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Macy’s story is that of an American institution. From a single store in 1858 to a nationwide banner, it became not only a retail powerhouse but a cultural symbol woven into American life. Unique in terms of national coverage and multi-banner operations, the scale that once secured its dominance is now put to the test.

In FY2024, Macy’s Inc. spanned 680 stores, including Macy’s, Macy’s Backstage off-price outlets, Market by Macy’s small-format stores, but also Bloomingdale’s, Bloomingdale’s The Outlet, Bloomie’s (Bloomingdale’s small-format stores), its international stores in Dubai (UAE) and Kuwait under license, and beauty specialist Bluemercury. FY2024 closed with net sales of $22.293 billion (down 3.5% YoY). The company reported a 38.4% gross margin (flat YoY). Digital sales accounted for 33% of net sales (unchanged from 2022), indicating a stabilised omnichannel mix after pandemic-era gains.

Despite a glorious past, today’s Macy’s financial picture seems gloomy for a department store as tightly intertwined in the country’s commercial and cultural landscape as it is. Macy’s mirrors the evolution of retail itself in the 20th century: a story of pioneering and relentless innovation. The fight for relevance is the question it needs to address to fully belong in the 21st century.

The making of an American star

From 14th Street to Herald Square

In 1843, Rowland Hussey Macy opened several dry goods stores in Massachusetts. All failed. Learning from its mistakes, he opened R.H. Macy & Company on NYC’s 14th Street and Sixth Avenue in 1858. He adorned it with a star, which has remained Macy’s logo to this day. Innovative from its inception, the store changed the retail industry. It was the first to institute the one-price system, advertise its prices in newspapers, and promote a woman to an executive position. Margaret Getchell started as a cashier and rose to become a leader in the company. She developed many ideas, including using illuminated window displays to attract customers. Macy’s also pioneered the use of an in-store Santa Claus as early as 1861, embedding retail into cultural rituals.

Macy died in 1877. The company remained in the family until it was acquired in 1895 by Isidor and Nathan Straus, who had previously held a license to sell china at Macy’s. The decisive step came in 1902, when the store relocated to Herald Square. Initially a single building, the store expanded through new construction, eventually occupying almost the entire block bounded by Seventh Avenue, Broadway, 34th Street and 35th Street, creating what was then the world’s largest store. The store seemed so far away from its original ground that the company had to offer a steam wagonette service to transport customers from 14th Street to 34th Street. Macy’s became a publicly listed company in 1922. Two years later, Macy’s inaugurated the Thanksgiving Day Parade, which soon became a cultural event and a form of brand equity independent of its stores.

Macy’s goes national: growth and the making of a middle-class brand

The company opened their second location in the Bronx in 1941. The interwar period was marked by expansion beyond Manhattan, acquiring local department store chains across the country, including Lasalle & Koch (Toledo), Davison-Paxon-Stokes (Atlanta) and L. Bamberger & Co. (Newark). Post-World War II, acquisitions resumed with O’Connor Moffat & Company (San Francisco) and John Taylor Dry Goods Co. (Kansas City).

Then, Macy’s opened mall branches in Miami’s suburbs, Houston, New Orleans, Dallas, Atlanta, the Midwest, New Jersey, Philadelphia and Baltimore. From 1976 onwards, Macy’s cultural pull also included the 4th of July Fireworks over NYC’s East River and Hudson River.

Macy’s became an authority in bringing accessible style to the growing middle-class consumers, positioning itself between discount chains and luxury stores. It was neither elitist nor mass-market, but rather a “mass premium” brand long before the term existed. Soon enough, the flagship store functioned as both a commercial hub and a symbolic space for aspirational middle-class consumption.

From bankruptcy to a coast-to-coast powerhouse

By the 1970s and 1980s, Macy’s continued acquiring regional department stores. However, aggressive expansion financed by debt led to instability, a pattern Saks Global is currently experiencing. In 1992, Macy’s filed for Chapter 11 bankruptcy, underscoring the fragility of even the most iconic retail institutions and challenging the ‘too big to fail’ economic assumption. The company emerged from bankruptcy in 1994, merging with Federated Department Stores, the owner of Bloomingdale’s, among other banners. This merger created the largest department store group in the U.S., providing Macy’s with capital, management expertise, and scale. In 1995, the group operated 355 department stores across 35 states, achieving $8.29 billion in sales.

Federated Department Stores’ strategy culminated in the $11 billion acquisition of May Department Stores in 2005 and the conversion of approximately 400 stores to the Macy’s nameplate in 2006. Indeed, Federated rebranded most of its regional banners, such as Marshall Field’s, under the Macy’s name. This controversial move erased long-standing local identities in favour of the Macy’s brand, totalling 853 stores, creating a truly coast-to-coast flag and a universal name recognition. The consolidation positioned the department store as the anchor in hundreds of malls nationwide. In practical terms, that nationalisation gave the company a distribution canvas that neither luxury-led peers nor remaining mid-market rivals match to this day.

Federated Department Stores re-named itself Macy’s, Inc. in 2007. Standing out among other U.S. department stores, Macy’s diversified its portfolio across price tiers and categories, including Bloomingdale’s in the upscale fashion segment and the 2015 acquisition of beauty retailer Bluemercury.

Reinventing the store: Macy’s between culture, localisation, and experience

When a store becomes a stage: Macy’s as a cultural institution

Macy’s emerged as a reference in American and global retail by pairing scale with cultural brand-building. The company treated the department store as a public theatre and then institutionalised spectacle through the Macy’s Thanksgiving Day Parade. The first Disney Mickey Mouse balloon entered the parade in 1934, paving the way for subsequent cultural collaborations with Sonic the Hedgehog, Barney the Dinosaur, Snoopy, the Pink Panther, and brands like M&M’s. The parade became known nationwide after WWII, as it was heavily featured in the 1947 film Miracle on 34th Street, which included footage of the 1946 festivities.

Also, Macy’s began the annual Independence Day show with the U.S. Bicentennial in 1976, the start of the modern Macy’s 4th of July Fireworks tradition. That event, broadcast nationally on WPIX and later by NBC (which also broadcasts the Macy’s Thanksgiving Day Parade), solidified the company as a household name and transformed a retail banner into an annual cultural tradition, reinforcing Macy’s “owned media” advantage at a national scale. This blend of retail and ritual helps differentiate Macy’s from peers whose brands are influential in their cities but may lack a countrywide cultural amplifier.

My Macy’s: central power, local touch

My Macy’s strategy was launched in 2008 under the leadership of CEO Terry Lundgren as a much-needed localisation programme, aiming to bring a more personalised flair to stores by moving day-to-day assortment and presentation decisions closer to the store. Macy’s expanded it nationwide in 2009 with a new structure of regional merchants and planners who tailored buys, sizes and presentations to local tastes, creating 1,200 new roles. Parallel to that, Macy’s consolidated regional divisions into a single national organisation for core functions (buying, marketing, finance, and HR) to reduce duplication, increase efficiency, and streamline decision-making.

The operating model consisted of 69 districts that could adjust roughly 10-15% of a store’s inventory mix to local demand, with national categories and seasonal statements still determined by central buying. Also, to make My Macy’s work, they automated customer tracking and segmentation, allowing for a clearer view of the consumer. Early results were positive as most of the top-performing markets in 2009 were My Macy’s districts.

By late 2011, Macy’s introduced “My Macy’s 2.0”, additional targeted, cross-functional initiatives designed to sharpen local relevance and tie it more tightly to the company’s emerging omnichannel model. Macy’s pushed more decision-making to district teams to fine-tune “by store,” not just by region. My Macy’s 2.0 was deployed alongside a ship-from-store/BOPIS scale-up strategy, with localised inventory serving digital orders nationwide. Tablets, tap-to-pay pilots and QR codes were rolled out to improve discovery and conversion. Finally, the “MAGIC Selling” training (Meet-Ask-Give-Inspire-Celebrate) was expanded to raise conversion and NPS.

My Macy’s improved sell-through and relevance while protecting scale. However, it fell short due to uneven, complex execution. Building and maintaining district-level merchant teams added organisational complexity, with outcomes varying by market and leadership depth. Localisation was necessary but insufficient to deliver the digital growth achieved by other platforms. Macy’s digital mix eventually stabilised around one-third of sales in the 2020s, requiring additional strategies beyond localisation.

That said, as a case of “localisation at scale,” My Macy’s was a smart hybrid of central scale and local empowerment. Its limits became apparent later: it could raise relevance, but it couldn’t fully overcome macro headwinds (mall traffic erosion, off-price, and online pressure) without broader reinvention in experience, merchandising authority, and digital. In Macy’s transformation arc, My Macy’s appears as the operational foundation that allowed subsequent strategies such as off-mall small formats, marketplace and fleet upgrades.

Moreover, My Macy’s illustrates a typical pattern: companies pursue centralisation and scale, then decentralisation in the name of localisation and personalisation, as neither strategy is 100% satisfactory. For example, Walmart, a champion of centralisation and standardisation, emphasised local tailoring via “Store of the Community” in 2001 with assortments adapted to local demographics, moving from a one-size-fits-all playbook toward more local customisation.

Turning stores into stories

In 2018, as retail was becoming less transactional, Macy’s invested in experiences to capture younger consumers, establishing a pop-up enterprise, dubbed The Market @ Macy’s, designed to emphasise in-store discovery of emerging brands and niche products. The ten pop-up stores were designed to offer customers a rotating selection of apparel, accessories, beauty, entertainment, experiences, decoration, stationery, technology, and gifts. The retail-as-a-service concept was described as a solution for brands looking to break into brick-and-mortar retail. Unlike traditional concessions, Macy’s staff ran the pop-ups. Offering more flexible lease terms, brands were paying a fixed fee but pocketing all sales. Ultimately, Macy’s evaluated sales and traffic. The duration was flexible, although a one-month minimum commitment was required.

Later in 2018, Macy’s acquired Story, a quirky New York City retail store that has partnered with big and small retailers and brands. Story defined itself as a storytelling retail model, adopting a magazine’s perspective, evolving like a gallery, and selling items like a store. Macy’s even hired Story founder Rachel Shechtman as brand experience officer. Finally, that same year, Macy’s partnered with b8ta, a company providing the technology engine to enhance and scale The Market @ Macy’s. With b8ta’s software platform and business model, product makers could go from solely selling online to launching their products with Macy’s in a few clicks. However, execution was uneven, and Macy’s struggled to balance its vast legacy footprint with the agility needed for such formats. When COVID hit and Macy’s closed stores in March 2020, the pop-up programme was effectively discontinued and did not return thereafter.

In transition: the state of Macy’s today

Why Macy’s lost its shine

In 2015, roughly 10 years after its massive expansion that led to a network of 853 stores, Macy’s told investors it would close 35 to 40 underperforming stores in 2016. In the meantime, analysts expressed confidence that Amazon would overtake Macy’s in apparel sales (even though Macy’s entered e-commerce early). In the years that followed, as Amazon grew its fashion business, Macy’s turnover decreased.

However, Amazon is not solely responsible for Macy’s downfall. The mid-century department store mall era’s promise to combine the best of the fashion world with the best of the discount world hardly works in the 21st century. As a mid-tier banner, Macy’s business was eroded by low-price retailers (as early as 1962 with the start of mass-market retailers such as Target) and discounters serving a shrinking middle class. By comparison, in 2006, Macy’s operated 853 department stores and a website, reaching $27 billion in sales, while Target operated nearly 1,500 stores and a website, notching $59.5 billion in sales.

In parallel, the department stores’ love story with malls came to an end. Macy’s, as a suburban mall anchor nationwide, didn’t react quickly enough as suburbanites grew pessimistic and anxious about the future, increasingly buying cheaper products at off-price stores outside traditional malls. Malls and their department store anchors were stuck together, but were no longer hangout locations for kids and teens. Meanwhile, speciality retailers such as Sephora in beauty or Best Buy in electronics took market share from department stores. In turn, unable to compete with these speciality retailers, Macy’s (and others) closed or reduced store sections, filling them only with apparel (in free fall anyway) and making the stores less and less relevant and attractive. Finally, as the U.S. middle class shrinks, the mid-price market is disappearing, leading Macy’s to compete with off-price retailers.

From Polaris to A Bold New Chapter: Macy’s strategic reset

Learning from the My Macy’s and Market @ Macy’s initiatives, the company launched the three-year turnaround Polaris strategy, announced in February 2020 by CEO Jeff Gennette. Meant to stabilise profitability and position the company for growth, it was primarily built around:

• Optimising the fleet by closing roughly 125 lower-tier-mall stores while giving “growth treatment” to 100 stores and testing off-mall small formats, Market by Macy’s.
• Accelerating digital/omnichannel (ship-from-store, BOPIS, marketplace).
• Simplifying the organisation with a net 9% reduction in its corporate function headcount (approximately 2,000 positions) and one corporate HQ.

In practice, parts of Polaris worked. Macy’s built a balanced omnichannel mix, resulting in digital stabilising at ~33% of net sales by FY2024, while the marketplace expanded. However, some elements of the strategy stalled: the original 125-store closure cadence was disrupted by the pandemic and later re-scoped. Several pre-Polaris experiments (The Market @ Macy’s and the Story shop-in-shop) were wound down and not scaled post-2020.

Announced four years after the Polaris strategy, A Bold New Chapter plan, led by new CEO Tony Spring, builds on and accelerates Macy’s Polaris portfolio reset. The plan includes closing ~150 underproductive Macy’s locations by 2026 and investing in ~350 “go-forward” stores via remodels, service and presentation upgrades, while scaling small-format/off-mall concepts. In January 2025, Macy’s confirmed the first 66 closures as an initial wave, consistent with the multi-year target. Also part of A Bold New Chapter, Macy’s created the “First 50” cohort, the first wave of upgraded stores. 2024 third-quarter results highlighted that these locations delivered their third consecutive quarter of comparable sales growth, up 1.9%. However, Macy’s First 50 locations, Bloomingdale’s and Bluemercury’s posted growth is more or less offset by softness in non-first-50 Macy’s doors. In the coming semesters, the plan’s credibility will rely on the pace of closures and the performance of upgraded doors. Overall, the plan acknowledges and builds on Macy’s reality: its strongest stores still outperform, but the weakest ones drag down the brand.

Macy’s next moves

So far, structural headwinds have outpaced wins. As a result, Macy’s has many challenges ahead to secure its future as a mid-tier department store:

• Rebuild its fashion authority despite the sector squeeze. With the U.S. mid-market pressured by off-price, fast fashion, and platforms, Macy’s needs clearer category leadership (especially in women’s categories, its most prominent family) and a sharper brand image, less reliance on promotions, and more on curation and experience so that the remaining fleet feels “worth the trip.” This is still a question mark, as previous attempts have failed.
• Grow e-commerce beyond 33% of the business without eroding contribution margins.
• Finish the store fleet reset at pace and with proof, as the strategy only delivers if the upgraded doors consistently outperform the fleet.
• While Macy’s credit card is an additional revenue stream, it fell to $537m in FY2024 as card income is sensitive to credit cycles.
• In 2019, “retail prophet” Doug Stephens defined the company’s struggle: “Macy’s has two things, space and audience, and they’re not leveraging that space and that audience to find new ways of making money beyond selling apparel and linens, ways to monetise experiences within that space that are richer for the consumer.” It’s not entirely true anymore, as Macy’s has built Macy’s Media Network to monetise Macy’s audience and data through brand advertising on owned and partner surfaces. This additional source of revenue generated $176 million in FY2024 (+13.5% YoY).
• Accelerate Bloomingdale’s and Bluemercury growth, the best way to de-risk Macy’s overexposure to the mid-tier.
• Keep control of the real-estate narrative. Macy’s must show that its own plan has more value than aggressive sale-leasebacks would, as suggested by activist investor pressure from Arkhouse Management and Brigade Capital, which launched an unsolicited acquisition bid in 2023 to take the company private. They would have used every means to extract cash from stores while keeping them open under leases. They likely would have done a portfolio-by-portfolio review, selling some stores and leasing them back, placing secured debt on flagship or high-quality sites and pursuing mixed-use redevelopments on under-utilised parcels. Macy’s board ended talks in July 2024, saying the proposal lacked value and financing certainty.

Macy’s today is a scaled mass-premium platform with owned media assets, a coast-to-coast store network and diversified banners that many U.S. peers cannot replicate. The fleet reset, store closures and investments are designed to concentrate capital and talent where the unit economics justify it. The primary risks remain the mid-tier squeeze from off-price, fast fashion and e-commerce platforms, and the credit income risk. Conversely, the 33% digital mix, the traction at First 50 locations and the ongoing strength at Bloomingdale’s and Bluemercury point to levers Macy’s can scale as the transformation progresses.

Macy’s future relies on turning a smaller, better fleet and a balanced profit mix, with merchandise from its various banners, credit and retail media revenue, into sustained growth and margin, while advancing the digital business to make the company less exposed to the structural headwinds of the legacy mall model. The company itself sets the targets: the next 6-18 months are about proving them in the numbers. A question remains: what to do with Macy’s most significant symbol —the Herald Square flagship store, which increasingly seems irrelevant at the light of today’s consumer habits.

Credits: IADS (Christine Montard)

IADS presents the consolidated 2025 Holiday Window Displays from around the world in this year’s Holiday Window Report. Discover how IADS members and other leading department stores are welcoming the new festive season through their imaginative, artistic, and forward-looking visual interpretations.

CLICK HERE TO SEE THE 2025 HOLIDAY WINDOWS REPORT

Credits: IADS Team

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It is almost inevitable that the human population will decline. Birth rates are falling at much higher rates than initially projected, across rich, poor, and middle-income countries alike1. A reduction in childhood mortality, better contraception and healthcare, as well as women’s increasing financial independence in many parts of the world are among the reasons contributing to this phenomenon. A decrease in the world’s population, unseen since the Black Death during the 14th century2, is now an imminent reality. Naturally, this leads to the discussion of ideas that once seemed farfetched, with world leaders Xi Jinping and Vladimir Putin caught discussing immortality through organ transplants, the notion that an aged population will lead to fewer wars, and broad implications for the labour force especially with the hurtling pace of technological developments including artificial intelligence.

With the peak of human population expected to be in 20843, a much closer reality is that an increasingly larger proportion of the human population will be elderly. As healthcare improves, people will be “older for longer”, thereby changing the demographic structure of the human population. The average department store consumer is middle-aged; however, the narrative surrounding serving these consumers has often skirted around or relied on subverting age stereotypes. The age-old (pun-intended) question has been: how do we serve elderly customers without calling them old? However, some retailers and brands are in the process of rebranding being old and leaning into combatting ageism by beginning mainstream discussions. With generations typically increasing their spending power as they age, currently concentrated in Gen X and beyond, department stores have a unique advantage in addressing consumption for ageing populations.

Ageism, beauty standards and the cost of exclusion

The stigma of being labelled ‘old’ reflects deeply rooted attitudes in which ageing is equated with diminished worth, relevance and incompetence. Ageism manifests across various domains, from workplace discrimination, dismissal of health symptoms, to social interactions patronising or ignoring older adults. In the retail industry, this presents as the exclusion of workers over forty, glorifying ‘youthful’ energy and excluding age diversity in inclusivity strategies4 . Ageist attitudes are particularly pronounced on gender lines, creating an imbalance where women encounter these much earlier and more markedly than men, compounding the effects of sexism. Women in their forties and fifties are perceived as being ‘old’ or having past their reproductive or conventional beauty standards while men of this age are often seen as still being in their prime.

