandas du Ménil)

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CLICK HERE TO SEE THE PHOTOS OF SHEIN

According to the Institut Français de la Mode (French Fashion Institute, IFM), ultra-fast fashion from the Asian trio SHEIN, TEMU and AliExpress now accounts for 6% of clothing purchases by volume, with SHEIN the fifth-best-selling brand in France by volume. While traditional fashion houses struggle to adapt to shifting trends and global trade tensions, SHEIN is thriving, selling millions of $2 T-shirts in over 150 countries, excluding China. However, a month or so after the landmark opening of SHEIN at BHV Marais in Paris, very few shoppers continue to flock to the department store, as word-of-mouth suggests customers aren’t finding what makes the brand successful. For BHV, what was presented as a winning strategy and a tremendous business opportunity appears to be fatal.

What was intended as strategic validation for SHEIN instead became a test case of whether ultra-fast fashion can coexist with traditional retail. The French battleground raises questions that extend far beyond just a store. Can SHEIN’s hyper-efficient online model translate to brick-and-mortar success? Will European markets mount effective resistance to business practices they deem harmful? And most provocatively: if SHEIN’s model can deliver unmatched value in the eyes of cost-conscious consumers, should it be stopped at all?

The silent revolution: how SHEIN rewrote fashion’s rules in just 15 years

SHEIN’s brief history

SHEIN debuted in China in 2008 as ZZKKO, initially focused on wedding dresses, before pivoting to fast fashion in 2012 and rebranding as SHEIN. Founded by entrepreneur Chris Xu, the company evolved from a modest online retailer into the world’s largest fast-fashion platform within 10 years.

The COVID-19 pandemic has accelerated SHEIN’s growth as online shopping has become more prevalent. In parallel, SHEIN quickly expanded its product offerings, adding accessories, beauty products and home goods. Since 2022, SHEIN has operated from Singapore and maintained a deliberately low public profile. That same year, building its empire entirely online, SHEIN began venturing into brick-and-mortar, as many DTC brands eventually seek physical outlets.

SHEIN’s meteoric growth has disrupted the global fashion industry, reportedly increasing revenue from $610 million in 2016 to $32.5 billion and profit to $2 billion in 2023. Despite being valued at more than the combined market capitalisations of H&M and Inditex with a $100 billion valuation by 2022, SHEIN has seen this valuation decline to $50 billion as of early 2025. IPO projects were troubled by concerns over intellectual property rights, corporate governance and sustainability, as well as allegations of forced labour in the company’s supply chains.

Innovation: the on-demand model that makes Zara look slow

With most items between $8 and $30, SHEIN’s low pricing is a key component of its strategy, significantly undercutting traditional fast-fashion retailers. SHEIN pioneered an “on-demand”, speed-to-market, ultra-fast fashion model that fundamentally differs from traditional fast fashion. Compared to Zara’s 3-to-4-week design-to-market, SHEIN achieves a 3-to-7-day delay. Their highly flexible model allows them to:

• Launch small-batch test production (100-200 units per design) to minimise financial risk,
• Add 2,000-6,000 new items daily to their website,
• As a result, offer an unparalleled product choice: for example, they introduced 1.5 million products between November 2022 and November 2023, 37 times more than Zara and 65 times more than H&M.

With a network of around 5,400 suppliers, mainly in Guangzhou, innovation also comes from SHEIN’s supply chain architecture. Proprietary software provides suppliers with real-time sales data and customer preference analytics. At the same time, AI and machine learning algorithms predict “micro-trends” by tracking online user behaviour (clicks, viewing time, searches).

Sales models: from self-managed to marketplace

SHEIN operates different sales models. First, they operate a self-managed model, selling their own brands and covering product development and design. This model accounts for 70% of SHEIN’s apparel sales. This model enables them to launch unique styles and attract young consumers.

They also have two managed models, representing 20% of the transaction volumes:

• Fully managed services are designed for merchants selling small goods without having online operation experience. Products are owned by the supplier and stored in SHEIN’s domestic warehouse, and SHEIN is responsible for packaging and delivery. Approximately 7,000 merchants operate under this model. Merchants can list thousands of products, as SHEIN doesn’t limit the number of SKUs.
• Semi-managed services are designed for merchants selling bigger products and having operational capabilities. These merchants have warehouses abroad where the goods are stored. They are mainly companies engaged in cross-border e-commerce business, already selling on Amazon. The number of merchants in the semi-managed model is about 13,000.