The beauty industry offers the clearest illustration, where anti‑ageing has long been a foundational theme, with products marketed to women starting as early as their twenties, and sometimes even before. According to the latest Vogue Business beauty standards survey, ageing is a primary beauty concern according to 97% of respondents. Recently, the beauty industry has seen the onset of a ‘pro-ageing’ movement which ‘advocates for self-care and wellness at every stage in life’. Several beauty brands have transitioned from using words such as ‘anti-ageing’ to ‘rejuvenation’, ‘revitalisation’ and ‘ageless’, in advertising, promoting linguistic inclusivity while still idealising youth.

On one hand, beauty brands are rewording narratives to performatively tackle these pervasive beauty standards while on the other hand, increasingly medicalising beauty products to enhance claims of ageing reversal—La Prairie Pure Gold Revitalising Essence claims ‘maximum cellular renewal for skin with visible signs of ageing especially those linked with hormonal disequilibrium’. Beauty products are increasingly medicalised to create a stronger backing for products claiming to reverse natural processes such as ageing. This follows the larger trend of increased consumption of medicalised beauty products and procedures including the rise of Ozempic and other GLP-1 agonist drugs.

In recent years, the inclusion of older supermodels and actresses in advertising and fashion campaigns has often functioned as a form of token representation rather than genuine inclusivity. While figures like Maye Musk, Isabella Rossellini, and Helen Mirren are celebrated for defying age norms, their visibility tends to reinforce selective ideals of “ageing gracefully” rather than embracing age diversity in all its forms. Pamela Anderson’s makeup-less appearance at Paris Fashion Week and El Palacio de Hierro’s campaign featuring Carmen Dell’Orifice are examples of inclusivity without challenging the underlying narrative yet. This controlled visibility serves commercial motives, targeting older consumers with spending power without truly challenging entrenched ageist beauty standards.

Beauty standards and hyper perfectionism are reaching unprecedented levels in the age of AI. AI-generated content is known to lack diversity and introduce bias as a result of training data; this is further demonstrated by the exclusion and replacement of elderly models and consumers by generated versions. Diesel’s usage of AI-generated elderly models that are conspicuously muscular shows the distortion of beauty standards that is fuelling the engagement of all generations with ageing trends in differing manners. Ageist ideals in society are reflected in the retail industry, not just in beauty but in fashion, luxury and other sectors.

Altogether, such practices highlight the persistent commodification of inclusivity in the beauty and fashion industries, where ageing becomes a marketable narrative rather than authentic inclusion. The normalisation of ageing is the first step to addressing the biggest consumer group of the future.

The rebranding of ageing: Longevity and nostalgia

Longevity’s emergence as a defining wellness paradigm in 2025 reframes ageing from an unavoidable decline into an optimisation programme. A significant share of younger consumers is prioritising healthy ageing by adopting preventive practices such as cellular supplements, wearables, and epigenetic testing to extend health span rather than merely lifespan. Within this context, Khloé Kardashian’s KHLOUD protein popcorn exemplifies youth-oriented and health‑conscious positioning that capitalises on recent widespread appeal for accessible nutrition. Concurrently, the mainstreaming of menopause care, accelerated by social media communities and emergent brands such as Respin serving women in their forties and fifties, exposes a historically underserved category for life-stage solutions in the beauty and health industry. In developing markets, younger generations’ early adoption of wellness and longevity products is reinforced by sustainability considerations, further integrating health optimisation with sustainable consumption.

Parallelly, nostalgia marketing from legacy brands such as Levi’s and Polaroid taps into younger consumers’ yearning for eras they have never experienced, reflecting deeper anxieties about uncertain futures and a desire for perceived authenticity and stability from the past. This convergence creates a unique opportunity where older adults become valuable cultural transmitters rather than obsolete demographics - their lived experiences of nostalgic eras gain currency with younger generations seeking connection to ‘simpler times’, while their embodiment of successful ageing aligns with longevity wellness aspirations.

The result is a reframing where age becomes a bridge rather than a barrier, with older consumers positioned as pioneers and cultural custodians rather than declining market segments, fundamentally reshaping retail’s approach to intergenerational marketing and product development. Rather than recasting ageing for younger consumers, embedding older adults in product, content, and experience design so that communication embodies participation, not proxy representation is key.

Department stores bridging generations

Recently, Le Bon Marché hosted a cultural exposition entitled Rock’n’Drôle curated by renowned French television presenter Antoine de Caunes. Transforming the store and windows into a comprehensive celebration of rock and roll heritage, it encompassed a selection of vintage clothes and accessories reminiscent of the genre’s golden era, limited edition souvenirs and rare concert merchandise, as well as a space dedicated entirely to music complete with jukeboxes and vinyl records in collaboration with brands such as Kiloshop and Gibson, and collaborations with artists and animators including a surprise performance by Patti Smith.

The most notable feature, however, was the Rock Motel on the second floor which had ten themed rooms, each one paying tribute to ten icons of the genre including Elvis Presley, The Beatles, David Bowie and Patti Smith among others. The experience was enhanced by sensor-driven technology that triggered contextual narration throughout different areas of each room, with commentary provided by de Caunes’ cult persona Didier L’Embrouille from the French channel Canal+.

Perhaps unintentionally but significantly, the exhibition created meaningful intergenerational connections. Grandparents and parents were observed guiding younger family members through the installations, sharing anecdotes and contextualising the cultural significance of these musical icons for younger audiences. This organic knowledge transfer, as part of a technological showcase, exemplified how curated experiences can serve as a bridge between generations, demonstrating the growing trend of cultural programming to foster deeper customer engagement. John Lewis’ Christmas advertisement for the new ‘Where Love Lives’ campaign, showcases a similar sense of connection and nostalgia, taking viewers on a journey between a father and son, transported by music back to the 1990s.

During the same period, Galeries Lafayette presented a fashion and accessories curation by Sophie Fontanel, a French fashion critic, writer and influencer. She has been an avid commentator on ageing and deciding to go grey, having released a book on this topic, and stating that ‘the real anti-wrinkle is not caring’. Her curation was displayed across the ground floor and womenswear section at Galeries Lafayette Haussmann, however at the time of visit, there was negligible customer interaction. She is featured on the cover of the fall catalogue, and the photograph and her choice of products subvert age stereotypes by owning markers such as greying hair and wrinkles, despite the ironic advertisement for La Prairie’s Revitalising Essence promising ‘eternal youth’ in the catalogue. In an interview, she also discussed the impact of filters on younger generations and how wrinkles go beyond shaping one’s face to include every experience in one’s life.

Beyond youth targeting: the intergenerational dividend

The silver generation, comprising many grandparents, frequently assumes responsibility for the care of their grandchildren. This demographic generally enjoys financial stability and tends to indulge their grandchildren, prioritising expenditures on them over personal spending (in France, it is estimated that assets exceeding EUR 9 trillion will be transferred to the next generation by 2040 as the baby boomer cohort ages). Grandparents shop for their grandchildren and look for entertaining activities when they look after them, representing business opportunities for retailers. Department stores, in particular, should reflect on how shared experiences between grandparents and grandchildren might cultivate enduring customer relationships among younger generations. Furthermore, a fair part of Generation X remains financially prosperous and spends a significant portion of their resources on personal consumption, which is another business opportunity. Despite this, most visible marketing efforts among retailers usually focus on attracting younger generations. It is notable that two department stores simultaneously introduced substantial campaigns addressing ageing through distinct approaches. These examples show that retailers may begin to mainstream age inclusion as an engagement driver, with iterations likely to deepen intergenerational relevance by delivering participatory experiences across customer segments. By recognising the emotional and financial influence of older generations alongside the aspirational pull of younger consumers, programming that transcends age categories can strengthen intergenerational brand affinity if sustained strategically.

For the retail industry, this shift also represents a strategic imperative. As the majority of disposable income consolidates among older generations and wellness becomes a universal aspiration, retailers that prioritise healthy ageing and intergenerational engagement will be best positioned for long-term growth. Younger generations remain essential to sustained relevance; however, their engagement is most effective when embedded within intergenerational strategies that elevate the service, accessibility, and trust valued by older shoppers while integrating the discovery, wellness, and omnichannel expectations set by Gen Z and Millennials. Department stores have often served as settings for intergenerational traditions such as shared visits and gifting rituals between grandparents and grandchildren. These can be complemented by designing services that intentionally translate elder advocacy into younger loyalty, thus creating a continuum of influence across life stages. Department stores, in particular, have the spatial and experiential capacity to curate environments combining culture with commerce, strengthening brand loyalty beyond transactional relationships. By framing ageing not as an obstacle but as an opportunity for innovation, the retail industry can connect, include, and create enduring relevance in a world where longevity defines the future of consumption.

Conclusion: the next strategic mandate?

A future shaped by longer lifespans and shifting demographics demands a deeper commitment to normalising healthy ageing as part of everyday life, not just as a market trend. Rather than positioning older consumers as an isolated segment, department stores can serve as cultural and commercial hubs that integrate ageing into their narratives by highlighting wellness, vitality, and lived experience across all age groups. Embracing intergenerational programming, experiential retail, and nostalgic storytelling, these spaces can connect generations through shared cultural touchpoints, knowledge exchange, and collaborative participation. Such approaches move beyond the narrow ambition of attracting youth toward cultivating environments where the presence and participation of older adults are seen as enriching for everyone. In doing so, department stores retain their relevance as inclusive institutions capable of bridging generational divides, fostering community, and reframing ageing as a valued stage of life.

Credits: IADS (Anchita Ranka)

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Retail’s “location, location, location” mantra is being rewritten for a post-e-commerce world. Facing online competition, rising occupancy costs and shifting consumer habits, leading retailers are turning their real estate into multi-purpose neighbourhoods rather than single-purpose stores. The article explores this strategic pivot through four emblematic case studies: Ingka Centres opening Meeting Places that weave shopping, offices, hotels and playgrounds in 37 countries to date, Breuninger, whose Dorotheen Quartier opened in 2017 shows how a regional department store can anchor retail, apartments and offices to rejuvenate a city, Walmart, developer of a mall acquired early 2025, aiming to fuse shopping, last-mile logistics, housing and community space into a modern neighbourhood and, finally, John Lewis Partnership, venturing into build-to-rent programmes across the UK that turns surplus car parks into homes above a Waitrose or department-store anchor.

The strategic imperative: why retailers are pivoting to mixed-use projects

Traditional brick-and-mortar retailers face mounting pressure from e-commerce, changing consumer behaviours, and the need to optimise valuable real estate assets. In response, some brands are reimagining their physical presence by developing mixed-use projects that combine retail with residential, office, hospitality, and entertainment. This pivot represents more than just diversification. It’s a strategic response to several critical market forces:

• Real estate monetisation: retailers sitting on prime real estate assets are generating multiple revenue streams from the same footprint. With the rise of e-commerce, some properties can become underutilised, generating costs. Mixed-use development allows retailers to become landlords.
• Revenue stability: by incorporating residential units, office spaces, hotels, and entertainment venues, retailers reduce their dependence on product sales alone, creating more stable and predictable income sources.
• Creating destination experiences: in an era where consumers can buy almost anything online, physical retail spaces must offer something digital cannot. Lifestyle experiences are gaining traction: mixed-use developments can transform shopping from a transactional activity into a social and cultural experience.
• Community integration: mixed-use projects allow retailers to embed themselves deeper into local communities, fostering brand loyalty and ensuring long-term relevance in consumers’ daily lives.

From blue boxes to city hubs: how Ingka’s Meeting Places are re-imagining urban life

Ingka Centres, the real estate arm of IKEA, has pivoted from suburban big-box retail to their Meeting Place strategy, acquiring or building large mixed-use sites anchored by an IKEA store. Combining different functions in one place, these projects want to raise the bar regarding integrated living, working, and leisure experiences and provide an example of how these integral features of modern life can coexist. In 2025, 37 Meeting Places are already open globally, from Poland to China, from Portugal to Sweden. While they are adapting to local specificities, they are either called Avion, Livat or Lykli. Most of them bear a stylised yellow Smiley face, reminiscent of IKEA’s yellow.

One of the most significant examples is the €1 billion Livat complex in Shanghai, China. Opened in September 2024, it delivers a 430,000 square metres programme comprising a multi-functional mix of shopping, dining, entertainment, culture, wellness, children’s activities, and outdoor leisure spaces, aiming to create an all-ages-friendly, one-stop destination for lifestyle and social gatherings. It includes:

• A 200,000 square metres commercial space with more than 312 third-party stores, with approximately 71% being domestic.
• A 21,600 square metres IKEA store.
• Five Grade-A office towers.
• Deliberately non-retail amenities such as a tree-house playground and a Scandi Village, all designed to pull locals in for leisure as much as for shopping.
• Sustainability and community engagement are prioritised: the scheme incorporates an Innovation Hub that showcases circular living ideas and aligns with Ingka’s group-wide People and Planet Positive strategy.

South Asia’s counterpart, Lykli in Noida (in Delhi’s Sector 51 in the National Capital Region, 15 km from Delhi city centre) is scheduled for a 2028 handover. The project is set to attract 25 million visitors and will span 396,000 square metres and combine an IKEA store with 240 retail and F&B partners, two 37-storey office towers and Ingka’s first 267-room hotel. The transit-oriented site has its own two-line metro connection in addition to 4,500 parking lots.

Together, these investments show IKEA’s wider ambition: by owning and curating entire mixed-use districts it can lock in daily footfall for its core store, harvest long-term real-estate income, and run large-scale pilots—from rooftop biodiversity zones to circular-economy retail labs—that reinforce the group’s brand promise of affordable, sustainable living.

From single store to city quarter: Breuninger’s Stuttgart’s Dorotheen Quartier

Department store companies also venture in mixed-use projects in their own ways. As a company, Breuninger imagined and built Stuttgart’s Dorotheen Quartier in 2007, with the department store as its anchor. After 10 years in the making and a €200 million investment, the company opened this 62,000 sqm mixed-use project in 2017 to revive the area located between Stuttgart’s gourmet Market Hall, the historic Karlsplatz and the Breuninger store. Complementing it and consisting of three 6-storey buildings, the area offers a mix of luxury-oriented retailers (including Louis Vuitton, a Porsche dealership and a Tiffany store), restaurants, apartments, offices and a 350-slot underground parking lot. The project involved transforming a street into a retail space, known as the Karlspassage, which is now a small mall connected to the Breuninger store. Overall, the Dorotheen Quartier feels very lively and offers an alternative to Stuttgart’s high-street shopping area, the Königstrasse, which feels outdated (home to Peek & Cloppenburg and Galleria mid-range department stores).

The Dorotheen Quartier exemplifies how Breuninger leveraged a real estate project to create new sources of revenue. The thoughtfully designed mixed-use project has invigorated the area, seamlessly blending luxury shopping, dining, residential, and office spaces to create a lively urban ecosystem, showing Breuninger’s deep understanding of local consumer needs.

From dead mall to neighbourhood hub: Walmart’s Pittsburgh makeover

In February 2025, investing $34 million, Walmart acquired the 112,000 square metres Monroeville Mall in The Pittsburgh area in Pennsylvania, the first time the retailer has ever bought an operating regional mall outright. The company immediately confirmed that the ageing 1969 centre will be re-purposed as a mixed-use district layering new retail, restaurants, residential, hospitality, office space and public realm around (or in place of) the existing anchors. Walmart will also take advantage of the site’s location at the junction of major highways to create a last-mile fulfilment node as well as a community hub.

The project traces its DNA to the retailer’s 2018 Walmart Town Center pilot, which proposed filling the surplus Supercenter parking lots in Loveland store in Colorado, with third-party restaurants, gyms, urgent-care clinics and even apartments, to turn the big-box into the high-street of a walkable neighbourhood. Although the Loveland build never broke ground, the concept now serves as the programmatic blueprint for Monroeville and for future acquisitions the company is reportedly scouting in Texas and Florida. Monroeville will provide the scale test, positioning Walmart not just as the anchor tenant but as a developer of neighbourhoods that can capture retail sales, lease income and e-commerce efficiencies on the same parcel.

From checkouts to check-ins: John Lewis’ push into service-led rental homes

Few legacy retailers have committed to residential at the scale of the employee-owned John Lewis Partnership (JLP). Moving beyond department stores and groceries, the group has pledged to develop and operate 10,000 build-to-rent homes within a decade and has seeded the programme with a £500 million joint venture with asset-manager abrdn. JLP’s ambition is to put excellent service at the core of the UK’s private rental homes sector, with residents treated as customers, not just tenants. The scheme involves:

• Sites and scale: under-used plots such as supermarket car parks and surplus store land will be redeveloped into mixed-use complexes containing apartments and a refurbished or replacement Waitrose or John Lewis unit.
• Homes on offer: one-, two- and three-bedroom flats will come fully furnished with John Lewis products and be supported by 24/7 on-site staff. Planned amenities include shared workspaces, fitness areas and social spaces.
• Management model: rather than selling the homes, JLP will retain ownership and manage them itself, aiming to offer longer leases and a service-led experience more typical of hotels than of traditional private rentals.

This new venture will add a new income stream to bolster its core retail business and make better use of its property portfolio, much of which sits in densely populated areas with good transport links. Converting brownfield sites into housing aligns with the company’s goal of reducing urban sprawl while utilising existing infrastructure.

Entering housing is part of a wider plan to build complementary businesses. If successful, the build-to-rent arm would give the company a foothold in a growing sector while providing a hedge against the volatility of retail income. By recycling underutilised parking lots and back-of-house land into long-hold rental assets, without losing the grocery anchors that guarantee daily footfall, John Lewis is demonstrating how a department-store landlord can turn its real estate footprint into a diversified, inflation-linked income stream while deepening community presence.

Whether they sell flat-packs, fashion or groceries, each of the retailers profiled has reached the same conclusion: single-use retail boxes underperform in an omnichannel era, whereas mixed-use districts can unlock new income streams. The transition from pure retail to mixed-use development represents a fundamental evolution in how retailers can create value. Ingka, Breuninger, Walmart, and John Lewis all start with a strong anchor (an IKEA, a flagship store, a supermarket) and then layer complementary uses, including housing, offices, hospitality, and entertainment, on land they already own. The shared outcomes can be significant with diversified revenues from rents and third-party tenants, reducing the pressure on product sales. Enhancing local communities, live-work-play ecosystems give consumers more reasons to visit and stay, defending traffic against pure-play e-commerce. For retailers evaluating the same path, mixed-use development is no longer a speculative side bet but a strategic shield and a growth engine. By becoming more than merchants, retailers can monetise dormant assets, de-risk volatile sales, and secure a permanent, value-adding role in the urban fabric their customers call home.

Credits: IADS (Christine Montard)

PRINTABLE VERSION HERE 

In the era of multiple systemic challenges affecting the world, the term ‘polycrisis’ has been repopularised by former European Commission president Jean-Claude Juncker and historian Adam Tooze. The utility of the term lies in mapping disparate shocks, that cannot be reduced to a single common denominator, interacting to create a shock more overwhelming than the sum of all individual shocks. In the wake of the COVID-19 pandemic and its long-lasting impacts, economic shocks around the world, Russia’s full-scale invasion of Ukraine, and the spiralling consequences of climate change, the diversity of problems is compounded by insufficient economic and social development for policy, business and individual decision-makers.

Given this context, the IADS undertook internal research to understand how department stores most severely affected by economic and geopolitical crises manage their operations. This exclusive combines the learnings of our exchanges with strategic teams responsible for guiding company activities. Despite the varying natures of crises, the IADS found that the priorities and critical goals for these department stores remain similar in contextually relevant manners. In one line, cash is king and the priority order is people, assets and operations.