They also launched a third-party marketplace in 2023, accounting for 10% of sales as of 2024. Brands independently manage inventory, pricing, and customer service, similar to how Amazon operates. SHEIN offers special conditions, such as zero commissions for the first month. Third-party brands typically achieve a 10%-15% gross profit margin, while the same merchants on TEMU achieve 8%-13%.

Expansion left, right, not in the centre

SHEIN is not operating in its home market, China, either online or offline. The company’s expansion is exclusively international and includes establishing a physical presence just ten years after its inception. After several pop-up stores across Japan, SHEIN opened its first permanent space in Tokyo’s Harajuku in November 2022. At the opening, the 200 sqm showroom featured 800 items, changing rooms and a photo booth for shoppers to capture their outfits. This first permanent location is not a store per se, as customers must place orders online. Shoppers scan a product’s QR code, which directs them to SHEIN’s website or app, where they can make purchases and organise delivery. The space is still open to this day.

That same year, multiple 4-9 day weekend pop-ups in high-traffic locations opened around the world to test physical environments. In 2023, SHEIN planned 30 pop-ups across the EMEA region, driving immediate purchases and social media buzz. In 2024, pop-ups were organised in Australia, in 2025 in Toronto and Dubai, but also in secondary cities such as Dijon in France (or Indianapolis, U.S., in 2023). These pop-ups provided SHEIN with data-driven insights to inform expansion decisions. They also allowed customers to touch, feel and try on products to address persistent quality concerns and build trust and credibility.

In 2023, SHEIN also announced a partnership with Authentic Brands Group’s Forever 21. SHEIN would design, manufacture and distribute a line of Forever 21 co-branded products under the Forever 21 x SHEIN name. In 2025, French apparel brand Pimkie launched a joint venture with SHEIN to boost its digital sales and expand into 160 international markets. What those deals have in common is that both brands were, and are still, struggling.

Breaking stereotypes: customer demographics

SHEIN’s global customer base went from 2.8 million in 2017 to 88.8 million active shoppers (people who made at least one purchase) in 2023. Contrary to popular perception, SHEIN’s customer base is older than commonly believed. According to Statista, in 2025, the largest segment of website visitors is 25-34 years old, nearly 26%. The 35-44-year-old group accounts for almost 20% and the 45-54-year-old group is close to 16%. On its side, UBS Securities research shows that the average U.S. SHEIN customer is a 35-year-old woman with an annual salary of approximately $65,000.

In France, the platform’s core demographic comprises women aged 30-45, with a strong presence among 18-35-year-olds. The company’s remarkable penetration into the French market is an interesting example of how SHEIN transforms customer dynamics. The brand’s success is particularly pronounced in rural areas, with some regions experiencing twice the customer concentration of traditional retailers such as Zara. This geographic distribution challenges conventional retail assumptions: only 2.8% of Shein’s customers are in Paris, compared with 14% for Zara.

SHEIN’s French battleground

SHEIN’s conquer strategy

Before SHEIN sealed the deal with Société des Grands Magasins (SGM) and opened its permanent store in Paris’ BHV Marais, it conducted an intensive two-year lobbying campaign, just the time they needed to become indispensable, as 40% of the French population had at least made one purchase on one of the ultra-fast fashion platforms. SHEIN hired former Interior Minister Christophe Castaner (a French President ally) as a consultant from December 2024 to June 2025. He aggressively defended SHEIN, calling critics “disgusting moralists” and warning that the law would “penalise the most modest consumers.” The company also actively courted members of Congress with meeting invitations and deployed lobbyists in government offices to counter anti-fast-fashion legislation, promising environmental commitments and claiming to be decarbonising its supply chain. They targeted the French President’s office, the Prime Minister’s officials and various ministries, arguing the law was incompatible with E.U. free trade rules. Prime Minister’s advisors, among others, were heard repeating SHEIN’s arguments and characterised the law as voted against by the working classes. On its side, the Ministry of Economy openly opposed the legislation, citing E.U. trade regulations. Despite this intense lobbying, Congress voted unanimously in favour of the law, though it included reduced taxes.