Crisis management models: iterative vs. protocol-driven

Crises are rarely identical. While uncertainty permeates all kinds of crises, the source and evolution dictate how stakeholders respond. Department stores have faced a range of crises including full-scale invasions and currency crises, some at the periphery with others at the epicentre, and developed unique crisis models. According to research conducted by the IADS, the types of strategies used can be broadly divided into iterative models, where recovery plans use continuous cycles of evaluation and improvement as situations evolve, and protocol-driven models, that use predefined procedures and clear roles to guide organisations in managing crisis situations.

While adaptability is key in any crisis, iterative models are used by department store companies in volatile situations with little preparation, however, without widespread imminent physical danger. Especially evident in situations where they operate in turbulent political environments, strategic guidelines prove more useful than protocols to respond to new developments flexibly. The level of crisis management experience of decision-makers plays a factor as well.

Protocol-driven models are more common in situations where physical danger to people and assets looms. In the face of airborne incursions and national defence efforts, comprehensive and efficient evacuation protocols for staff, tenants and visitors are foundational for physical safety. Protocols designed to secure the store, inventory and other assets are next. Facing constant uncertainty for extended periods of time gives rise to a new operational status quo that requires updated operating mechanisms. The key necessities in such situations are to identify warning signs that signal the onset of larger crises and focus on recording organisational responses that can be refined over time to develop thorough standard operating procedures.

Liquidity equals lifeblood

The unanimous principal lesson is that managing the company’s cash ensures that the business survives daily. Steep currency devaluation and subsequent inflation are almost always a consequence of considerable crises and need to be managed by every economic actor in the nation. Monetary erosion is normally managed at the government level and percolates down to businesses and individuals. During times of crisis, regulations around currency arbitrage and investment are stricter to meet political goals. Provided banks continue to exist, companies can manage currency devaluation by converting domestic currency to a more stable currency in line with other regulations.

Department stores have employed innovative measures to keep themselves afloat. Heavily indebting a company in the extremely devalued local currency to eventually convert into a more stable currency to repay banks and suppliers, thus transitioning into a financial business, was one of the techniques used. Additionally, collaborating with providers from other, more restricted industries (in one case, the insurance industry) to buy and sell financial bonds was another method to maintain liquidity. Fundamentally, cash is a bargaining chip to find other manners of funding through loans, bonds and financial securities within exceptionally stringent legal limits.

People during crisis: Staff, partners and leaders

There is a consensus about people being the most important resource to address at the onset of a crisis. However, depending on the nature of the crisis and stakeholders, priorities for human resources can range from talent retention, physical safety, and adapted management techniques to the business’ transition to a social unit, among others.

During a crisis, businesses often pivot from pure profit-seeking to a more socially cohesive role, uniting employees, customers, and communities around shared resilience because collaboration and mutual support become essential for survival. Some retailers undertook initiatives such as distributing cash bonuses and paying advance salaries for employees to manage their personal situations. Staff measures depended on urgent imperatives: when retaining employees was the need, companies offered financial, non-financial (such as cars and houses) and personal (such as admission to schools for their children) incentives in individual compensation packages. In other cases, retailers helped employees relocate to safer parts of the country at no expense, as well as provided power banks, headsets, and other operational tools necessary for remote operations. For employees involved in national security operations, companies continued to pay full salaries for three years in some cases.

Continued communication within teams during a crisis is crucial. Some  department stores purchased satellite phones for senior executives to combat power outages and maintain connectivity. Keeping employee motivation up in times of crisis is important for their mental health and performance. Advocacy initiatives and collaborations with civil society can rally employees around a unifying purpose, turning uncertainty into renewed motivation and collective resilience.

Another aspect of people management is the relationship with partners, tenants and suppliers. Extensive negotiations are a given to arrive at universally acceptable decisions. Complications arise when partners have different policies than the department store in crisis situations requiring relocation of inventory. Specific store teams coordinate with partners, suppliers, brands, and tenants to access their inventory during crises. Emphasising transparent communication and commitment to cooperation, some retailers have managed to preserve all their longstanding collaborations while adding new partners. However, despite the best efforts, others have lost partners and suppliers who quit the market due to the larger political and economic instability.

Finally, all teams emphasised the importance of strong leaders’ over preparedness and decisiveness. All leaders require a combination of mental resilience, clarity, and strategic foresight. They should focus on issues they can impact while recognising factors beyond their control. Making tough choices is an inherent part of leadership and should be guided by the long-term well-being of the company and its stakeholders. Both the leader and the team must remain agile and ready to adapt swiftly when plans no longer align with changing circumstances. Trust within the team is paramount for strong collaboration, and transparent communication is essential to foster alignment, minimise misunderstandings, and strengthen overall cohesion.

Shielding stores and inventory during disruptions

Department stores’ management of their key assets, buildings and owned stock, is the second-most important priority after people’s safety. In times of acute crisis, physical protection of assets encompasses securing the façade, internal maintenance systems such as heating, water, and electricity, as well as entrances and windows. Compounded by widespread chaos, the risk of thievery, rioting and squatting increases. Some retailers have dedicated, protocol-driven teams that work to secure the building and even live onsite on a rotational basis to counter hostile activity.

In other situations, the threat to assets may not be physical but economic. In cases of currency crisis and hyperinflation, the devaluation of inventory can make stock almost worthless, with government-imposed price cuts having the same effect. A large divergence between the market exchange rate and a government-fixed one further complicates the situation. While the price cuts briefly increased sales, cash flow fell, resulting in unpaid suppliers and exhausted stock. While the product mix remained similar to the pre-crisis situation, this drove a shift in the brand mix. A basic strategy to ensure that products would be sold was mapping key product features to ensure that they were affordable and necessary for customers. For instance, for fashion products, the criteria necessary for their customer base were: under USD 30, exclusive brands, quality, and differentiated from the market. Meeting these requirements reflected a great sell-through rate for this category.

In countries experiencing political instability, there is a risk that government actions may lead to capital expropriation. Remaining politically neutral can keep a company out of the limelight and at a distance from the threat of state takeover.

Pertinent operational continuity: Handling energy and supply chain shocks

Operational continuity depends on the specific nature, scale, and timing of a crisis, requiring adaptable plans that may range from protecting supply chains during a pandemic to reinstating critical systems after an energy outage. A variety of strategies to continue operations can be used. In some cases, department stores reduced the number of stores operated, maintaining only profitable stores. Even during challenging times, department stores continued to make small investments that could have big payoffs when the situation improves, notably in enhancing online operations via marketplaces.

Energy crises are one of the primary challenges during pervasive emergencies. Some dealt with this by implementing a series of operational protocols to optimise electricity consumption during power disruptions. These included reducing energy usage in sales areas by managing lighting, turning off façade lighting during non-peak hours, installation of a diesel generator to maintain operations during emergency power outages, and introduction of start/stop systems on escalators to reduce energy consumption. Installing solar panels on the rooftop enabled clean energy generation, resulting in a 10% reduction in overall electricity consumption, driving long-term operational efficiency sustainably. Mapping the citywide electric network allowed the department store to switch between electricity lines when necessary.

Shocks such as the war in Ukraine impacted companies’ supply chains worldwide, requiring realigned sourcing and logistics strategies, not only around the conflict’s immediate theatre but across entire global networks. To overcome disrupted global sea and air logistics, some retailers shifted to freight transportation for their international supply chains. This has resulted in increased logistics costs and a rise in fuel prices, but a more diverse mix of goods to meet growing demand. The loss of suppliers is almost inevitable, especially when driven by volume reduction due to currency collapse. Department stores coped by simulating purchases from brand headquarters to balance smaller quantities, a larger mix and affordability for customers.

Advertising and customer communication shifted as well. In some cases, all marketing initiatives were stopped to avoid being very visible in the public eye due to the risk of political targeting. Slowly restarting with in-store and social media advertising, the messaging focuses on being quality-oriented to regain customers’ top-of-mind space. Credit initiatives and promotions were also stopped in countries facing extreme currency collapses and high exchange rates. Selling merchandise each day is indispensable since cash flow keeps the business going.

Forward watch and the impact of Trump  

Global geopolitical developments, especially the election of US President Donald Trump, are being watched apprehensively by entire populations as his policies have introduced a new wave of changes. Impending tariffs and potential sanctions can upend several business continuity operations during ongoing crises. 

Amid multiple systemic crises, intensified by global upheavals and an overarching polycrisis, these insights have been distilled from retailers operating at the epicentre of these events. The IADS aims to lead members into strategic thinking avenues that may not have been addressed before in the face of growing geopolitical and economic uncertainty. While members surely have their own crisis management strategies and teams, learnings from department stores already confronted with profound and overlapping political, economic and security shocks can provide incomparable insight to sharpen and solidify their own playbooks. The commendable resilience and ingenuity shown by those already navigating crises offers a valuable benchmark, prompting others to reflect on and strengthen their own crisis management practices. 

Credits: IADS (Anchita Ranka)

PRINTABLE VERSION HERE 

Brands are no longer confined to their original product categories. Instead, they are increasingly expanding their reach into new brand territories, ranging from additional product categories to sports, culture, and entertainment, redefining not just what they sell, but what they represent. This diversification is not about opportunistic line extensions. It’s a calculated repositioning aimed at opening new revenue streams, for sure, but also deepening consumer engagement and embedding brands into broader lifestyle ecosystems. Whether through launching cosmetic lines, furnishing homes, associating with sports performances, staging cultural experiences or producing films, brands are reimagining their roles in consumers’ lives, moving from product providers to curators of aspirational living.

From that perspective, Louis Vuitton, a critical brand for any luxury department store, is probably the most striking example, ticking all the boxes of a brand that has transformed into a lifestyle ecosystem. While many other brands are expanding their territory, department stores need to adapt to welcome these new brand expressions.

Lipstick logic: When brands turn to beauty

The most usual way to expand brand territory is to venture into new product categories. At a time when the beauty and wellness industry has been booming, brands have recently ventured into the coloured cosmetics category. Hermès is a significant example in the luxury price bracket. While they first launched fragrances in 1950, the Perfume & Beauty ‘only’ represented 3.5% of the brand’s total revenue in 2024 (in comparison, Chanel’s beauty business is estimated to represent 35% of the total revenue in 2024). It took Hermès 70 years to initiate a careful foray into colour cosmetics in early 2020 during Covid, with disappointing results. Since then, the Perfume & Beauty division has built up, doubling from €263 million in 2020 to €535 million in 2024, growing 9.3% YoY. While it’s a very significant achievement, it represents limited growth compared to the rest of the business. In 2024, Hermès achieved a consolidated revenue of €15.2 billion, marking a 14.7% increase over the previous year.

On its side, Louis Vuitton began by relaunching its perfume division in 2016. This initiative marked a return to the brand’s historical roots, as Louis Vuitton had released its first perfume in 1927, though it was quickly discontinued. After fragrances, Louis Vuitton will debut colour cosmetics in fall 2025 with the British makeup artist Dame Pat McGrath as its creative director. The line, which will be called La Beauté Louis Vuitton, is the fashion house’s first foray into cosmetics since the 1920s, when it offered a range of powder compacts, brushes and mirrors.

The market is crowded with prestige and luxury brand new beauty lines: Prada, Celine, Rabanne and Dries Van Noten have all debuted cosmetics in the past years. But not only does luxury follow this trend. In 2023, Ecoalf’s founder, Javier Goyeneche (a guest speaker at one of the recent IADS CEO meetings), expanded into sustainable beauty products, seeking to bring its environmental ethos to everyday personal care with Ecoalf Wellness. Assuming customers would be seduced by the brand’s circular principles applied to skincare and hygiene, the brand eliminates single-use plastics and drastically reduces water-heavy formulations, delivering powder-based shampoos, deodorants, and more enclosed in reusable aluminium containers that can last over twenty years.

Not all ventures are successful, though. In 2019, Birkenstock launched a skincare line including eye cream, anti-wrinkle cream and more. While Birkenstock’s surprising move into the beauty sector could represent a natural yet bold progression from its DNA of wellbeing to a broader vision of self-care, these products didn’t sell because offering products such as eye cream was probably too far-fetched. Closer to its DNA and core business, Birkenstock ventured again into beauty in 2024 with Care Essentials, a short and focused foot care line that aligns more closely with the brand ethos. Overall, this transformation highlights a broader trend in which heritage labels utilise their domain expertise to expand into adjacent lifestyle categories, hoping to deepen consumer engagement and open new revenue streams.

Living the brand: How fashion brands furnish everyday life

Brands are not only venturing into beauty but also embracing home design. The first brand to truly venture into furniture, lighting, and home accessories is Armani, which introduced the Armani/Casa label in 2000. This strategy to integrate domestic life continues with the Louis Vuitton Objets Nomades collection, introduced in 2012. Initially conceived as a series of travel-inspired furniture pieces, the collection has since evolved into a substantial home design portfolio, featuring collaborations with recognised designers such as Patricia Urquiola, India Mahdavi, and the Campana Brothers. These limited-edition objects are presented as collectables, elevating Louis Vuitton from a fashion house to a purveyor of high-art domestic experience.

Fast fashion brands also account for successful forays in the home categories. Zara, H&M, and more recently Primark have each undertaken significant strategic expansions into home products to capture a rapidly growing homeware market shaped by post-pandemic lifestyles. Starting in 2003, Zara Home leveraged the same fashion calendar and just‑in‑time logistics that made apparel successful, but uses relatively low discounting compared to apparel, maintaining a premium feel. Financially, the division has matured into a significant revenue driver, with 2018 figures reaching approximately €830 million out of the €16.62 billion total revenue.

H&M adopted a similar but later strategy, first entering the home arena in 2008. Initially sold online and later in stores, the business rationale for H&M Home followed a clear logic: leverage a trusted mass-market retail infrastructure to capture lifestyle spend while maintaining price accessibility, mirroring its “fashion for the many” ethos. In doing so, H&M strengthened its omnichannel ecosystem, using home products to increase basket size and frequency of visits.

Finally, Primark’s entrance into homeware has taken a different trajectory, rooted in physical retail dominance. The retailer began testing its homeware range alongside clothing before making a decisive strategic shift in 2025. The retailer opened its first dedicated Primark Home store in Belfast, showcasing small furniture, bedding, ceramics, and travel essentials in a standalone environment.

Temporary territories: When department stores catch the zeitgeist

There is also an agile way to catch customers’ attention and a share of their wallets. Selfridges and Le Bon Marché offer vivid examples of how department stores have opportunistically tapped into lifestyle trends by temporarily expanding their product ranges to capture additional revenue streams. Following Covid, Selfridges identified an unexpected yet powerful consumer behaviour toward nature, gardening and wellbeing. By mid-2021, its London, Manchester, and Birmingham stores had introduced pop-up garden centres offering a variety of plants and tools, compost, and related apparel. The effort helped Selfridges capture a surge in “green-fingered” spending, translating consumer leisure budgets into in-store impulse purchases on plants and horticultural expert consultations. While Le Bon Marché had the same initiative, this pivot exemplifies how a temporary trend can be monetised through short-term, high-impact product ventures. These initiatives were also incredibly smart in attracting more local consumers, especially at a time when tourism was halted.

Le Bon Marché took an agile approach to pet products in early 2025 by transforming its permanent pop-up spaces into a canine playground under the exhibition banner “Je t’aime comme un chien!”. The initiative mixed dog-centric products, from designer collars, bowls, bespoke toys, treats, spa and grooming services, to a café, workshops, personalisation and photo booths, with immersive visual installations such as big prop bones throughout the store. This thematic takeover capitalised on a widely observed surge in pet spending. Generating high traffic and engagement, Le Bon Marché found the right way to bring dogs and their owners into the shopping journey, strategically steering discretionary spending toward products that align with a momentary yet powerful cultural obsession.

These initiatives are less about permanent transformation and more about momentary alchemy. Selfridges’ plant pop-ups and Le Bon Marché’s dog-themed extravaganza both illustrate a modern department store strategy: not just selling things, but staging culturally resonant experiences that trigger new purchasing behaviours. By reading the zeitgeist and moving fast, with highly curated inventory and thematic environments, these stores created agile revenue plays that capitalised on emergent consumer trends at just the right moment.

Gold, speed, and symbolism: Luxury meets global sports events

Brands venturing into sports is nothing new. Yet Louis Vuitton’s involvement in Formula 1 and the 2024 Olympic Games reflects an increasingly assertive strategy to position the brand at the centre of contemporary cultural spectacle. Over the last decade, Louis Vuitton has steadily moved into the realm of global prestige events, not as a traditional sponsor, but as a supplier of symbolism. In 2021, the brand unveiled a bespoke monogrammed trophy trunk for the Formula 1 World Championship. Its repeated presence on the podium reinforced the brand’s authority and symbol of positive rituals and victory. The move into Formula 1 coincided with a generational shift in the sport’s audience, the sport’s blending of technology, drama, and internationalism offering the brand a stage that mirrored its own values: precision, control, spectacle, and heritage. In early 2025, Louis Vuitton announced a new 10-year significant partnership with Formula 1, beginning with the title sponsorship of the March 2025 Australian Grand Prix. This initiative capitalises on Formula 1’s growing popularity, which attracted six million race attendees and 1.5 billion TV viewers last year, with particularly strong growth among women and youth demographics. The partnership will enable Louis Vuitton to offer unique hospitality experiences for top clients while reaching new audiences. It’s a compelling example of the brand’s broader transformation from a traditional luxury retailer to a cultural powerhouse.

But Louis Vuitton’s ambitions in the sports ecosystem are not isolated. In 2024, the brand expanded its reach further by becoming an official partner of the Paris Olympic and Paralympic Games, joining LVMH’s broader role as a premium sponsor of the event. As part of this engagement, Louis Vuitton designed and produced custom-made trunks for the Games medals. Similar to Formula 1, this foray signals a brand strategy anchored in recruiting new middle-class consumers. In both cases, the brand builds the physical artefacts through which these moments are staged. By embedding itself within the most visible and emotionally charged moments in sport, Louis Vuitton has redefined the boundaries of luxury participation. No longer solely anchored to the runway or its store network, the brand now lives elsewhere, and (already) everywhere.

Beyond commerce: Art as identity

Over the past three decades, luxury groups have moved far beyond fashion and retail to establish a lasting presence in contemporary art and culture. Similar to sports, this shift is not simply an act of sponsoring but a repositioning of luxury as a global cultural force. LVMH, Kering, and Richemont have each established cultural ecosystems to give their brands artistic legitimacy. For LVMH, this began with the 1990 creation of the Prix LVMH des Jeunes Créateurs, followed by the launch of the Fondation Louis Vuitton in 2014, which has become a cultural landmark in Paris. The Fondation has hosted major exhibitions drawing over a million visitors annually and positioning LVMH not just as a backer of the arts, but as a producer of major cultural events on par with the world’s leading institutions.

On its side, the Pinault Collection, distinct from the Kering group, represents one of the most ambitious private interventions in the contemporary art world. Long before the 2021 opening of the Bourse de Commerce in Paris, Pinault had already established two major cultural outposts in Venice, marking a sustained engagement with art. The Bourse de Commerce not only embodies a private collector’s vision but also illustrates how the resources of the luxury sector can be redirected to create enduring cultural institutions that have a lasting impact far beyond fashion.