The SHEIN-SGM deal: a calculated risk that backfired

In October 2025, SHEIN announced an unprecedented partnership with SGM for permanent spaces first in BHV Marais, then in seven affiliated provincial Galeries Lafayette stores.

It is no secret that BHV Marais was struggling, even more so since SGM took over. CEO Frédéric Merlin tends to be regarded as a questionable businessman, even more so now that he has actually become SHEIN’s lobbyist in chief. He’s known for operating real estate and malls and for having numerous unpaid vendor invoices. He expected the SHEIN partnership would boost traffic, attract younger shoppers who tend to avoid department stores, generate significant rental and commission revenue and benefit the other store floors.

SHEIN’s 1,000 sqm store opened on the sixth floor of BHV Marais on November 5, 2025. The product range included women’s, men’s fashion and accessories. According to SHEIN shoppers visiting the store on the first days and checking the QR codes on garment labels, items were priced significantly higher than on the website (€11.99 for a sports bra, €32.99 for a top, €35.49 for a denim pants, €48.99 for a pullover, €118.99 for a coat, for example), which was disappointing for customers. Seven thousand visitors came on the first day, 50,000 over the first five days, 300,000 over the first month, but did not find the very low prices SHEIN is known for. The average basket was reported at €45 per transaction (well above the online average purchase price of €10), which seems accurate given the price point. Frédéric Merlin reported to various media 15% to 30% cross-selling rates among SHEIN customers making additional purchases in other BHV departments.

In parallel, BHV mentioned difficulties: a 10% drop in foot traffic during the fourth week and a conversion rate below expectations. In other words, people are coming but not buying. The few pictures attached to this article show how empty the space was during the IADS visit (a weekday lunchtime). While Frédéric Merlin reports that approximately 10,000 people visit SHEIN daily as of mid-December, the IADS recorded only 20 customers during its visit (also see a video shot by the president of the French RTW federation on Saturday, 6 December here).

Provincial expansions were initially planned for SGM-operated provincial Galeries Lafayette stores in Dijon, Angers, Grenoble, Limoges and Reims, but these openings have been postponed to unknown dates.

For SHEIN, the BHV partnership was a new step toward establishing a permanent physical presence and validating brand legitimacy ahead of troubled IPO attempts. It also provided an opportunity to address quality concerns by allowing consumers to examine products. Ultimately, the partnership was designed for SHEIN to test a hybrid model that combines online convenience with in-store engagement and to counter French anti-fast-fashion legislation by demonstrating local job creation and economic contribution. Ultimately, the controversy reportedly caused a 38% drop in online orders the very next day the SHEIN space opened, according to data from cashback specialist Joko, which examined one million transactions. Most importantly, the figures show a 45% decline in orders placed on the site between October and November. Finally, when comparing November 2024 and November 2025, the sales decline would be as dramatic as 54%. This decline in SHEIN sales should be interpreted with caution, however.

What happened with SHEIN and SGM: everyone said no

360° pressure: politics, retail, culture and even customers against one store

As soon as BHV and SHEIN unveiled the deal, pressure mounted from all sides, triggering unprecedented opposition, often highly emotional, from the French retail, political and cultural sectors. Controversies were not new, though, with factory workers’ working conditions issues, child labour cases, 16.7 million metric tons of CO2 emissions in 2023 making them the biggest polluter in fast fashion, 76% of products made in polyester fabrics, 32% of clothing containing hazardous chemicals violating E.U. limits, intellectual property violations and copyright infringement cases.

However, pressure reached an unprecedented level. Shortly after the partnership announcement, Galeries Lafayette Group terminated its partnership with SGM, refusing to have its venerable name become synonymous with SHEIN, with SGM’s provincial stores to be rebranded as BHV. Caisse des Dépôts’ Banque des Territoires (a French public investment bank), which was due to finance the acquisition of the BHV building, withdrew from the deal.

Street protests were organised. Disneyland Paris cancelled the 2025 Christmas window display project with BHV. Then, numerous brands withdrew from BHV in protest, including LVMH brands, Diptyque, SMCP brands, Armor Lux, Figaret Paris, Le Slip Français, Aime Skincare, among others. Galeries Lafayette is also set to withdraw its private-label brands, except for La Redoute bed linens, which will continue to be sold in-store as of December 2025.

Retail federations escalated their actions. Retail industry body Fédération des Enseignes de l’Habillement (federation of apparel retailers) announced it was expelling Pimkie. A coalition of more than 100 French brands and 12 retail federations filed a landmark legal action against SHEIN, alleging the fast-fashion giant engaged in systemic unfair competition. The coalition cites a pattern of illegal practices, including misleading advertising, non-compliance with product standards, counterfeiting, and breaches of data protection laws. These actions, they argue, have destabilised the French retail landscape, threatening thousands of jobs and undermining local businesses.

On the political side, although relatively muted in recent years, reactions flooded in as soon as the SHEIN-SGM deal was announced. The Ministry of Economy acknowledged that SHEIN paid almost no taxes or VAT, resulting in a loss of billions of euros to the country. The Paris Mayor denounced the partnership, as did the Prime Minister and the Commerce Minister, among other officials. Mayors of Dijon, Angers, Grenoble, Limoges, and Reims publicly opposed the planned expansion of SHEIN in their cities.

The situation escalated in November 2025 when child-like sex dolls and Category A weapons were spotted on the platform. The French government suspended SHEIN’s marketplace. The suspension was later lifted after SHEIN removed illicit products. The French government also launched actions on product compliance, blocking thousands of parcels at Paris airport, revealing that 80% of inspected Chinese products were non-compliant.

Finally, France sought a three-month suspension of the SHEIN website in a court hearing (rejected since then), abandoning its bid to suspend SHEIN’s website entirely. Also, the E.U. noted that the Digital Services Act (DSA), which regulates the activities of online platforms and imposes fines of up to 6% of their global turnover, would not permit the suspension of SHEIN. The decision rests with the country in which the platform is based (Ireland in the case of SHEIN). It would occur only in the event of systemic risks, not merely due to a limited number of illegal activities.

Despite politics and officials’ protests, France cannot and would not ban SHEIN even if it could: companies like SHEIN are, so far, the only answer to the overwhelming French purchasing power problem. Also, banning SHEIN would emphasise the profound disconnect between wealthy cities and unprivileged secondary cities and rural territories. As Michel-Edouard Leclerc (owner of the large Leclerc French supermarket group) explained, SHEIN cannot be banned now that it has operated for several years without having been seriously questioned by governments or states.

What SHEIN’s Paris experiment reveals about fashion’s future

The SHEIN-BHV deal has sparked considerable debate about the strategic direction of both companies. For SHEIN, the Paris store’s underwhelming performance raises critical questions about the viability of physical expansion. The success of SHEIN stems from its DTC model, an endless, low-priced product offering, numerous promotional deals, and influencer-led, seductive social media campaigns, all of which drive customer excitement in the online shopping experience. However, this formula doesn’t translate seamlessly to brick-and-mortar retail, where customers encounter a limited selection at relatively higher prices and low quality, a stark contrast to the brand’s online promise. This disconnect appears to be reflected in declining foot traffic, with the SHEIN space showing sparse customer presence about a month after opening.

Rather than maintaining the brand’s characteristic low prices and treating the store as a marketing investment, SHEIN chose to increase prices to present a more upscale brand image, preserve margins, and likely comply with French regulations prohibiting loss-leader pricing. The choice of Paris as the location for SHEIN’s first permanent store is also worth examining. While the symbolism is undeniably powerful, demographic data suggest that secondary cities, where SHEIN’s core customer base is concentrated, might have yielded better results. That said, the elevated pricing strategy would have posed similar challenges regardless of location. Evidence from previous pop-up stores, which outperformed the BHV space, indicates that the limited-time excitement factor is crucial to SHEIN’s physical retail success. Based on current performance, permanent locations may not be the optimal strategy for SHEIN to establish a meaningful presence in key cities.

From a department store, retail and brand perspective, the SHEIN-BHV deal is also interesting. First, SHEIN is not the solution to department stores’ problems. In BHV’s case, it appears to be in a worse position than before the SHEIN deal. Store sources say the store lost 70% of its turnover, and brands continue to withdraw as of mid-December 2025, leaving the shop floors very airy (even though BHV responded quickly by changing layouts to conceal the empty spaces).