Richemont has taken a more classical route, yet no less ambitious. The Fondation Cartier pour l’Art Contemporain, established in 1984, predates most other luxury group initiatives and stands out for its consistent, long-term engagement with artists across disciplines. Located in Paris, it recently announced plans to move to a larger site near the Louvre, underlining its institutional ambitions.

The logic here is not transactional but foundational: art and culture are not marketing vehicles but narrative extensions of what luxury is presumed to be: timeless, intellectual, emotional, and transformative. In embedding themselves into art, luxury groups are not just financing creativity, they are quietly recasting themselves as cultural institutions in their own right. This repositioning elevates their brands beyond fashion cycles, resonating long after a runway show ends.

Fashion cinematic turn: there’s no business like show business

As the boundaries between fashion and entertainment continue to dissolve, a growing number of luxury houses are entering the film industry not as sponsors or costume collaborators, but as producers and curators. Louis Vuitton, Saint Laurent, and AMI Paris have each taken distinct yet strategically aligned steps into the film industry, using cinema as both a storytelling device and a cultural amplifier. In 2023, Louis Vuitton launched 22 Montaigne Entertainment, a dedicated production entity. Unlike earlier iterations of fashion-film collaborations, which often blurred into extended commercials, 22 Montaigne Entertainment aims to finance and develop projects. In partnership with Superconnector Studios, this division will be responsible for identifying opportunities for LVMH brands to collaborate with entertainment entities to co-develop and co-produce entertainment properties across film, television, and audio. However, it is likely that LVMH also has an eye toward producing larger, more mass-entertainment offerings, such as The House of Gucci movie, which grossed $166 million worldwide at the box office.

Saint Laurent, by contrast, has made the most direct and structurally ambitious move into filmmaking. In 2023, the house launched Saint Laurent Productions, becoming the first luxury brand to create a registered film production company. Its debut collaborations with auteurs such as Pedro Almodóvar and David Cronenberg made immediate headlines at major festivals including Cannes and Venice. Jacques Audiard’s Emilia Perez movie was a particularly striking example: it co-produced the entire feature, collaborating closely with the other movie-producing companies. The result is not mere branding, but active, creative authorship, with Anthony Vaccarello, Saint Laurent’s creative director, serving as a credited producer on the project.

AMI Paris’s entrance into the cinematic world took a more institutional turn in 2024 with the creation of the Grand Prix AMI Paris de la Semaine de la Critique, an award presented during the Cannes Film Festival that celebrates emerging filmmakers. Founded by AMI Paris’s founder and creative director Alexandre Mattiussi, the prize is designed to support the kind of filmmaking that aligns with AMI’s cultural positioning.

Together, these three brands represent different yet converging models for how fashion intersects with cinema. Louis Vuitton approaches it as a narrative architecture surrounding the brand’s universe, Saint Laurent treats it as a parallel industry in which to operate and AMI Paris uses it to enhance the brand’s emotional temperature. Each strategy points to the same conclusion. In a saturated visual economy, luxury no longer communicates through clothing alone. With its emotional depth, films offer a medium through which to project identity, build mythology.

As brands move beyond their traditional domains, a clear ambition emerges: catching all consumer life moments. Louis Vuitton’s ventures outside of its traditional categories are more than secondary revenue streams. They are expressions of the brand’s DNA and values, only reinforcing its position as a global cultural arbiter. Collectively, these moves signal a profound shift in the role of brands, from product makers to global cultural forces. In extending their territory, brands are not just chasing growth, they are shaping the consumers’ lives, raising questions about their cultural and emotional dominance.

For department stores, these new brand territories certainly require adaptation, but they also represent unprecedented opportunities to attract new consumer groups, making stores more exciting and livelier. Boring retail is, more than ever, dead!

Credits: IADS (Christine Montard)

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Over the past three decades, hospitality, whether in the form of restaurants, bars, cafés, or hotels, has evolved from a brand-building side project into a strategic pillar for non-hospitality brands across various sectors. What began as bold experiments by luxury fashion houses has transformed into a multi-industry movement, as companies seek to deepen emotional engagement, increase traffic and customer dwell time, and unlock new revenue streams. Hospitality now serves as a customer acquisition tool and can transform into a profit centre. As the lines between retail, lifestyle and experience continue to blur, hospitality has evolved not just as a trend but as a long-term strategy, one that requires brands to demonstrate creativity and operational excellence.

Hospitality has been an integral part of the department store business since its inception. Almost two centuries after Le Bon Marché opens a reading room free of charge to husbands waiting for their wives, department stores up the hospitality ante to better serve customers and compete with their brand partners’ own hospitality engines.

No longer a vanity sideline, hospitality is becoming the front door to brand ecosystems and a credible profit driver. Department stores that curate these experiences can turn lattes, food and maybe room keys into the next generation of retail loyalty.

A selective 30-year history of hospitality at non-hospitality brands

Luxury fashion at the forefront…

Hospitality ventures by non-hospitality brands began in 1998 with a luxury brand. Giorgio Armani unveiled plans for the first hotel, an idea realised in Dubai and Milan a decade later and widely viewed as the proof-of-concept for luxury fashion hospitality. The following year, Ralph Lauren opened RL Restaurant in Chicago, showing that restaurants could amplify a lifestyle label’s aura without leaving its home market. The early 2000s marked the first wave of upscale experiments: Versace debuted Palazzo Versace in Australia in 2000 and in Dubai in 2016. In 2004, Bulgari launched its Milan hotel. Soon enough, non-luxury brands entered the hospitality game.

Luxury fashion’s second wave occurred between 2014 and 2020. In 2014, Prada took an 80% stake in Milanese pasticceria Marchesi 1824. Dior launched Café Dior in Seoul in 2015, Fendi installed Zuma on its rooftop in Rome in 2016, and Gucci Osteria earned a Michelin star two years after opening in 2018. In the 2020s, the movement matured into scale plays and mixed-use flagships. While planning a hotel to open on Paris’ Champs-Élysées in 2026, Louis Vuitton opened its first in-store Le Café V in Osaka in 2020 and Paris in 2022, as part of the LV Dream exhibition. That same year, Dior Paris’ Avenue Montaigne flagship store reopened, flanked by a café and a restaurant by renowned French chef Jean Imbert. Exploring other hospitality options, Louis Vuitton then opened a lounge on top of its Doha airport store in 2023. The space includes designer furniture pieces, as well as a 3-star Michelin restaurant.

… Followed by other industries…

By the mid-2000s, other industries had joined in, including the automotive, beauty and banking sectors: BMW introduced fine dining at Munich’s BMW Welt in 2007. The momentum accelerated in the 2010s with a second wave of ventures. With six different restaurants, Ferrari World in Abu Dhabi (2010) proved that theme-park F&B could drive sales, while beauty label L’Occitane combined cafés and spas from 2011 onward. Financial services moved next: Capital One Cafés debuted in 2012, and American Express rolled out its Centurion Lounges in 2013. In 2016, Samsung opened its NYC flagship store, including a Stand Coffee.

… And premium and mass retail

In 2001, French lingerie brand Etam opened a now-closed 4,000 sqm flagship store in the former Samaritaine Sport building, featuring a restaurant supervised by renowned chef Alain Ducasse. Urban Outfitters’ first Terrain garden café launched in 2008. The first Muji hotel opened in 2018, followed by Maisons du Monde (which opened two hotels in 2019, in Nantes, and 2021, in Marseille) and IKEA (in Grand Canaria in 2025). In 2023, Tokyo saw the first Maison Kitsuné café. That same year, Zara opened its first café in Dubai’s Mall of the Emirates, refining the concept through 2024 with the opening of Zacaffé in Madrid, part of its premiumisation strategy.

This concise three-decade history highlights brands’ expanding ambitions—from single-brand one-time initiatives to global, data-driven ecosystems that boost customer lifetime value, foster loyalty, and deliver EBITDA margins sometimes exceeding those of their core product lines.

Between halo and headwinds: hospitality’s retail reality

Beyond the buzz: when hospitality fails

Hospitality is not a perfect world. On top of potential rising operating costs and economic downturns that refocus customers on commodities, several risks are attached to hospitality:

- Concept and customer fatigue: for example, Lexus restaurant in New York’s Meatpacking District shut permanently in January 2022 after struggling to fill seats outside the launch buzz. This shows that even a best-in-class collaboration (with Danny Meyer’s Union Square Hospitality Group) cannot offset footfall gaps if the brand story isn’t locally resonant. This also highlights the potential struggle of partnering with a different industry.

• Brand-licence fracture: Versace walked away from its 15-year branding deal on Australia’s Palazzo Versace. The resort was renamed Imperial Hotel in 2023. Even with the right partner, licence renewals can hinge on one side’s changing strategy.
• Market oversaturation: when you’re not Starbucks, how many lattes can a brand sell? Rapid café rollouts can dilute exclusivity. South Korea’s coffee shop count fell for the first time in decades, down 743 outlets YoY in Q1 2025, making it more difficult for brands to find their way in the hospitality business.
• Brand dilution: a mediocre execution can undermine the halo effect brands seek. Additionally, even successful brands in the hospitality business face challenges. Maison Kitsuné, for example, has opened 25 Café Kitsuné, which represent around 10% of the company’s turnover. While they have played an essential role in the growth and development of brand awareness, cafés are now somehow more successful than the RTW products.

From dwell time to data: hospitality as a retail growth engine

Hospitality can help non-hospitality brands exploit under-served white spaces in the customer journey (such as banking wait time or car showroom friction). For fashion retailers, hospitality touchpoints can nurture loyalty and transform into high-frequency visits between low-frequency purchases, such as those between 18 to 24-month handbag purchases. Moreover, hospitality can lead to increased customer spending. Harrods’ director of restaurants and kitchens mentioned in 2023 that they had “almost 10,000 bookings made for the Dior café in the first four days of opening. If we take the Gen Z customer, they are telling us they want to spend their money on luxury, fashion, and dining. This combination is gold.” The restaurant and café business is also a data goldmine, providing retailers with new customers and additional information, such as dietary preferences, that can feed CRM personalisation engines. Customer acquisition costs are also unrivalled compared to digital ads, as a €5 café voucher can result in new customer data and future conversion.

In the case of IKEA, restaurants represent a sophisticated retail strategy that leverages food at break-even or slight loss to drive traffic, increase dwell time, and ultimately boost sales. IKEA is essentially subsidising food costs to generate higher-margin furniture sales. Restaurants extend store visits and increase impulse purchases. The traditional shopping journey, “browse → select → purchase”, transforms into an enhanced model: “dine → browse → rest → browse → purchase → maybe dine again.” IKEA restaurants have a strategic psychological impact, too. In a somewhat overwhelming shopping environment, they reduce shopping fatigue through strategic breaks, create positive associations with the brand and transform utilitarian shopping into a leisure experience1.

Overall, brands can leverage hospitality to extend lifestyle narratives, capture higher dwell times, generate significant turnover, and build high-margin revenue streams, as restaurants can achieve approximately a 23% EBITDA, significantly above core RTW margins.

Temporary, tactile, tactical: the rise of ephemeral hospitality

A coherent hospitality concept should make the intangible brand universe sensory: scent, music, menu curation and service rituals translate logos into lived experiences. While many brands have turned this ambition into a series of café openings, how to differentiate from the crowd? Onitsuka Tiger succeeded in that mission on the occasion of their red concept opening in London’s Covent Garden in Spring 2025. Instead of opening a permanent in-store café, the brand decided to partner with a local pub, the neighbourhood staple Crown & Anchor, blending a Japanese night feeling and a British pub atmosphere. The pub was transformed for a limited time into the “Onitsuka Tiger Tavern”. The classic British watering hole was reimagined through a Tokyo nightlife lens, completed with heritage posters and a karaoke session. The usual wood-panelled pub interior was given a crimson red Onitsuka twist. Bartenders served Japanese Suntory whiskey, Wagyu tartare plates, and a Japanese take on traditional fish and chips. Instead of a permanent café, the Onitsuka Tiger Tavern will resume only for significant moments such as brand events or product launches. Communication will go through the brand’s Instagram account. Not only does it allow the brand to blend into the local environment and community, but it also avoids heavy investments in CAPEX and staff as well as potential customer fatigue.

Similarly, to better anchor itself in Paris, the Italian brand Pucci partnered with a laid-back institution in Saint-Germain-des-Prés, Bar de la Croix Rouge. The café’s awnings and terrace are adorned with one of the iconic, colourful prints until the end of July 2025. A one-night-only aperitivo hosted local celebrities and friends of the house, mixing Italian and Parisian flair.

Another interesting and unprecedented hospitality offspring initiative comes from IKEA. During July 2025, they opened their ‘Billy-othèque’ (a pun mixing Billy, the name of the iconic bookcase, and the French word for bookcase) in Paris. On the Seine bank in front of Paris’ biggest library and shrewdly positioned just 15 minutes away from their latest Paris store, a 30-metre-long open-air Billy bookcase displayed thousands of books of any kind with a simple idea based on sharing and community-building: participants gave out a book they love and left with another book that has caught their attention. Reading advisors were available to assist the public in selecting their books. Readings for the younger generation were organised every day at 4.30 pm. This initiative demonstrates how alternative hospitality formats are evolving and becoming increasingly relevant in terms of standing out from the crowd.

How hospitality reinvents department stores

Gastronomy and gross margin: when retail goes gourmet

One of the oldest examples of a retailer embracing in-store dining is the Walnut Room, which dates back to 1907 at Macy’s in Chicago. Now integral to any elevated retail experience, food offerings, and especially fine dining, have become a department store staple. The past few years have seen some interesting ventures. In 2022, El Corte Inglés became the first department store in the world to get a Michelin star for its RavioXO restaurant, opened at its Castellana store with renowned Spanish chef Dabiz Muñoz. The collaboration with El Corte Inglés continued with the opening of a second restaurant, located in the Serrano store, a few months later.

Hospitality feeds cross-selling models. Research by Harrods showed that when customers engage with their 26 restaurants and bars, they spend twice as long in the building and twice as much money. Additionally, when the Prada Caffè opened at Harrods in London in April 2023, a viral TikTok reel showcasing the cafe recorded 220,000 views within the first 24 hours of its posting, generating brand awareness and attracting customers in-store. In NYC, Printemps Wall Street’s recently opened store follows a similar strategy and dedicates a third of the space to F&B offerings. They have appointed renowned Haitian chef Gregory Gourdet as their culinary director, who has created five distinct concepts for the store, including an all-day casual café, a classic Parisian-inspired raw bar, and more. However, the most critical F&B option is undoubtedly the Maison Passerelle restaurant. It aims for a Michelin star and is considered one of the 10 most important restaurant openings in NYC in 2025.

In Summer 2025, Galeries Lafayette established an unprecedented partnership with Air France, transforming its rooftop into an aeroplane-themed dining destination, featuring Business Class menus created by three-star chef Régis Marcon and World’s Best Pastry Chef Nina Métayer. The restaurant, accommodating 20 covers both indoors and outdoors with two lunch services daily, recreated the intimate atmosphere of Air France’s airport lounges while offering panoramic views of Paris. The Air France rooftop restaurant builds upon a series of successful dining experiences. In September 2024, as it celebrated its 130th anniversary, Galeries Lafayette showcased its expertise in culinary ventures with an exclusive dining event under its iconic dome, setting a precedent for innovative food partnerships.

From retail to lodging: hotels as the ultimate brand touchpoint

Whether it’s Armani or Bulgari, luxury brands have been pioneers in opening hotels. Lately, building on its Art of Travel DNA, Louis Vuitton is adding full lodging to its now-usual “shopping + café” model. 103-111 avenue des Champs-Élysées in Paris will become a hotel again2. The 25,000 sqm block sits a door’s distance from Louis Vuitton’s current flagship at 101 avenue des Champs-Élysées. This will enable the luxury giant to open a mixed-use complex featuring an enlarged Louis Vuitton megastore on the lower floors and a luxury hotel spanning approximately 6,000 sqm. Every square metre will then become a loyalty touchpoint. If Paris succeeds, it could serve as a blueprint for further openings.

There is room and interest for department stores also to enter the hotel business, as profitability doesn’t compare, especially at a time when traditional retail is under pressure and customers are looking for experiences over shopping. FY 2024 adjusted EBITDA as a percentage of total revenue is around 29% for Host Hotels & Resorts (the largest U.S. lodging company), 30% at Hilton, and only around 8% at Macy’s Inc. Selfridges considers venturing in the hotel business. The dormant Old Selfridges Hotel occupies the block at 1 Orchard Street and 40 Duke Street, directly behind the Selfridges store on Oxford Street. The 294-key hotel shuttered in 2008 and has since been stripped back to a concrete shell used for fashion-week shows and art pop-ups. When Central Group and Signa bought Selfridges for £4 billion in December 2021, they announced that reactivating the hotel was the deal’s “significant value-upside” lever. There has not been any update on the project to date. In any case, hospitality can be an option for unused real estate and leverage new potential, as is the case with LVMH using a part of the Samaritaine store for a 5-star Cheval Blanc hotel.

Beyond VICs: when hospitality becomes a status strategy

Hospitality in department stores reached a new peak in June 2025 when Selfridges announced it would transform its 4th-floor executive offices into a members-only destination, marking a significant evolution in its customer engagement strategy. Named 40 Duke, the private club will feature an internal bar and lounge accommodating 80 covers, a private dining room and terrace with 14 covers, and an external dining terrace seating 50 people. Operating hours will extend from 8:00 am to 12:30 am, Sunday to Thursday, and until 1:30 am on Friday and Saturday, with the terrace available from 9:00 am to 11:00 pm daily. This strategic transformation of office space into a premium members’ venue reflects the broader luxury retail trend of creating exclusive experiences for high-value customers turned members, while maximising property utilisation in prime locations. Building on that perspective, IADS members could build a luxury department store network to offer hospitality membership perks to travelling VICs.

As it gives a renewed purpose to physical stores, hospitality is no longer an accessory but the new retail battleground for loyalty. The past thirty years illustrate a shift from one-off showcases to data-driven ecosystems that extend the brand narrative and drive additional business. Yet not every venture succeeds: brand dilution, oversaturation, and poor execution remain constant risks. The future belongs to retailers who can design resonant concepts that add meaning, not just margin. Whether through immersive restaurants, temporary cultural takeovers or full-scale hotels, brands that turn hospitality into a genuine extension of their identity will be best placed to capture customer loyalty and lifetime value.

Enhanced lifestyle credentials, elevated perceived value and brand equity, increased customer engagement and dwell time, and a way to differentiate from competitors. Although the ROI may not be immediately quantifiable, the impact of these hospitality-inspired experiences is a strategic investment for future retail success. For customers, it offers the convenience of multiple services under one roof, the experiences they crave, and entertainment and engagement beyond shopping.

Credits: IADS (Christine Montard)

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Retailers have spent the last decade chasing the promise of omnichannel, often equating it with being everywhere at once. But the real challenge today is not ubiquity—it is focus. The most advanced players are learning to guide customers toward journeys that create value, while reshaping their store networks into engines of proximity, trust, and fulfilment. Omnichannel is no longer just about touchpoints; it is about rethinking the very infrastructure of retail.

The IADS has published several articles on the topic, including from Dr Christopher Knee, the Association’s honorary advisor. To go further and make conceptual advances, we invited Robert Rooderkerk, an Associate Professor at Erasmus University (Rotterdam), to give IADS CEOs an idea of where research about Omnichannel stood at the time. By a fortunate coincidence, his lecture took place the very week when he published his latest article in the Harvard Business Review, When omnichannel retailers don’t deliver what customers ordered.