Moreover, after Caisse des Dépôts’ Banque des Territoires withdrew following the announcement of SHEIN’s arrival, SGM has been seeking partners to raise the €300 million required to purchase the building from the Galeries Lafayette Group. The acquisition deadline was set for 19 December 2025. “On that date, exclusivity lapses and we reserve the right to explore all the options open to us,” a Galeries Lafayette spokeswoman told AFP. The Paris city hall even declared that it was exploring the possibility of acquiring the property to safeguard jobs and maintain activity. In the end, Canadian fund Brookfield, Galeries Lafayette Group and SGM sealed a deal under which Brookfield would acquire the building for €250 million. While it’s unclear whether the SHEIN space will survive the acquisition, Brookfield is not planning to radically change the building’s purpose; rather, it plans to revive it, requiring a strategy to recreate value over several years.

Finally, from a broader perspective, how should we prepare for the future, given that SHEIN or a similar company could leverage its highly efficient business model to sell responsibly produced products or build full-fledged brands?

SHEIN represents a fundamental paradox: a company recognised for technological innovation and significant consumer demand, yet facing unprecedented regulatory hostility, and a business model that achieves market dominance while struggling to gain legitimacy. SHEIN’s trajectory will likely depend on three factors: its ability to navigate escalating regulatory frameworks, the success of omnichannel expansion in legitimising the brand and addressing quality concerns, and its capacity to address labour and environmental controversies while maintaining an ultra-low-price positioning in a credible way. The France experiment’s low-to-mild commercial success amid fierce political opposition encapsulates these tensions and will serve as a critical test case for SHEIN’s broader physical retail ambitions. Whether SHEIN represents the future of fashion retail or an unsustainable model facing imminent regulatory constraint remains the industry’s most consequential question.

Credits: IADS (Christine Montard)

Printable version of the exclusive here

IADS White Paper - DEI at a crossroads in retail

Since its founding in 1928, the IADS has served as a collaborative platform for department stores worldwide, conducting research on their activities and supporting members as they navigate ongoing developments.

Each year since 2020, the IADS has published a White Paper on a topic considered strategically important for its members. In 2020, the paper reflected on lessons from the pandemic. Then in 2021, it examined digital transformation and its organisational impact. The 2022 edition analysed sustainability, CSR and ESG. In 2023, retail media and monetisation ecosystems were explored. And in 2024, the White Paper highlighted the crucial role of middle management.

In 2025, the IADS turned its attention to diversity, equity and inclusion (DEI), a subject that has become increasingly complex. The shift began to take shape in 2024, when DEI programmes became a visible point of political contention in the United States. The signing of Executive Order 14151 on January 20, 2025, and the rapid corporate reactions that followed made clear to companies worldwide that DEI is being tested yet again. At the same time, given the challenging economic context, retailers worldwide are asking whether DEI is a must-have rather than simply a distraction from more pressing issues related to “business as usual”. These tensions are the reason why the topic was selected for research this year.

Introduction: what this moment is telling us

During the opening keynote of the 2025 World Retail Congress in London, Ken Murphy, CEO of Tesco, remarked that “by doing the right thing, it also brings growth.” This idea has shaped much of the corporate conversation around DEI in recent years. In reality, the context in which many DEI commitments were originally made has shifted. Political polarisation, economic pressure, demographic shifts and evolving customer expectations have placed DEI under closer scrutiny.

The IADS White Paper  explains why DEI remains, in our point of view, a business imperative. Retail employs one of the most diverse workforces globally and serves an equally diverse customer base. Social justice movements and the uneven effects of the COVID-19 pandemic increased expectations that companies should contribute to fairness and opportunity. Younger consumers also increasingly choose brands that reflect their values. According to Accenture, 41% of shoppers have switched retailers because they felt a company did not prioritise DEI. This indicates that inclusion can influence consumer behaviour in measurable ways.

Research from McKinsey & Company indicates a strong association between diverse leadership teams and improved organisational outcomes. Companies with more gender-diverse executive teams were more likely to outperform financially than those with lower diversity. These findings reinforce the business relevance of inclusive leadership.

Despite widespread commitments, progress in retail remains uneven. Women constitute the majority of frontline retail workers and influence most purchasing decisions, yet they remain underrepresented in senior leadership roles. Representation of racial and ethnic minorities in top roles also lags behind the workforce’s diversity. The White Paper highlights a clear perception gap: many leaders believe they foster inclusive workplaces, while significantly fewer employees share that view.

Economic pressures and political tensions have also slowed or altered progress in some organisations, creating uneven movement across the sector. Some retailers continue to advance, while others have paused or adjusted their approaches. IADS notes that stepping away from DEI carries strategic risks. Companies that remained committed during recent crises tended to demonstrate greater adaptability and organisational strength, whereas those that retreated often experienced diminished trust. As Ken Murphy suggested, DEI can support growth in the same way as other core strategic priorities.

The human advantage: how DEI supports retail performance

Evidence from across the industry shows that DEI strengthens the everyday functioning of retail organisations when it is embedded thoughtfully rather than treated as a separate initiative. Four consistent patterns stand out:

• Diverse leadership and inclusive cultures support stronger financial and operational performance. Companies with broader representation at senior levels tend to make better decisions and avoid narrow thinking, which improves their ability to respond to changing markets and customer needs.
• Inclusion has a clear impact on retention. Retail has long struggled with high turnover, and this pressure eases when employees feel valued and connected to their teams. A sense of belonging, supported by managers who listen and foster meaningful relationships, has been shown to reduce churn and strengthen commitment. Research cited in the White Paper indicates that employees who feel their opinions are valued are more engaged and more likely to remain.
• Inclusive teams are more productive. They share information more openly, surface more perspectives and experience fewer operational errors. Psychological safety and equitable voice sharing translate into smoother store operations, better cross-functional collaboration and improved customer interactions. Even minor improvements in how employees feel heard can lead to measurable gains in performance and safety.
• Inclusion drives innovation. Many retailers say that their strongest ideas come from employees on the shop floor, who observe customer behaviour directly. When people feel able to contribute, organisations gain access to a broader range of insights, leading to improvements in merchandising, service models, and product design. This is important in a global sector serving an increasingly diverse consumer base.

Taken together, these insights form a consistent business case. DEI is not an abstract concept. It shapes how teams communicate, how customers are served and how effectively companies adapt to change. When inclusion is part of everyday practice, it supports performance, trust and competitiveness.

A global imperative, many local realities

DEI does not look the same everywhere. Cultural expectations, regulatory frameworks, workforce demographics and social norms all influence how inclusion is understood and practised across regions. Retailers operating internationally cannot assume that one approach will work everywhere and must account for meaningful variation in priorities and sensitivities.

In some markets, gender equality remains the central focus. In other cases, ethnicity, disability, socioeconomic background, religion, or national integration policies carry greater weight. Attitudes toward DEI language also differ, as do expectations around transparency and communication. Some regions emphasise compliance, quotas or reporting, while others prioritise cohesion, community engagement or workplace harmony.

The White Paper examines these differences across Europe, the Middle East, Asia-Pacific, Africa, Latin America, and North America. It highlights that North America faces a mix of stakeholder pressure and growing backlash. Europe places strong emphasis on gender parity and disability inclusion, shaped by established regulations. The Asia-Pacific region reflects a more diverse landscape, in which demographic complexity and varying levels of comfort with DEI concepts shape corporate practice. The Middle East and Africa illustrate rapid workforce changes and localisation efforts, while Latin America presents contexts where racial, indigenous, gender and LGBTQ+ inclusion intersect with longstanding social inequalities.

However, across these regions, one insight stands out clearly. Retailers succeed when they tailor their approaches to local expectations while upholding universal values of fairness, dignity, and equitable opportunity. Balancing this global consistency with regional nuance has become one of the most critical operational challenges for international retail groups.

Lessons from the field

DEI is illustrated in the White Paper through real examples from IADS members and retailers around the world. These cases show how inclusion efforts succeed in practice, and where they fall short. Retailers that embedded DEI into hiring, leadership expectations, daily management and operational systems saw stronger engagement and trust. Those that treated DEI as a stand-alone programme, or relied on statements rather than action, often struggled to maintain momentum and, in some cases, faced reputational or operational setbacks.