Rooderkerk holds an M.Sc. in Econometrics with a specialisation in logistics from Erasmus University Rotterdam and a Ph.D. in Marketing from Tilburg University – both earned with cum laude distinction. His research focuses on the intersection of marketing and operations, addressing critical challenges in omnichannel retail and retail analytics.

Drawing from collaborative academic research, insights from management journals and popular media, and conversations with practitioners across industries such as apparel, consumer electronics, grocery retail, and DIY— he offered a fresh view on the steps department stores could take to become truly omnichannel and remain competitive against specialist retailers and Direct-to-Consumer (DTC) brands.

Introduction: the new competitive reality in omnichannel retail

Today, department stores face competition from many directions. Digitally native brands are opening their own flagship stores to protect their brand and collect richer customer data. Specialists like Sephora are winning by offering very deep product ranges and seamless cross-channel experiences. At the same time, luxury online marketplaces are setting new standards for what customers expect.

In this context, department stores can’t just keep up with omnichannel capabilities—they need to use those tools to guide customer behaviour. In other words, they must stop relying only on defensive strategies and instead take an active role in shaping customer experiences that increase profitability. To achieve this, Rooderkerk suggests two angles.

The first one is to push omnichannel optimisation forward: the goal of omnichannel is no longer just connecting all channels but actually optimising them—steering customers toward the paths that are most valuable for the retailer. This can mean higher profitability, better efficiency, or progress toward sustainability. To make this work, retailers need a more precise understanding of how customers move between channels and touchpoints. The most advanced companies have gone past simply allowing every possible shopping journey. Instead, they now nudge customers to channels or combinations of channels that bring higher margins, reduce returns, or balance inventory across the network. They use data to shape behaviour through personalised offers, dynamic user experiences, and fulfilment strategies that serve business goals.

The second one is to make store networks work through smaller formats. Smaller formats are becoming strategic assets: lower cost, highly flexible nodes for last mile, localised assortments, and experiential service—especially in cities. Rooderkerk insists that store strategy and digital strategy can no longer be separated. Each store should not only be judged on sales per square metre but also on how it supports customer experience, delivery efficiency, and brand visibility across all channels.

The omnichannel evolution: moving into the optimisation stage

The term “omnichannel” is often misunderstood—if not outright misleading. Robert Rooderkerk emphasises that 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. This shift in perspective is essential.

According to Rooderkerk, the industry’s fixation on perfectly seamless customer journeys has pushed many companies into strategies that don’t make money. Removing every bit of friction can look customer-first, but if there’s no solid business reason, it becomes financially unsustainable. The goal isn’t to abolish all friction—it’s to remove friction intelligently where it supports broader strategic objectives. In this sense, omnichannel isn’t a tech spend or a tactical add-on—it’s a mindset—a mindset of continuous evolution, iteration, and optimisation.

Through a broad research effort with C-minus-one level leaders (such as heads of omnichannel, operations, and marketing) across categories from luxury to consumer electronics, in 2025, Rooderkerk outlined a maturity model that most companies are currently moving through.

Credits: Robert Rooderkerk, 2025

The journey typically begins in a fragmented, multichannel phase, where online and offline channels are siloed and serve different customer segments. This setup fell short during the COVID-19 pandemic, when retailers rushed to stand up click-and-collect using a mix of manual workarounds and disconnected systems. That time was the “experimentation” phase: it worked, but it wasn’t efficient.

As retailers progressed, they moved into what Rooderkerk calls the “ramping up” stage—scaling services like same-day or even same-hour click-and-collect, expanding geographic reach, and increasing speed. Still, most companies today are stuck in this phase or the next, known as “channel integration.”

This third stage focuses on omnichannel order orchestration—using centralised systems to choose the best fulfilment nodes, whether stores or distribution centres, based on stock availability, distance, and delivery efficiency. Yet many organisations are still held back by internal silos between digital and physical teams, with ongoing “tribal” conflicts over budgets, authority, and strategy.

The move from a channel-led to a customer-led organisation is signalled by customer journey segmentation. That means spotting and investing in the most valuable or frequent journeys based on transaction volume or customer value. Instead of trying to optimise every possible journey, the most forward-looking retailers focus on the ones with the most significant return potential.

But the most advanced retailers don’t just support these journeys, they shape them. This higher level of maturity, which Rooderkerk calls “omnichannel optimisation,” is about steering customers toward the channels and touchpoints that improve profitability or customer equity. Strategic guidance might mean encouraging in-store visits in areas where delivery performance is weak, or nudging customers away from home delivery when in-store interactions offer better upsell opportunities or long-term loyalty benefits.

Holland & Barrett, for example, uses different nudges by market to influence channel selection. In the UK, customers are prompted to pick click-and-collect with a prominent “free” message. At the same time, in the Netherlands, the highlighted benefit is sustainability—each tailored to local motivations and levels of disposable income. These nudges, Rooderkerk notes, are both low-cost and highly effective.

Fulfilment strategy is another lever. Swatch shows how simple, inventory-aware rules can avoid waste. When stock of a particular watch is low, the reservation option disappears from the site, preventing high no-show rates that tie up valuable inventory and reduce availability. This inventory-sensitive approach decreases operational friction and protects margins.

Store layout is another underused but powerful optimisation opportunity. Working with Coolblue, a Dutch consumer electronics retailer, Rooderkerk examined how the physical placement of click-and-collect points can meaningfully affect cross-sell potential. Early versions placed pickup desks near the entrance for convenience. However, that didn’t lead to additional purchases and resulted in scattered labour use. By routing certain high-value pickups—like smartphones—to spots near accessory displays, the retailer lifted cross-sell by 10 percentage points. This targeted rerouting was enabled by customer self-check-in kiosks and conditional logic, demonstrating that smart spatial design can significantly increase revenue per visit.

The last, and perhaps least discussed, pillar in this omnichannel shift is incentives, especially for ship-from-store. Rooderkerk points out a worrying 7% to 10% order cancellation rate due to insufficient inventory data or lack of store compliance. Often, stores deprioritise e-commerce orders when there are no incentives, or when picking disrupts in-store work. He has observed that without financial incentives, stores might cancel online orders to conserve inventory for themselves or to avoid additional tasks. This has clear effects: research shows that cancellations cause measurable drops in future customer spending and loyalty, even in high-frequency areas like grocery.

Solutions need to align technology with human incentives. Companies like Adidas have rolled out reward-based routing, sending orders to stores with strong compliance and fulfilment performance. Walmart and Target, for their part, are relying heavily on real-time inventory accuracy as a key routing factor. Rooderkerk’s findings show that orders sent to stores with verifiable stock availability achieve much higher fulfilment rates and customer satisfaction. Bonus systems linked to order volumes, real-time traffic signals, and available labour are additional factors being tested to fine-tune this orchestration layer.

As omnichannel optimisation turns channels into levers—nudges, routing, spatial design, and incentives—the next question is where those levers have the greatest force. That answer sits in the store network: the physical footprint that doubles as a fulfilment node, service stage, and brand amplifier. To make optimisation real at scale, retailers must decide when to open, resize, relocate, or densify. The following section explores how to architect that footprint for both growth and profitability.

Leveraging an omnichannel store network

The much-talked-about halo effect—the idea that opening stores lifts nearby online sales—is often exaggerated. Using the example of Warby Parker in the U.S., Rooderkerk notes that digitally native brands can indeed see halo effects because their stores act as showrooms, physical billboards, and trust anchors. For Warby Parker, which initially had low brand awareness and a strong reliance on showrooming, store openings served as a catalyst for growth across all channels.

However, this effect depends on context. In Rooderkerk’s research with Coolblue, which has 90% brand awareness in the Netherlands, no meaningful halo effects were observed after domestic store openings. In fact, online sales were more often cannibalised than expanded. But when Coolblue entered new markets—Belgium and Germany—halo effects did appear. This suggests that halo dynamics are most likely in low-awareness markets, where a physical presence helps build visibility, trust, and brand familiarity.

Rooderkerk also cautions against flawed internal analyses that credit all post-opening growth to the store, without isolating organic growth that would have happened anyway. He adds that misclassifying click-and-collect orders as purely online can distort how a store’s impact is evaluated, since many of these purchases depend heavily on in-store experience, upselling, and service.

Beyond opening new stores, Rooderkerk proposes a wider framework for store network strategy that includes expansion, downsizing, relocation, and densification. In particular, densification—adding smaller stores closer to high-density customer segments—is becoming a strategic frontier. Smaller formats enable retailers to target specific stages of the customer journey, reduce capital intensity, and increase proximity to key demographics.

These smaller stores can follow two main models:

• The first focuses on specific touchpoints in the journey, offering services like advice, pickup, or returns without holding full inventory. Nordstrom Local is a clear example, providing click-and-collect, tailoring, and return services in compact urban spaces. Similarly, IKEA’s “Plan & Order” stores in central Paris allow city dwellers without cars to plan complex purchases like kitchens without visiting large suburban warehouses. These locations focus solely on configuration and consultation—products are then delivered to the customer’s home.
• The second model supports the full journey within a smaller footprint. Galeries Lafayette’s store in Paris’ 15th arrondissement illustrates this approach. Although much smaller than the flagship, it offers a curated yet comprehensive assortment tailored to local families. By combining proximity with personalisation, the store increases visit frequency and deepens loyalty. For many consumers, especially families, this localised convenience reshapes their preferred shopping journey.

Designing these compact stores for high engagement requires agility. Layouts must be modular so assortments can shift quickly with seasons or trends. Rooderkerk highlights Decathlon as best-in-class: the retailer dynamically adjusts floor space by sport based on the calendar, enabled by highly flexible fixtures.

But proximity alone isn’t enough. To succeed, small-format stores must act as gateways to the broader ecosystem. Staff need training in endless aisle capabilities to access online inventory. Technologies that power smart recommendations or real-time inventory lookups can bridge physical and digital channels. However, services like ship-to-store or buy-online-return-in-store should be adopted carefully. While attractive to customers, these models carry significant cost and operational risk. Rooderkerk warns that returns, in particular, can overwhelm store teams and harm the shopping atmosphere—unless they are clearly segmented and potentially monetised through smart conversion efforts.

Deployed with rigorous measurement and clear roles, store networks become the most tangible arena where omnichannel optimisation compounds.

Conclusion: from “everywhere” to “the right where”

Omnichannel is no longer about being everywhere; it is about being decisive—prioritising the journeys that matter, removing the frictions that don’t pay, and steering customers to the touchpoints that maximise both profitability and equity. The maturity path shows that progress stalls when organisations stop at integration; value unlocks when orchestration becomes intentional, incentives are aligned, and stores are treated as precision instruments rather than blunt expansion. With rigorous measurement (including a sober view of the halo effect), role-based formats, and inventory-aware rules, the store network is where strategy meets unit economics. Retailers that iterate their nudges, layouts, routing, and incentive systems—and redeploy their footprint via relocation, downsizing, and densification—won’t merely follow customer behaviour; they will shape it, profitably. In fact, this relates to a simple truth: optimising customer journeys and reinventing the store network are not parallel projects, but interdependent levers of transformation.

Credits: IADS (Selvane Mohandas du Ménil)

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As Chalhoub Group stated during the IADS CEO meeting in Dubai earlier in 2023, Saudi Arabia stands out as one of the Middle East’s most dynamic retail markets, undergoing rapid transformation fueled by Vision 2030’s drive to diversify the economy beyond oil[1]. 

In 2024, the Saudi retail market reached approximately USD 270.8 billion, with forecasts projecting growth to USD 408.7 billion by 2033 at a compound annual growth rate (CAGR) of 4.2%. The retail landscape has shifted from a dominance of traditional souks and small traders to a more organised and modern format, adapted to the needs of an urban, digitally savvy population (83% of Saudis live in urban areas, 98% of Internet traffic is done via smartphones) and making the most of an increasing consumer spending, especially among youth, expected to account for 75% of retail spending by 2035.

E-commerce is a significant growth engine, with online retail reaching an estimated market size of USD 8.7 billion in 2023 and experiencing a 32% CAGR over the past five years. Apparel, beauty, and food and drink are among the leading online categories, with apparel alone generating USD 4.18 billion in online sales. Substantial investments in omnichannel strategies, digital payments, and experiential retail concepts further energise the retail ecosystem.

This robust growth positions Saudi Arabia as a regional retail powerhouse, attracting local and international retailers considering entering, or strengthening their positions, in KSA. Taking the opportunity of conferences in the country, the IADS visited a selection of malls in Riyadh to understand the market and how department stores are faring there. From the most traditional malls (Olaya Mall, Panorama Mall), to the more Dubai-like (Cenomi Nakheel Mall), luxury-oriented (Al Faisaliah, Kingdom Centre, Solitaire), and experiential (Via Riyadh) ones, it is clear that there is room for the unity of space, supply and time that the department store format offers, much more than just for Harvey Nichols Riyadh and Al Rubaiyat.

Olaya Mall, Panorama Mall: two very different ways of being “traditional” 

Olaya Mall is located in Riyadh's bustling Al Olaya district, a central business and retail hub of the Saudi capital which also includes the Kingdom Centre, just across the road, Al Rubaiyat, a fashion and lifestyle department store, and, a little further, Al Faisaliah mall (where Harvey Nichols is located) and the Panorama mall (where Etre, a fashion and luxury multi-brand store, is located).

Launched in 2000 by the AlMogren group, it was the first mall in Saudi Arabia to introduce international brands in the city, two years before the Kingdom Centre. It is now recognised for its family-friendly atmosphere, offering an appropriate environment for shopping and dining. It has a large food court that includes a mix of local and international fast-food chains, dedicated children's play areas, and shops that mostly showcase women’s apparel.

While, in theory, the mall benefits from its proximity to luxury hotels and business centres, making it accessible and attractive to locals and tourists, its current state and design make this unlikely.

Although the building remains pristine, its dated design betrays the era in which the mall was conceived. Several tenants wisely operate double façades—opening both to the parking lot and the interior concourse—but the shopfronts march down unbroken, monotonous corridors with no pauses for surprise or variety. Almost every retailer sells one thing—women’s dresses—so the offer has narrowed over time, appealing to a single product category and a single audience. The result is a mall frozen in the early phase of Western-style retail in the Gulf, a stark counterpoint to the more progressive Kingdom Centre just across the road.

Located 10 minutes away by car from Al Olaya, and a stone's throw from the King Khalid Grand Mosque, Panorama Mall represents another way of looking at tradition in the mall business. It was opened in 2010 on 130,000 sqm, developed by Mohammad Al Habib (a real estate company founded in 1972 with a track record of 50 projects in KSA) for the account of Aswaq Almustaqbal Company, the owner until 2020, when all stakes were sold to Borouj International Company for €23m. Leasing company Hamat Holding, is managing the property.

Panorama Mall is known for its panoramic facade, reinforcing its status as a visual landmark. The retail mix at Panorama Mall is robust and diverse, featuring over 200 stores that cater to a broad audience: luxury brands such as Louis Vuitton, Gucci, Chopard, and Rolex share the space with high-street names like Zara, H&M, and Marks & Spencer. Speciality boutiques and high-end jewellers enhance the shopping experience, while the presence of the Danube Hypermarket, Jarir Bookstore, various electronics and home décor complete the offer.

What makes it unconventional (and, from our point of view, exaggerated) is the amount of space dedicated to experience[2]. While every retailer in the world knows the value of such space these days, Panorama Mall offers an experience on steroids: not less than 7,325 sqm is dedicated to one of the region's largest Sparky’s indoor amusement parks, attracting families in crowds. The mall also houses an AMC cinema and a food court oriented towards international fast food, conveniently located near the amusement zone. As a consequence, while such a heavy focus on family entertainment creates an sizeable traffic, it also seems disconnected from some parts of the mall, such as the luxury section with surprising adjacencies (Dior near Steve Madden, Chanel near Tumi), not to mention Etre, a multi-brand store that used to be fashion oriented and which now only focuses on home.

Panorama’s ambition mirrors its façade: broad, impressive, but unfocused. Families flock to Sparky’s, teens queue for AMC blockbusters, and luxury shoppers weave past sneakerheads under one roof that tries to please everyone. Yet history has shown that malls that trade distinction for dilution eventually lose both edge and audience. Panorama Mall may still glitter in 2025 Riyadh, but without a more deliberate point of view, it could be rehearsing the very script that closed so many U.S. anchor stores before the final curtain fell.

Olaya and Panorama stand side by side in this “traditional mall” section because—despite their opposite tactics of monotony versus maximalism—both cling to the same first-generation, one-size-fits-all template that newer retail formats have already begun to abandon.

Raising the bar: Cenomi Nakheel Mall  

Opened in 2014 by Arabian Centres (a Riyadh-based real estate company, developer, owner, and operator of shopping malls in the Middle East trading under the Cenomi Centres brand), Al Nakheel Mall rapidly became a local reference. In 2015, the mall received awards from the International Council of Shopping Centres (ICSC) in the New Media/emerging Technology Marketing and Design and Development categories.

Cleverly situated along major roads leading into Riyadh and relatively far away from the Olaya catchment zone (which is crowded with four malls), Al Nakheel Mall attracts more than 200,000 visitors weekly, including many Riyadh residents, thanks to its visitor-friendly, single-level design spanning 370,000 square meters as well as a location ensuring easy access by car or private car services like Uber or Careem.

The mall's architecture is noteworthy for its walkways and design, which incorporate open spaces and intimate corners, allowing for a comfortable shopping experience. Accessible through eight gates, it is composed of two large wings, hinged on a central food court (relatively smaller than other malls). It includes family activities on the first floor: Muvi Cinemas, Sparky's, and Playnation playgrounds. The wings, which are inviting and perfectly maintained, are large enough to have stands in the middle, either for small accessories or refreshments.

The retail space boasts a selection of high-end luxury brands such as Chanel and Gucci, alongside popular international chains like Zara (located in a spectacular and central store) and H&M and a surprising array of Turkish brands (LC Waikiki, Kahve Dünyası…). Overall, the offer is lifestyle- and aspirational-oriented, and complete with experiences (a Jamie Oliver cooking school or an Australian restaurant).  Essential services such as banks, pharmacies, and customer service desks further enhance its functionality and visitor convenience.

Despite a significant number of hoardings hiding empty units, the mall felt crowded during the visit, and many shopping bags were in sight. Compared to the two previous malls, this one felt modern, well-curated, and organised, competing with other successful regional generalist malls[3].

Going upscale: Kingdom Centre, Solitaire, Al Faisaliah 

The Kingdom Centre, a symbol of modern Riyadh at the heart of the city in Olaya, was designed by Ellerbe Becket and completed in 2002. It is an iconic structure distinguished by its almond-shaped tower, which reaches a height of 302 meters, making it one of the tallest buildings in the city (and the third-tallest building with a hole worldwide). The tower's design is characterised by an inverted catenary arch, capped by a glass skybridge that offers panoramic views of Riyadh.

This mixed-use complex includes commercial, residential, and retail spaces. The tower comprises office spaces, a five-star Four Seasons Hotel, and luxury residences. It also includes the King Abdullah Mosque on the 77th floor, the world's highest mosque from ground level. At the tower's base, two symmetrical wings extend east and west, encompassing landscaped public gardens and a mall that spans 56,000 square meters across three levels.