Across these examples, several patterns emerge:

• Clarity matters: employees trust DEI efforts when goals, responsibilities and expectations are explicit.
• Consistency matters: progress is more durable when initiatives continue even as external conditions shift.
• Listening matters: understanding how underrepresented groups experience the workplace helps reveal blind spots.
• Action matters: practical steps such as fair hiring practices, equitable promotion pathways and inclusive meeting habits carry more weight than broad declarations.

When DEI is implemented in a practical and structured way, organisations experience improved communication, stronger team collaboration, enhanced customer interactions, and a more resilient culture. These field insights reinforce a central message: DEI drives performance when it is built into the organisation’s routines, not when it is treated as an isolated initiative.

Taken together, the retailers examined in the White Paper illustrate how these principles play out across different organisational models and regional contexts. Some companies, such as John Lewis Partnership and Wegmans, demonstrate how deeply rooted people-centred cultures can create strong foundations for inclusion. They also revealed that values alone are insufficient without explicit leadership accountability and measurable progress at senior levels. Other retailers, including Falabella, The Mall Group, and Marks & Spencer, demonstrate that DEI is experienced most powerfully through everyday management practices. Their emphasis on well-being, flexibility, intergenerational inclusion and psychological safety is closely linked to lower turnover, higher engagement and more consistent service quality in labour-intensive retail environments.

Several cases highlight the importance of addressing equity through systems and structures. Bloomingdale’s experience with commission models, along with Galeries Lafayette’s and El Corte Inglés’ focus on internal mobility, disability inclusion, and data-driven targets, demonstrates that inclusion challenges often lie within pay, promotion, and progression mechanisms rather than intentions or culture alone. In another set of examples, Chalhoub Group, Target and Best Buy, illustrate how inclusion can be leveraged to support innovation, brand relevance and growth. In these examples, diverse perspectives inform merchandising, marketing, supplier relationships, and community engagement, thereby strengthening customer connections and, in some cases, supporting broader business transformation.

Finally, the White Paper documents instances in which DEI was neglected, inconsistently sustained, or poorly managed. Cases such as Abercrombie & Fitch, H&M and periods of perceived pullback at Walmart underline the reputational, operational and trust-related risks of exclusion, cultural blind spots or inconsistency. They also show that progress is not fixed: retailers can move forward or backwards depending on leadership focus and sustained commitment. Seen collectively, these examples reinforce that DEI in retail is neither uniform nor static. Its impact depends on how clearly it is defined, how consistently it is applied, and how closely it is integrated into the systems and decisions that shape everyday work. In a context of continued uncertainty, these patterns help explain why DEI increasingly functions less as a statement of values and more as a contributor to organisational resilience.

Conclusion: DEI as part of retail resilience

DEI continues to act as a stabilising force for retailers navigating political tension, labour shortages and rapid technological change. Inclusive organisations make more informed decisions, adapt more readily and maintain higher levels of trust across their teams. In this sense, DEI is not simply about meeting expectations. It is part of what enables an organisation to remain steady when conditions shift.

The advantages become visible in everyday operations. Inclusive workplaces see stronger collaboration, fewer barriers between frontline teams and headquarters and smoother execution during periods of operational pressure. Employees who feel respected and able to contribute are more likely to remain, thereby reducing turnover in a sector where continuity is essential to service quality. These practical elements of inclusion, such as how meetings are conducted and how opportunities are shared, become habits that strengthen overall performance.

DEI also supports innovation and customer relevance. Retailers consistently report that diverse perspectives help anticipate changes in consumer behaviour and generate ideas that improve products, services, and the store experience. When employees feel comfortable sharing insights, problems are addressed sooner, and teams adjust more quickly to new trends. These capabilities are becoming increasingly important as AI, sustainability demands and demographic shifts change how teams work and how customers engage with retailers.

The IADS believes that retailers who approach DEI with clarity, consistency and long-term focus will be better positioned to face future challenges. Inclusion strengthens resilience by grounding organisations in fairness, opportunity and belonging, qualities that support people and performance at the same time. At this crossroads, retailers who integrate these principles into their everyday decisions will be best prepared to remain connected to both their employees and their customers.

Credits: IADS (Maya Sankoh)