This mall is a key feature of the complex and was inaugurated in 2001. It houses 161 stores, including a wide range of luxury brands, with a general design meticulously tailored to an affluent clientele. Interestingly, while in the past the mall housed a Debenhams and a Saks Fifth Avenue store, both of which closed a long time ago, only mono-brand stores are present, without any non-luxury anchor. During the visit, the mall was being revamped with quite a number of hoardings hiding units and part of the structure. Another notable feature is the food court on the top floor, “Al Mamlaka Social Dining”, where customers must pay an entry fee.

Solitaire, located in another catchment area up north in the city (near the Kingdom Hospital and the Financial District), is a new multi-use lifestyle complex covering over 65,000 square meters. Inspired by a geode, its design features an angular stone façade that evolves into a crystalline interior, creating a striking experience.

The complex includes three aboveground levels dedicated to retail, food and beverage, entertainment, wellness, and sports and three levels of basement parking. This layout caters to a diverse clientele, including high-net-worth individuals and expatriates living in nearby residential compounds. The North Plaza features fast-fashion brands, casual dining, and entertainment, while the South Plaza focuses on luxury retail and fine dining.

Sustainability is integrated into the mall design through wind towers for climate control, using mechanical fans to circulate air and offering a passive cooling solution. Similarly, water features, including misting elements, contribute to a cooler environment. Therefore, it is unsurprising that such a commitment has encouraged the Chalhoub Group to team up by bringing in a selection of luxury brands it operates in joint ventures, including Loewe, Celine, Fendi, or Tiffany & Co.

The most surprising during the visit was the fact that, even though almost no boutiques were open by then, with scaffoldings in the middle of the passageways and a strong smell of glue, the mall was already crowded with passers-by and customers sitting at the few restaurants (including French Paris Society brand Perruche) and cafés already in operations (including Ladurée, Patchi or luxury chocolate maker Bateel). While the opening date was set for a few weeks later, locals explained that this showed the enthusiasm of the KSA clientele for new experiences and places (also suggesting that this enthusiasm can wane as fast as it arrives).

Interestingly, both Kingdom Centre and Solitaire share a notable characteristic distinguishing them from traditional mall developments worldwide: the absence of department store anchors. While these destinations excel in creating immersive luxury environments through curated mono-brand boutiques and experiential elements, neither has incorporated the retail stability of flagship department stores or hypermarket. This choice reflects a local retail aspect but may also present challenges for consistent foot traffic beyond the initial excitement.

This is not the case at Al Faisaliah Mall, not far from Kingdom Centre. After a brief stint as Mode Mall, it re-emerged under its original name to align with Saudi Arabia's Vision 2030. The mall covers a retail area of 35,600 square meters within the Al Faisaliah Centre complex. This mixed-use development also houses the 267-meter Al Faisaliah Tower (for a moment, the tallest in the country, before losing its crown to Kingdom Centre) and a five-star Mandarin Oriental hotel, which is directly connected. The mall's architectural design, crafted by Foster + Partners, emphasises modern aesthetics with a glass atrium offering panoramic city views across three levels.

A major point of differentiation is that the mall houses a Harvey Nichols store in addition to the usual brands (see below). The mall was painstakingly empty during the visit.

A completely different experience: VIA Riyadh 

Welcome to another planet! VIA Riyadh is a mixed-use development located far from all the other locations, adjacent to the Ritz-Carlton hotel, and includes a St-Régis hotel. This complex, inaugurated in Q2 2023, combines high-end retail, hospitality, and entertainment facilities, using local stones and drawing inspiration from the Nadji architectural approach.

The exterior of VIA Riyadh is striking, with architectural elements that evoke a sense of grandeur and opulence. The development is conceived as a fort-like structure or a mountain, with spectacular buildings that create an impressive visual impact upon arrival. Inside, the design maintains this high level of quality, featuring multiple distinct spaces that are large and elegantly staged.

VIA Riyadh is not about scale, but experience. At its heart is MWAZ, a spectacular multi-brand concept store displaying niche and rare brands. The store has high-tech displays and screens that contribute to its avant-garde presentation.

In the rest of the mall, the retail section only features 25 upscale shops, presenting international and local brands (from Brandon Maxwell to Elie Saab), art galleries (Richard Orlinski,  Phoenix Ancient Art), a robust dining scene of 17 restaurants (including UK's Sexy Fish, US’ Spago, and the French Les Deux Magots) and seven cinemas each offering unique thematic experiences. The -1 level houses a car lounge showcasing brands like Ferrari and Porsche, a concierge service, and the Via Mercato luxury food market.

VIA Riyadh is designed as a human-scale luxury mall, creating an experience centred around relaxation and high-end retail. The absence of a dominant anchor store, apart from Zegna and MWAZ, emphasises a curated approach to luxury shopping. However, questions remain about the foot traffic and how the destination qualifies its market appeal, given its location outside the city near gated compounds. The place was empty during the visit.

And what about department stores? 

While malls are omnipresent (up to 18 in Riyadh only), the department store format is not that common.

Harvey Nichols at Al Faisaliah Mall is the most prominent representative of this format. As visitors enter the mall, they are greeted by a prominent storefront featuring large display windows and calls to action for click-and-collect. This creates an inviting entrance adjacent to brands like Boss and Cartier.

The ground floor is dominated by a strong emphasis on fragrances, with a series of branded concept stores dedicated to perfumes. Visitors encounter a tunnel-like layout where brands such as Dior and Guerlain are creatively interwoven, a rarity.

The basement level was undergoing renovations at the time of visit. The first floor displayed a well-curated selection of women’s RTW brands within a concept unique to Harvey Nichols. The RTW area is divided into two main sections near the escalator, offering a luxurious ambience akin to an apartment setup, transitioning smoothly into a more generic yet well-executed section. This area features a selection of high-end brands, stopping just short of ultra-luxury. A dedicated zone for local designers presents shoes and accessories, though this section remains underdeveloped compared to others.

On the second floor, the focus shifts to children's luxury multi-brand concepts and leisure activities. This includes kid’s brands not featured in the women's sections. The central sale areas are effectively designed, with the athleisure zone featuring brands like Veja and Axel Arigato, a corner displaying The Edit LDN concept (an original Harvey Nichols London feature), and a transition into home goods and streetwear collections. Nearby, the men's section is somewhat compact, featuring a concept store, sneaker laundry, design area, and a t-shirt bar towards the back, all looking cluttered. Probably due to space issues, an area on that floor is dedicated to a couture-like women's RTW salon, complete with shoes, bags, and dresses from brands such as Oscar de la Renta. The store becomes somewhat chaotic toward the back, with a t-shirt bar adding to the eclectic mix.

While the store was impeccable during the visit, it was also very empty, with VM employees ironing products on the sales floor and staff dressed casually, which fostered an approachable atmosphere but could also lead to confusing them with visitors. The omnipresence of promotional material for online shopping and up to 60% discounts also suggested that the business was not so fluid.

Al Rubaiyat is a concept standing halfway between the department store format and a concept store, and is located across the road in front of Kingdom Mall. Originally a company from Jeddah, Al Rubaiyat opened the Riyadh location in 2019, spanning 2,100 sqm, with a concept crafted by Virgile + Partners. It focuses primarily on luxury womenswear, showcasing brands such as Gucci, Balenciaga, and Saint Laurent.

A notable security measure was immediately apparent upon entering: a guarded entrance where customers had to leave their bags (a feature not seen elsewhere during the visits). The heightened security measures suggested a proactive stance on preventing theft, which may reflect broader concerns about inventory loss or a strategic effort to enhance the shopping experience by ensuring a safe and orderly environment.

The store was in the midst of a sales event, as indicated by the ubiquitous sales signs and densely packed clothing racks. The store layout was somehow confusing, with kids' offerings intertwined with women’s RTW and the dressy part upstairs and quite visible: anyone looking for evening gowns would be immediately spotted by other visitors.

While the store was beautiful, it also felt packed with products and only crowded with hostile salespersons more occupied with preventing theft than offering their services. While the timing may not have been the best (at the end of the day), this visit was the most unconvincing of the whole tour.

It seems that Riyadh’s two flagship department-store experiments (Harvey Nichols and Al Rubaiyat) expose both the promise and the peril of a retail format that has not yet truly taken root in the Kingdom. Each strives for curated luxury, yet both compensate for thin footfall with deep markdowns, dense merchandising, and conspicuous security in Al Rubaiyat’s case. The result is a shopping experience that feels more guarded than guided, more promotional than aspirational.

Today's Riyadh retail landscape is defined by malls that either cling to the comfort of tradition or chase the latest trends with maximalist ambition. Across the spectrum—from the single-category monotony of Olaya Mall, to the entertainment-driven sprawl of Panorama Mall, to the carefully curated luxury of Kingdom Centre and VIA Riyadh—a common thread emerges: the absence, or underperformance, of true department stores as anchor retail experiences.

The limited experiments so far—Harvey Nichols and Al Rubaiyat—have only scratched the surface of what a department store could mean for Riyadh. Both stores display flashes of curation and aspiration but are hobbled by a reliance on deep discounts, dense merchandising, and a guarded, transactional atmosphere. Far from the bustling, service-rich hubs in other world capitals, these stores remain peripheral, their value yet to be fully articulated or realised.

Yet, beneath the surface, the opportunity remains. While Saudi shoppers have grown accustomed to the convenience and spectacle of malls, the department store format—when reimagined—offers something that no mall or boutique can replicate: an all-under-one-roof experience built on true curation, seamless service, and coherent storytelling across categories and brands. In an environment where retail destinations either dilute their identity or fragment their offer, a department store with a clear point of view can become an oasis of discovery, personalisation, and hospitality.

For a new generation of Saudi consumers—curious, globally connected, and eager for differentiated experiences—a department store that embraces curation, brings together international and local brands, and delivers best-in-class services (from personal shopping to seamless omnichannel integration) could unlock a form of value they do not yet suspect. It is not about nostalgia but anticipation: meeting needs and desires that have yet to be fully expressed. We believe that in Riyadh, the space is still open for a department store that dares to define itself, not by what has been tried and failed, but by what has not yet been imagined.

[1] Vision 2030, launched in 2016 under the leadership of Crown Prince Mohammed bin Salman, is the country’s flagship development plan. It is a comprehensive blueprint aimed at transforming Saudi Arabia’s economy, society, and government, and is structured around three main pillars: a vibrant society, a thriving economy, and an ambitious nation. The plan includes 96 strategic objectives, focusing on economic diversification, reducing dependence on oil, empowering citizens, fostering investment, and enhancing the Kingdom’s global role.

[2] And yet, the IADS is a fervent supporter of experience in retail.

[3] Cenomi Centres is not a rookie: the company operates 22 malls in KSA, including the Mall of Arabia in Jeddah and the Mall of Dharan among the most iconic ones alongside Nakheel Mall Riyadh.

Credits: IADS (Selvane Mohandas du Ménil)

PRINTABLE VERSION HERE 

The formation of Saks Global in July 2024 was positioned as a landmark moment in luxury retail, a merger meant to give Saks and Neiman Marcus dominance in a shrinking department store business. Backed by tech allies Amazon and Salesforce, and reinforced by a partnership with Authentic Brands Group, the deals promised operational synergies, expanded customer and brand reach, and digital acceleration. So much has happened since then, and behind the headlines lies a more fragile reality. What was touted as a strategic move may, in fact, be a high-stakes gamble with a limited margin for error.

At the time of the merger, the IADS took stock of the freshly minted Saks Global company. A year or so later seemed to be the right time to pause and reflect on Saks Fifth Avenue’s history, a history marked by mergers from its inception in 1867 to its struggles in 2025.

A store is born: The foundations of Saks  

Innovation, family legacy, and the first major merger that shaped Saks 

In 1867, at the age of 20, Andrew Saks and his brother opened a men's clothing store in Washington, D.C. Early on, the small company implemented what would be recognised as department store innovations, such as banning bargaining, merchandise returns, and product catalogues. By 1897, Saks & Company had six stores, including one in Washington and two in New York City. In 1902, while Andrew’s sons, Horace and William, had joined the family business, they secured a long-term store lease at New York’s Herald Square. When Andrew died in 1912, Horace took over management of the company.

In 1923, Saks & Company merged with department store company Gimbel Brothers, Inc., which was owned by Horace’s cousin, setting the stage for future expansion. Having their Herald Square store rent doubled, Horace Saks and Bernard Gimbel decided to relocate their business. In September 1924, they opened New York’s iconic store at 611 Fifth Avenue, marking the first time a large retailer had established a presence in what was then primarily a residential district. Adam Gimbel (Bernard’s cousin) took over the leadership from 1926 when Horace Saks died. In 1931, a couture salon opened its doors, Salon Moderne, which soon ranked among New York’s most glamorous retail spaces. Ran by talented Adam’s wife Sophie, the salon sold her in-house designs alongside fashion from Chanel, Vionnet, Schiaparelli and more. By offering the finest quality, as well as an extraordinary programme of customer services, Saks Fifth Avenue soon became the reference for taste and elegance.

During the Great Depression, Saks proved relatively resilient thanks to its luxury positioning and the instalment options offered to customers, then a common practice among department stores. These challenging times also triggered innovation. Adam Gimbel revolutionised retail presentations by implementing creative solutions. New display techniques were introduced, along with cost-cutting practices such as using cardboard and papier-mâché instead of wood, stone and metal.

By 1940, Saks Fifth Avenue had 12 locations: four flagship stores (in New York, Chicago, Los Angeles’ Beverly Hills and Detroit) and seasonal resort stores. During World War II, in response to changing customer needs, Saks opened Navy and Army shops, which later evolved into University shops after the war, catering to the Ivy League communities.

The mall era and corporate hands 

From the 1950s, the shift from downtown shopping to suburban shopping malls gained momentum, opening a new chapter for the department store. Saks Fifth Avenue's first mall location opened in 1954, at The Galleria in Fort Lauderdale (Florida). Twenty new stores opened between 1972 and 1989. While a few of the new suburban stores were still freestanding in suburbs that had a significant downtown shopping district, dozens of new Saks stores opened in malls until the 1990s.

In 1973, Saks & Company was acquired by tobacco conglomerate B.A.T. Industries PLC, forming the Batus company to run US retail operations. Implementing efficiency policies, Batus also financed store modernisations. In 1979, Saks announced that the flagship store would be remodelled, including the installation of the store’s first escalator, marking the first significant renovation in the store's history. Then, a proposal for an adjacent 36-story mixed-use tower was presented by a joint venture of Saks and Swiss Bank Corporation in 1986. Completed in 1990, the store’s selling floor was expanded by nearly 30% through the first nine storeys of the tower, the other floors allocated to offices. Also, under Batus management, Saks launched Saks Off 5th in 1990, an off‑price concept aimed at monetising clearance merchandise without compromising full‑price sales. Finally, as summarised by The New York Times in 1982, “by hiring highly qualified merchants at high salaries and allowing them free rein, Batus has scored a success at Saks Fifth Avenue, where profits have largely improved after a prolonged slide in the late 1960s and early 1970s.” That said, Batus was a mixed success for B.A.T., as Gimbels struggled.

In 1990, affiliates of Bahrain‑based Investcorp S.A. and a group of international investors acquired Saks & Company. In 1994, to intensify its presence on the West Coast, the company acquired four former I. Magnin luxury department stores in Beverly Hills, Carmel, San Diego and Phoenix. In 1996, Saks became a public company as Saks Holdings, Inc. Public equity provided a currency for the 1998 merger with Proffitt's, Inc., a Tennessee‑based department store. The resulting entity, renamed Saks, Inc., briefly oversaw 330 stores under nine flags.

A century turns, and so does Saks: dot com, financial woes and more mergers

In 2000, Saks launched Saks.com and expanded its presence internationally, opening stores in the Middle East and Mexico. In 2008, the global financial crisis struck with force. While retailers were already discounting merchandise, no one thought luxury brands would be included in this frenzy. Saks decided to cut prices on designer clothes by up to 70%. The strategy helped Saks reduce excess stock, but it took three years before the company could resume selling at closer to full price. Management used this issue as an impetus for structural change, including tighter inventory management and the establishment of the invitation-only Fifth Avenue Club, completed with private lounges and concierge services.

In 2013, Hudson's Bay Company (HBC) acquired Saks, Inc. for US$2.9 billion, marking another significant change in ownership and paving the way for synergies between its own banner and Saks. HBC Chairman Richard Baker announced the group would open up to ten Saks stores in Canada and more than twenty Saks Off Fifth outlet stores. In the end, only three full-price stores opened, whose operations were shut down in 2025 when HBC Canada went bankrupt. In 2015, Baker also launched a US$250 million project to reimagine the Fifth Avenue flagship, elevating the luxury experience.

In 2021, HBC separated Saks Fifth Avenue’s e-commerce operations into a standalone company named Saks, in partnership with Insight Partners, bringing $500 million from venture capital. The move splits the 40 physical stores from the online sales channel, aiming to position better Saks.com to compete with digital competitors. However, the move raised questions about the very relevance of such a split. The initial idea was based on a financial reasoning that Saks.com could go public at six times revenue, an idea immediately pushed by activist investor Jana Partners at Macy’s. Whatever the strategy was worth, it overlooked the role physical footprint plays in driving online sales.

In July 2024, HBC disclosed that it would acquire the previously bankrupt Neiman Marcus Group at a US$2.65 billion price tag (including debts) and fold its assets into a newly formed holding called Saks Global. Last episode of the Saks series for now, in October 2024, Authentic Brands Group (ABG) and Saks Global announced they would build a $9 billion luxury ecosystem through their new venture, Authentic Luxury Group (ALG), which is expected to account for approximately 60% of luxury distribution in the US.

Saks Global: Big bet, bigger risks 

What the deal promises in scale, synergy and innovation 

Considered inevitable to some and mainly driven by the need to consolidate market share in the face of the ongoing department store contraction, the Saks-Neiman Marcus landmark deal is one of the most significant mergers in the luxury retail sector in recent years, at a time when the retail industry is at a crossroads, facing changing consumer habits, digital transformation, and economic pressures.

Hence, in 2024, the merger could be seen as a strategic move to strengthen further the companies’ ability to compete against both traditional rivals, such as Bloomingdale’s and Nordstrom, as well as platforms like Net-a-porter, Farfetch and MyTheresa. By combining resources, inventory, and customer data, Saks Global would enhance both its in-store and online offerings, streamline operations by integrating technology platforms and logistics networks, eliminate duplicative roles in commercial, finance, operations, human resources, technology, and transformation teams, and negotiate more favourable terms with vendors. When it comes to real estate, the merger could optimise the store portfolios for better competitiveness and margins, potentially leading to the monetisation of overlapping locations in major cities.

Additionally, the move was expected to position the company to better adapt to the ongoing digital transformation, bringing significant financial resources and technological expertise to the new entity. Amazon and Salesforce’s minority stakes would leverage technology to modernise operations and compete in luxury e-commerce. Central to Saks Global strategy is the rollout of AI-powered personalisation, designed to create highly tailored shopping experiences across both digital and physical channels. Early results showed significant improvements in conversion rates and revenue per visitor, validating the group’s investment in advanced data analytics and machine learning. In August 2025, Saks partnered with AWS to launch Sophie, an AI-powered virtual voice assistant that handles customer inquiries while reducing agent call volume by 20%.

The merger was also said to offer other strategic advantages. Neiman Marcus attracts more affluent customers (median income is $112,800 vs. Saks' $102,900) and has access to more family-oriented shoppers (26.2% vs. 23.7% of households with children).

The merger was also said to offer other strategic advantages. Neiman Marcus attracts more affluent customers (median income is $112,800 vs. Saks' $102,900) and has access to more family-oriented shoppers (26.2% vs. 23.7% of households with children).

The price of consolidation: Why vendors, shoppers and analysts remain unconvinced 

However, the merger raised concerns due to the differences in branding, clientele, and business models between Saks, primarily operating through concessions and moving further away from wholesale, and Neiman Marcus, which is more wholesale-focused. Brand differentiation appeared as a challenge, as the suggestions to reposition Saks as ‘accessible luxury’ and Neiman Marcus as ‘true luxury’ seem risky. Additionally, although a payroll decrease was on the table during the merger, the significant layoffs, particularly at Neiman Marcus’ Dallas headquarters, made headlines. Finally, with some Saks and Neiman Marcus stores close to each other and serving the same customers, deciding which ones should survive will be challenging, and exiting leases may be more costly and complex than anticipated.

Mounting challenges are exacerbated by the luxury slowdown:

• Saks Fifth Avenue sales fell 16% in Q1 2025, and combined Neiman Marcus and Bergdorf Goodman sales dropped 10% while Bloomingdale's saw 10% growth. Operating in the more favourable accessible luxury price bracket, underlying growth, Nordstrom and Bloomingdale’s have upped their game with new brands, installations, events and services designed to entice.
• Saks faces vendor payment issues for months, with $275 million in overdue bills. CEO Marc Metrick assured vendors that overdue payments would be settled in 12 instalments starting July 2025. New payment terms were announced (90 days from the receipt of inventory for all future orders), causing tension with suppliers, some pausing shipments and others filing lawsuits. However, in August 2025, many suppliers remained unpaid. These methods raise concerns among Neiman Marcus suppliers, putting at risk the stores' procurement as it diverges from the industry-standard 30-day payment terms.
• Customer service has deteriorated, with increasing complaints about damaged deliveries and delayed refunds, coinciding with significant cost-cutting measures.
• The company's attempts to streamline operations through store closures and workforce reductions have further complicated its market position.
• Recent financing efforts highlight ongoing liquidity concerns.
• Last but not least, luxury brands, the very essence of both department stores, are wary of Amazon's involvement.

Now what: Saks' balancing act 

Mounting debt, risky financing 

Saks is in a weak financial position. The company borrowed heavily to fund the acquisition of Neiman Marcus, and it now faces a cash crunch. In May 2025, the company had secured $350 million in financing to stabilise its operations and cope with interest payments. But mounting pressures have required additional funding, especially as Saks recorded a US$100 million loss in FY 2024. No later than June 2025, Saks secured a new $600 million debt arrangement with existing lenders, providing an immediate $300 million loan, with potential for an additional $300 million through a debt exchange. Also, the company's bonds have faced significant pressure, trading at record lows of 34.5 cents on the dollar, reflecting market concerns about its financial stability. In July 2025, the company's financial weakness led to a credit rating downgrade from S&P Global Ratings from CCC+ to CC and concerns about its $600 million financing transaction. S&P believed the company’s market position would further weaken, as illustrated by the new downgrade to CCC- in September 2025. Additionally, interest expense to cover the debt loan is expected to reach approximately $400 million over the next 12 months, which will come on top of overdue payments to vendors and new merchandise, S&P said. A reason enough to announce just days later that the company considers selling a stake in Bergdorf Goodman to inject much-needed capital and restore confidence among stakeholders. However, the sale might be challenged by the fact that only the retail operation, not the Fifth Avenue property, is considered.

When it comes to cost saving, the company projected $600 million in annual synergies over five years, with $285 million expected by the end of fiscal 2025. Illustrating this, Saks Global transitioned from four different purchase order and supply chain systems to one in early September 2025, marking a first and significant streamlining effort. However, the handover resulted in $110 to $180 million in cancelled orders, with no assurance that they can be fulfilled during the critical holiday period.

How brand reductions threaten Saks’ fashion credibility 

In May 2025, Saks announced plans to eliminate 500 to 600 brands while increasing focus on strategic brand partnerships and aiming to achieve 20% of sales from higher-margin private label products. This reduction will include brands that Saks is dropping, as well as those that choose to discontinue their relationship with the retailer. While it makes sense to increase the private label share, eliminating brands can put the assortment diversity at risk. A product offer rationalisation is probably needed, but Saks must maintain the retail diversity, flair, and excitement that luxury shoppers need, with curated assortments mixing emerging labels and established global brands. Additionally, delayed vendor payments make this crucial requirement increasingly difficult to fulfil, as independent and small brands are particularly affected, many of which are lacking the cash reserves to absorb payment delays.  

Trading prestige for volume 

Reflecting the company’s current weakness, Saks let Nieman Marcus’ super personal shopper to the stars, Catherine Bloom leave for Nordstrom, probably taking more than $10 million in revenues with her. She is set to launch an innovative 350 sqm Catherine Bloom for Nordstrom private shopping destination in Los Angeles’ Melrose Place, bringing her eight-person team and decades of luxury retail expertise with her. In September 2025, veteran shoe force Will Cooper exited the company.

Also, Saks has undercut its status as a luxury player by partnering with less premium retail partners. Not only has Saks created a presence on Amazon, but the company has plans for the Saks men’s private brand to debut at Costco (with plans to extend to women's), raising concerns about brand dilution and questioning whether customers will continue to shop high-end brands at Saks when the nameplate is available at Costco. The deal emerges from Centric Brands, a division of Authentic Luxury Group, which will oversee the development and production of the Saks-branded merchandise for Costco. This move may weaken long-term strategic positioning at a time when Saks should allocate resources towards innovation and a clear brand story.

Authentic Luxury Group: A beacon of hope? 
Authentic Luxury Group aims to expand luxury brands like Hervé Léger, Judith Leiber Couture, Vince and Barneys New York globally. The latter should see the rollout of retail locations or in-store shops, expansion of existing brand categories, and wider distribution both in the US and abroad. Besides luxury retail, Authentic Luxury Group plots hospitality, travel, experiences and entertainment, reflecting a broader shift in luxury as fashion volumes decline. While this diversification becomes essential to generate new revenue streams beyond apparel, the project leverages the partnerships with Amazon and Salesforce to scale both online and offline. Also, Authentic Luxury Group could help shift power from vendors to retailers, driving higher margins, tighter control, and exclusivity. In May 2025 at the World Retail Congress, Authentic Brand Group CEO Jamie Salter and Saks Global chairman Richard Baker emphasised distribution, data, and customer experience as cornerstones of growth.  


Barely a year into its new chapter, the newly consolidated Saks Global stands in a curious position, being both a 158-year-old institution and a new experiment in platform retailing. While most retail mergers (50%+) fail outright, this one is, to some, a ‘last man standing’ strategy rather than visionary merchant leadership. Saks Global finds itself on unstable ground, with media coverage amplifying challenges that often overshadow the company’s strategic ambitions and fuel scepticism about its future. While Saks' history is a succession of mergers, consolidation alone doesn’t guarantee customer loyalty and credibility with brands. Neither does it guarantee the survival of merging companies, as exemplified by Proffitt’s locations ultimately converted into Belk stores, for example. Also, efforts to chase volume with Amazon and Costco risk undermining Saks’ luxury positioning at the very moment it needs to reinforce it. Whether it can move from survival mode to market leadership will determine if Saks Global becomes a new blueprint for luxury retail, or just another cautionary tale of overreach. Too big to fail or not, the actual test begins now.  

Credits: IADS (Christine Montard)

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CLICK HERE TO SEE PHOTOS OF MECCA

Mecca is an Australian beauty retailer founded in 1997 by Jo Horgan, a former executive at L’Oréal. Privately owned by the founder and her husband, Mecca operates 110 stores, serving over 4.5 million customers annually and employing 7,000 people as of 2025.

The company doesn’t disclose sales figures but says it has grown tenfold since 2017. A 2022 IBIS report estimated Mecca’s revenues to be approximately equivalent to €580 million. Other industry sources estimate revenue to be around €865m.[1] According to WWD’s BeautyInc, Mecca continues to outperform the overall market in Australia and is expected to end 2025 with around €1 billion in turnover. Horgan says Mecca’s growth rate is three times higher than the 2024 Australian prestige beauty market, which posted a 3% year-over-year growth.

Succeeding in maintaining its pole position in the market despite Sephora's power and means to develop in Australia, Mecca is an interesting company in its own right. The retailer also has more outlets than the two leading Australian department stores combined, David Jones’ and Myer’s 100 stores. Said to be the world’s biggest standalone beauty store, the recent opening of Mecca’s new flagship store in Melbourne (pics attached) is an opportunity to understand more about the retailer’s success.

1997 and beyond: the making of a beauty powerhouse

Brand-agnostic store from day one: Mecca’s original edge

In 1997, Horgan had identified a gap in the Australian beauty market. As was the case in many regions, beauty retail in Australia was dominated by department stores, where cosmetics were sold through brand counters. Similar to the Sephora concept, Horgan’s idea was to create a multi-brand beauty store where customers could browse freely, receive unbiased recommendations, and access a curated selection of international prestige products not otherwise available in the market. To this day, this remains a strategic goal for some department stores and beauty retailers alike.

Dubbed Mecca Cosmetica, the first store opened in Melbourne in 1997. From its inception and mirroring Sephora’s early days, Mecca was remarkable because:

• It positioned itself not as a traditional retailer but as a beauty authority, staffed with trained advisors who were not tied to specific brands. This was an early expression of the brand-agnostic ethos that would later become a hallmark of the company.
• It pursued exclusive distribution agreements with high-profile global brands,[2] giving Mecca a unique positioning in Australia. These exclusivities not only differentiated the store’s offer but also created a strong sense of discovery.

From dotcom to own brand: a pioneer strategy

By 2001, Mecca had launched its first e-commerce platform, making it a pioneer of online beauty retail in Australia. This early digital move predated Sephora's entry into the Australian market by more than a decade. It signalled Mecca’s ambition to combine physical and digital channels long before omnichannel retail became mainstream.

In 2003, the company introduced its first private label brand, Mecca Cosmetica. Interestingly, unlike Sephora’s own brand, which targets a mass-market price point, Mecca positioned its private label closer to the premium segment.[3] Besides increasing margins, it reinforced Mecca’s positioning as a beauty expert and tastemaker.

During this period, Mecca gradually expanded beyond Melbourne, opening new locations across major Australian cities. By the mid-2000s, it had established itself as a national player, developing its presence in prestige shopping districts rather than mass-market malls. In 2007, Mecca expanded internationally for the first time by entering New Zealand, with stores in Auckland and Wellington.[4]

Segmentation as strength: tailoring formats for every shopper

The late 2000s also saw the beginnings of format diversification. While Mecca Cosmetica stores were sleek, boutique-style outlets aimed at prestige consumers, the company began experimenting with larger footprints and broader assortments, laying the groundwork for what would later become the Mecca Maxima format. A turning point for the company, Mecca Maxima was conceived as a ‘beauty superstore’ offering both prestige and trend-driven brands in a larger, more playful environment. Mecca Maxima was aimed at younger consumers and equipped to compete directly with Sephora’s global model, which would enter the market in 2014.

The first Mecca Maxima opened in 2007, but it was in the early 2010s that the format gained traction and expanded nationally. This dual-format strategy, Mecca Cosmetica for prestige boutique experiences and Mecca Maxima for younger, more mass-oriented shoppers, allowed the company to segment the market more effectively. During this period, Mecca also continued to deepen its exclusive brand portfolio.

Scaling beauty: training, testing global ambitions and flagships

By the mid-2010s, Mecca invested heavily in its online store and began developing integrated services such as click-and-collect, 90-day return policy and personalised product recommendations. At the same time, it intensified training of in-store advisors through what would later evolve into Meccaversity, an internal training and education platform (see more below).

In 2017, the company launched Mecca Max, a new private label targeting Gen Z and Millennial shoppers with trend-focused products at accessible price points. By 2019, Mecca had grown to over 100 stores across Australia and New Zealand and was capturing an estimated 25% of the prestige beauty market in Australia, with sales quintupled in five years. At that time, Mecca credited its success partly to investments in e-commerce logistics, offering 1-day to 3-day shipping in a country often plagued by long delivery times. Its private labels represented around 10% of the local beauty market.

While Mecca remained focused on the Australian and New Zealand markets, it began to test international opportunities as Horgan wants her company to become the “world’s most loved beauty destination.” In 2020, it launched a store on Alibaba’s Tmall. The move was a cautious step toward international e-commerce, but the company pulled out in 2023. As a second international test, they launched Mecca Cosmetica in the UK, France, Germany and Spain.

The company also invested in flagship projects to reinforce its status as a destination retailer. In 2020, it opened its largest Mecca Maxima store in Sydney, featuring interactive elements and expanded services and designed to rival Sephora and reinforce Mecca’s reputation as an innovator in experiential retail. In August 2025, they opened their biggest store to date in Melbourne.

Exclusivity, community and service: Mecca’s winning formula

Differences and similarities with Sephora, the best of the two worlds

Sephora arrived in Australia in 2014 and now accounts for 31 stores. The company imported its global model, focusing on large-format stores, rapid expansion, and a standardised experience. By contrast, Mecca tailored its stores and product offer to local consumer expectations, emphasising exclusivity, service, and community engagement. Whereas Sephora’s stores often feel interchangeable across countries, every Mecca store claims to be unique and bespoke to its environment, and flagships are site-specific cultural landmarks that integrate experiential dimensions. Overall, Mecca’s stores are designed not just to sell products but to encourage discovery, play, and education.

Also, some stores combine both Mecca Cosmetic and Mecca Maxima concepts under one roof. These Mecca stores offer a ‘high’ and ‘low’ experience, featuring different price points and everything from one-on-one makeup applications to group tutorials, where team members guide up to ten customers through various topics. Unlike Sephora flagship stores, which typically have only a few skin treatment chairs, Mecca flagship stores offer customers a fully developed aesthetic area.

Despite Sephora entering the market, Mecca remains to this day the go-to beauty destination for most people. The company’s mission is to be Australasia’s leading premium beauty authority while embedding a distinctive Australian sensibility, less formal than department store counters, yet more premium than pharmacy or mass channels. Finally, Mecca also has a few shop-in-shops in Myer department stores, as is the case for Sephora at Manor in Switzerland or Kohl’s in the U.S., for example. This positioning has allowed Mecca to appeal simultaneously to prestige customers, aspirational Gen Z shoppers, and beauty professionals.

When it comes to brand offerings, the breadth of merchandise is key. Not selling beauty giants Chanel and Dior, the retailer carries 234 brands and claims around 80% are under exclusive arrangements (a thorough analysis of Mecca’s website shows only 59% of brands are exclusive). The number of brands and proportion of exclusives are said to be comparable to Sephora. Another similarity is that Mecca invested extensively in private labels that became a significant revenue stream. In addition to Mecca Cosmetica and Mecca Max, the retailer also has Kit: blending effective botanicals for total skin wellbeing and Mecca-ssentials, a short line of products such as reusable makeup remover pads.

Horgan says Mecca now has a market share of more than 30% thanks to its dual positioning as a retail destination and a cultural authority in beauty.

How Mecca turned loyalty into cultural capital

Horgan attributes Mecca’s success to customer loyalty. The Beauty Loop loyalty programme is instrumental here and accounted for 2,9 million members in 2024. Contrary to many beauty retailers’ programmes, customers are not rewarded with discounts, but with sample sets based on their annual spend. The programme has four tiers and offers:

• A minimum of a birthday gift, four rewards per year and complimentary samples with every online order for Level One,
• A birthday gift, at least nine rewards annually, exclusive first access to new products, extra product rewards, invitations to exclusive events and a complimentary makeup session and complimentary samples with every online order for Level Four.
• Not advertised on Mecca’s website, Level Five is called the magic circle and gathers customers who spend more than AU$10,000 per year.

According to McKinsey & Company, Mecca’s loyalty programme is a success thanks to the high perceived value of rewards and surprise gifts. In turn, it has allowed Mecca to build a strong community of customers. Illustrating the retailer’s effective community building, and with immediate success, Meccaland, a large-scale beauty festival, launched in 2018. Despite passes ranging from the equivalent of €39 to €83, the event drew over 15,000 attendees in its inaugural year, combining entertainment, product discovery, and influencer engagement. Extravagant, part shopping experience and part consumer conference, with service staff and Instagram-ready backdrops, the event doubled in size in 2019. It positioned Mecca as a cultural force in Australia’s beauty market, emphasising its role in building community and creating experiences rather than simply selling products. Since then, and with the impact of Covid, the festival has not returned, the company has rather focused on flagship store openings.

Customer loyalty also comes with e-commerce. Mecca's entering the online business as early as 2001 constitutes an unparalleled competitive advantage.

Educating for excellence: Meccaversity as a growth engine

Mecca’s success stems from customer loyalty, as well as exceptional service and education. In 2023, the company formally launched Meccaversity, not only as an internal training programme but also as a public-facing educational initiative. Considered by Horgan as the core engine driver of the business, Mecca allocates 4% of revenue to education. This reinforced the company’s positioning as a beauty authority and educator, beyond commerce. The new Melbourne store (see below) is equipped with a Meccaversity auditorium, serving as an educational space for both staff training and masterclasses for customers, be it mastering eyeliner to flower arrangements.

Additionally, Mecca has developed a strong reputation as an employer brand, appearing in the Best Places to Work list. Over 90% of promotions are internal, ensuring people are recognised for their achievements and given opportunities. Finally, they put a real focus on recruitment.

The new Mecca Melbourne

Historic canvas, modern theatre

In August 2025, Mecca unveiled its most ambitious project yet: a three-level flagship in Melbourne’s Bourke Street, spanning nearly 4,000 sqm. Reminding of the Printemps Wall Street lavish and opulent atmosphere, the store showcases a stunning renovation of a historical Art Deco building by Sydney-based Studio McQualter.[5] Previously the premises of David Jones’ menswear department, the store renovation is state-of-the-art. The original terrazzo floors were restored, along with the exposed concrete columns and ornamental plaster ceilings. Tiles from the 1930s were also revealed, showcasing the building’s rich history and conversing with new store designs and artistic interventions by female artists.

Horgan’s brief for the store was clear: “to create the world’s most extraordinary, innovative and loved experiential beauty destination.” The architecture features thoughtful zoning, ensuring each service seamlessly integrates into the overall experience. There is a significant central void, opening clear sightlines across all levels and highlighting the restored ceiling from the ground floor. A new mezzanine, introduced through this reconfiguration, enhances the store's sense of openness.

From concierge to clinic: a three-level beauty journey

At the entrance sits a large cloud-shaped concierge desk staffed by up to six people to direct shoppers and answer questions, and the Mecca Newsroom, a 300-square-foot space with a large digital installation featuring streams of beauty content and information, from TikTok to brand content.

At the heart of the ground floor is the Beauty Carousel, a circular anchor already tested in other stores. It is designed for customers to gather, try new products, learn techniques and connect with the staff. With space for up to 12 guests, this communal area is inspired by the joy of colour in makeup.

The ground floor is also home to skin care, grouped by trending skin care, high-performance, ingredient-led active skin care, and luxury skin care. Each of these categories comes with both products and services, such as microdermabrasion and deep cleanse facials. Makeup is also located on the ground floor and offers services such as makeup lessons and lash applications at an 18-seat salon. Most service costs are redeemable in products. With the new store opening, exclusive brands were secured, such as Glossier.

Haircare, The Apothecary and a florist complete the ground floor offerings. The apothecary focuses on wellness and is organised according to three concerns: general wellbeing, skin, sleep and stress, longevity and recovery, and hormonal health. A naturopath is available full-time. Wellness services include acupuncture and breath coaching, for example, with prices ranging from €25 to €110.

The mezzanine is dedicated to gifting with a calligrapher and an engraver, and Japanese-style gift wrapping. The space leads to the highly elevated 600 sqm Perfumeria staffed by “scent sommeliers.” There is a fragrance bar with stools where customers can have an in-depth consultation, as well as the Scent-Sorium, a large table with diffusers that dispense scent at the press of a button. Unlike Sephora, Mecca could secure brands such as Diptyque, Byredo, and Officine Universelle Buly, among others.

The floor is also home to the Josh Wood hair salon, a British celebrity hairstylist, Maria Tash piercing studio, Sener Besim jewellery and styling consultation and the Mecca Atelier, which offers makeup, hair, and nails all at the same time, so that customers can have it all done in an hour.

The second floor is 100% dedicated to services. It houses the Meccaversity, which will accommodate up to 150 people for education-oriented events and master classes, and Mecca Aesthetica, the skin care services concept that the company has been testing in other doors. Measuring about 400 sqm, it has seven treatment rooms and offers clinical-level services from brands like Biologique Recherche, Ultraceuticals and Zo Skin Health. Treatments range from €34 for a skin diagnosis (redeemable) to €540 for a peeling session.

A lifestyle landmark

The flagship appears as a cultural institution, positioning Mecca at the intersection of beauty, lifestyle, and education. The store combines retail with experience, offering more than 80 in-store services across hair, makeup, nails, fragrances and wellness, paid or free of charge. The gifting hub, the auditorium and the Mecca Café, which serves everything from martinis to baked goods from a renowned Melbourne bakery, further add a lifestyle flair to the store. The goal is to entice customers to stay the entire day. More than 20,000 visitors attended on opening day, underscoring the company’s ability to generate cultural buzz at scale. The store is expected to reach nearly €60 million in the first year.

Nearly three decades after its creation, Mecca has established itself not only as Australia’s leading beauty retailer but also as a cultural authority. Its strategy, anchored in bespoke stores, exclusivity, education, and customer loyalty, has allowed it to compete with Sephora while retaining a distinctly local identity. The Melbourne flagship exemplifies this ambition: part store, part cultural hub, and part educational institution.

As the global beauty market consolidates and international players intensify competition, questions about Mecca’s future remain. Tailoring online convenience and great in-store customer experiences, such as in the new Melbourne store, is expensive, with company staff and an extensive service menu. This strategy certainly generates significant volumes but smaller profit margins. Also, the company's challenge will be to scale its experiential and community-driven model beyond Australia. For now, however, the company has demonstrated that with brand agnosticism, private label innovation, and a focus on customer experience, a regional player can rival global giant Sephora.

[1] In comparison, Sephora has 3,000 stores in 35 countries and generated €18bn revenue in 2024.

[2] Brands, such as Nars, trusted Horgan for their local development.

[3] Their sunscreen hero product retails at an equivalent of €45.

[4] Mecca now has ten stores in New Zealand.

[5] Known for the Zimmermann stores.

Credits: IADS (Christine Montard)

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The IADS released the premiere edition of its Global Retail Risk Index in September 2025 with the aim of providing a strategic tool enabling regional comparisons to guide retail expansion and investment. With tariff and geopolitical shocks potentially creating new economic geographies, accurate and comparable data is the basis of cutting through the noise of new developments with unknown impacts.

Recent developments have exposed retailers to sudden tariffs, currency swings, regulatory shifts and store-level security threats. Trade wars and conflicts have increased freight costs, delayed shipments, and forced companies to reassess their sourcing strategies. Despite rising scepticism around economic judgments and forecasts in a world encountering significant structural change, reliable data forms the foundation of informed decision-making. Cross-disciplinary knowledge combined with ever-improving data and scenario tools enables decision-makers across sectors to contextualise relevant information for better decision-making. To this end, the Global Retail Risk Index uses open-source data from the World Bank for comparability and accuracy in indicator definitions.

This IADS Exclusive focuses on analysing each of the eight regions in the Global Retail Risk Index and contextualising key data, intra-region differences within aggregates and other developments not captured in hard figures. The complete Global Retail Risk Index Report can be found here.

  IADS Global Retail Risk Index: A quick overview   

The IADS Global Retail Risk Index collects data on risk factors affecting the retail sector globally. Providing a comparable overview of macroeconomic factors affecting the retail sector across eight regions and 31 indicators, this report aims to inform considerations for potential market expansion, safeguarding profitability and preserving supply-chain resilience.

A ranking methodology is used to compare regions with no absolute meaning for regional scores. Scores allow comparisons among regions, with lower scores signalling lower risk for the retail sector. A ‘risk acceptability’ assessment is created based on how comfortably a region can absorb additional risk for the retail sector. The key limitations are uneven data availability, a retail-specific subjective notion of ‘favourability’ and an inherently static nature given historical data in fast-moving political and economic conditions.

Findings

The report finds that based on this framework, the ranking of regions based on risk acceptability, from low to high risk, for the retail sector is as follows:

1. North America
2. East Asia and Pacific
3. European Union (including Switzerland and United Kingdom)
4. Latin America and the Caribbean
5. South Asia
6. Eastern Europe and Central Asia
7. Middle East and North Africa
8. Sub-Saharan Africa

Secure markets: from North America to Western Europe

North America: still the strongest

This region encompasses the US, Canada, and Bermuda and has the strongest performance across economic, business, logistics and infrastructure indicators.

The US and Canada are developed economies that face similar struggles of a high age-dependency ratio and potential labour force shortages. The dependency ratio, which reflects the number of dependents to the working age population, is high due to ageing societies combined with a decline in the working age population. Political developments around immigration reform affect an already strained workforce that could potentially lead to severe consequences in the long run.

The North American region has the lowest population density, reflecting key considerations around the number, size and distribution of stores, as well as digital connectivity and order fulfilment for retailers. Currently ranked last in renewable energy consumption, this is a clear growth opportunity across sectors. Early movers in the retail sector could benefit from subsidies on renewable energy adoption.

The global impact of US President Donald Trump can hardly be overstated. The imposition of tariffs and domestic policy changes has caused global ripples that are being contended with at every level. Major department stores such as Macy’s, Nordstrom and Dillard’s are already hiking prices across categories to combat tariff pressures. Despite sudden policy changes by Trump, long-term impacts will depend on other countries’ and the private sector's responses, and remain to be seen.

Overall, North American markets are still the most favourable for retail risk acceptance given developed economies, massive capital, and US political hegemony. In general, its performance on business, economic, infrastructure and logistics indicators is the best compared to other regions. However, incoming policy changes can further impact international retail expansion in the region. In an uncertain world, the hegemon is the safest choice.

East Asia and the Pacific: rebounding strong

The East Asia and Pacific region has the second-most favourable risk acceptability for the retail sector. Countries in this region can be divided into three categories: developed economies such as Japan, Singapore and South Korea, developing economies such as China, Thailand, and Cambodia, and several Small Island Developing States (SIDS).

Broadly, the region has top rankings in economic, business, and supply chain indicators with improvements possible in full literacy and electricity access, and female workforce participation. Most East Asian countries, known to be saving economies, also showed positive real interest rates encouraging consumer saving with the Chinese government injecting a 300 billion yuan consumption stimulus to boost consumer confidence. Performance in climate indicators overall can be improved, with climate change affecting tropical countries and SIDS worse than others.

The developed retail heavyweights in the region (Japan, Singapore, and Hong Kong) are experiencing varying performances. Japan saw record tourist arrivals but the strengthening yen has led to a drop in spending. Retail sales in Singapore fluctuated in the first half of 2025 but are beginning to see a rise. After over a year of consecutive months of decline in the retail sector, Hong Kong is finally recovering however with mixed effects from tourist spending and currency effects. These countries also performed well on economic, business, and supply chain indicators, as well as social and infrastructure indicators, which enable a developed retail sector.

The Chinese economy is struggling due to weak domestic demand, a sluggish real estate sector, and ongoing deflationary pressures that limit consumer and business growth. It is also reeling from a tariff war with the US and required policy intervention to stimulate domestic consumption so that Chinese retail sales began to rise again. Chinese tourists remain a key consumer group in neighbouring countries being specifically targeted by retailers to encourage spending in Hong Kong, South Korea and Thailand.

Developing Southeast Asian countries and SIDS performed worse on risk indicators. Full access to electricity and complete literacy, which form the basis of organised economic activity, still need to be achieved in several countries. Furthermore, Thailand was wracked by severe floods this year, and its tourism challenges have been compounded by its ongoing border conflict with Cambodia. SIDS face similar challenges as given its limited data availability, market capitalisation and domestic credit performance is suboptimal. They are also one of the worst affected by climate crises with over a third of Tuvaluans applying for a climate refuge visa to Australia, marking the world’s first climate refugees.

Despite this grouping including economies of extreme sizes, the East Asia and Pacific region is low risk relative to other regions. While large economies such as Japan, Australia, and Singapore are the nuclei of the region, smaller economies rely on them geographically and economically to differing extents.

European Union, Switzerland and the UK: stable fundamentals, volatile politics

The European Union, along with Switzerland and the UK, is the third-most risk-acceptable region. This region is one of the most cohesive, with indicator divergences being less pronounced than in other regions. This is due to euro, including uniform monetary policy among euro countries, and the basic requirements that must be met to join the European Union. While Switzerland and the UK are not part of the EU, they are similar to some EU countries in terms of size and GDP.

Favourable indicators for this region are economic indicators, including FDI, demographic indicators, such as female workforce participation and population density, and supply chain risks, like logistics performance index and container port traffic. Climate risk indicators are also favourable, ranking second in forest coverage and proportion of the population exposed to PM2.5 air pollution.

Like other developed economies, the European Union faces a high dependency ratio and an ageing workforce, with persistent concerns over inflation and unemployment in certain member states. Political instability, driven by US policy shifts and the war in Ukraine, is causing widespread disruptions. Recent turmoil in major countries like France has escalated uncertainty for both consumers and retailers, with Primark, for example, bracing for lower sales and potential tax hikes, further dampening confidence and spending. Overall, the EU, Switzerland and UK region sees high risk acceptability due to its favourable performance on relevant indicators despite current political shocks.

Cautious promise: Latin America and South Asia

Latin America and the Caribbean: smack-dab middle

Consisting of large developing states like Brazil, Mexico and Colombia, smaller developing countries like Peru and Ecuador, and several SIDS, Latin America and the Caribbean lies perfectly in the middle of the risk acceptability spectrum. While it is the best performer on climate indicators, the region also faces significant challenges. Demographic indicators in this region see mixed performance; while the age dependency ratio is favourable, gaps exist in literacy, female workforce participation and population density. There are also significant gaps in infrastructure and supply chain indicators.

The region is rife with income inequality, which in turn affects consumer spending and the mix of products demanded. High income inequality polarises consumer demand, benefiting luxury and discount retailers while squeezing the mid-market. This reduces overall spending power, heightens volatility, and requires retailers to adapt pricing and positioning to navigate a fractured market.

Turbulence across Latin America and the Caribbean, driven by economic instability, governance issues, and social unrest, pose hurdles for retailers. Former Brazilian president Jair Bolsonaro was recently convicted of a coup, which will have further consequences for the biggest economy of the region depending on Trump’s response beyond high tariffs and sanctions. Venezuela’s hyperinflation and supply chain breakdowns, alongside a dictatorship regime in El Salvador increases crime-related risks and policy uncertainty around the region and require retail supply chain resilience in these volatile markets.

South Asia: dense markets and diverse challenges

This regional classification consists of only eight countries but represents a huge percentage of population due to the inclusion of highly populated countries such as India, Bangladesh and Pakistan. The region tends towards low risk acceptability due to insufficient FDI flows, low female workforce participation, and vast unorganised economic sectors. Performance on supply chain and infrastructure indicators needs improvement as well.

One of the key advantages of the region is high population density, which can be attractive for physical retail locations while acknowledging high urban digital penetration. For example, India’s fast-growing luxury market and high-spending consumer base make it a prime destination for retail expansion as evidenced by Galeries Lafayette launching its first Indian store in Mumbai later this year and a second one in New Delhi next year.

Geopolitically, the South Asian region faces tensions between nuclear powers India and Pakistan, border disputes with China, and internal instability in Afghanistan, Sri Lanka, and Myanmar. These dynamics can potentially create trade disruptions and impact consumer confidence, where careful market entry strategies must be balanced with growth opportunities.

High-stakes: Eastern Europe, MENA and Sub-Saharan Africa

Eastern Europe and Central Asia: adapting amid geopolitical shocks

This regional classification consists of several small and developing countries not part of the EU. The region is the worst performer on infrastructure and supply chain indicators. Performance in climate indicators, including forest coverage and renewable energy adoption, is towards the bottom as well. The key strengths of the region are high literacy, universal internet and electricity access and regulatory efficiency.

Geopolitical and economic instability has intensified in Eastern Europe and Central Asia as a result of the Russia-Ukraine crisis. Western sanctions against Russia and redirected trade flows have created labour shortages and forced many economies to adapt. Retail expansion in this region needs careful planning due to mixed performance across indicators and the prevalence of geopolitical crises.

Middle East and North Africa: oil-rich expansion vs. vulnerable markets

The Middle East and North African region include high-income countries like Qatar, Oman, and the UAE, as well as lower-income countries such as Morocco, Algeria and Lebanon, among others. The region ranks next-to-last in terms of risk acceptability due to mixed performance on indicators.

This region is characterised by extreme inequality between high-income Gulf countries where retail expansion is not just supported but encouraged, contrasting with poorer Northern African countries, where economic, infrastructure and supply chain performance is poor. Overall, the region is strong in inflation control, mobile connectivity and market capitalisation. However, gaps exist in full literacy, female labour participation and environmental resilience. Ongoing conflicts in Gaza, Syria, Yemen, and Lebanon have deepened instability and intensified humanitarian crises with regional repercussions.

Sub-Saharan Africa: high promise amid structural barriers

This regional classification includes several low-income countries, with regional powers being Nigeria and South Africa. The region exhibits the lowest risk acceptability as it faces significant gaps in development indicators, even given high regional inequalities.

Sub-Saharan Africa ranks the highest in renewable energy consumption and female workforce participation. It has a high dependency ratio due to a large chunk of its population being children, indicating incoming growth of its workforce. Retail, being a highly feminised sector, also benefits from high female labour participation. However, the region faces a dearth of FDI, market capitalisation and domestic credit. Infrastructure indicators and supply chain connectivity must be improved to encourage large-scale retail expansion.

Widespread violence and crises in sub-Saharan Africa, such as insurgencies in the Sahel, ethnic unrest in Nigeria, hyperinflation in Zimbabwe, and instability in Congo, further threaten supply chains, deter investment and dampen consumer confidence. This is perhaps the region with the most potential but with insufficient support structures at present.

Conclusion: resilience through data

The current global economic scenario is marked by slow growth, persistent inflation in some regions, and elevated geopolitical tensions that have disrupted trade flows and weighed on consumer sentiment. Retailers face ongoing headwinds from tariff escalations, volatile prices, and political uncertainty, requiring resilient supply chains, proactive risk management, and strategic market focus to defend margins and capture growth.

The debut edition of the IADS Global Retail Risk Index underscores the need for retailers to embrace data-driven decision-making amid a changing landscape. The Index reveals that risk acceptability varies sharply by region, with North America, East Asia, and Europe remaining the safest bets, while Latin America, Africa, and parts of Asia face volatility from inflation, social unrest, infrastructure gaps, and conflict. Across all markets, retailers must contend with supply chain fragility, fluctuating consumer demand, and new regulatory hurdles, but those leveraging reliable data, scenario analysis, and adaptive strategies are best positioned to pursue expansion and safeguard profitability amidst global uncertainty.

As digital adaptation and sustainability grow in importance, future success will depend on leveraging new scenario tools, tracking risk indicators, and remaining responsive to regulatory shifts and consumer trends. Retailers should prioritise continuous risk assessment, diversify sourcing strategies, and invest in regional intelligence to anticipate and mitigate disruptions before they escalate. Going forward, future editions of the IADS Global Retail Risk Index will allow multi-year comparisons, further empowering retail leaders to strengthen resilience, safeguard profitability, and identify new opportunities in an era defined by uncertainty and transformation.

For complete detailed data, interpretation and indicator rankings by region, please access the full IADS Global Retail Risk Index Report 2025 here.

Credits: IADS (Anchita Ranka)

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CLICK HERE TO SEE THE PHOTOS OF ETAM

Omnichannel strategies have become essential for brands seeking to enhance customer experience while driving sales. From that perspective, few brands have demonstrated the resilience and adaptability of French lingerie brand Etam. From its inception in 1916 to becoming a multinational underwear powerhouse with over 1,300 stores across 57 countries, Etam has orchestrated an omnichannel transformation that breaks down the traditional physical and digital silos. Through their clienteling application, fundamentally shifting how the brand approaches customer relationships, inventory management, and in-store operations, Etam offers department stores interesting insights into how heritage brands can embrace technological innovation without sacrificing the human touch that defines exceptional retail experiences.The IADS visited their Paris flagship store in front of Galeries Lafayette’s Haussmann department store for a private presentation of their clienteling tool, largely developed in-house.

The Etam lingerie empire: from product innovation to omnichannel revolution

Paradoxically, for a now iconic French brand, Etam was created in 1916 by Max Lindemann in Berlin, Germany. The true foundations of Etam's lingerie legacy were established in 1924 with the launch of their first "indémaillable" (run-resistant) lingerie collection, marking a significant innovation in women's underwear garments at the time. In 1928, Etam expanded into France, opening a boutique on Rue Saint-Honoré in Paris and a first French factory in 1936. In the 1960s, Etam revolutionised lingerie again by introducing ultra-comfortable cotton materials.

However, the company's transformative journey began when Martin Milchior and his family acquired the brand in 1963, establishing what would become the Etam Group. While the company expanded into ready-to-wear in 1963, lingerie remained its core identity and strength. In 1965, it created just-in-time automatic restocking. The 1970s saw a transformation in retail presentation, with underwear and clothing displayed on hangers for self-service. In 1983, Etam started its international expansion. In 1995, they formed a partnership in China, where they operated over 3,400 points of sale. In 2017, the company sold its Chinese operations.
Etam has evolved from a hosiery manufacturer into one of Europe's leading lingerie retailers with a significant global presence. One hundred years old, still family-owned and independent, the Etam Group operates 1,336 stores across 57 countries and employs approximately 5,656 people worldwide. The company's turnover reached €880 million in 2023. The group has diversified its portfolio to include several distinct brands: Etam (lingerie and ready-to-wear), Undiz (younger, trendier lingerie and loungewear), Maison 123 (premium women's ready-to-wear), Ysé (B Corp-certified mid- to high-end lingerie), and Livy (high-end, luxury swimwear and lingerie). This multi-brand strategy has allowed Etam to target different market segments while maintaining its expertise in intimate apparel. Etam has maintained its competitive edge, primarily through its annual runway show during Paris Fashion Week, which has become a significant event in the lingerie industry since its inception in 2017. Finally, the company supports innovation through the WeDareLab acceleration programme, assisting lingerie and fashion brands and innovative tech startups looking for expert support in the acceleration phase.
Under the leadership of the returning CEO Marie Schott,  who has been instrumental in revitalising the brand's image and marketing strategies, the then-traditional retail company embraced an omnichannel approach. With digital sales now representing 15% of the revenue, the brand faced the challenge of connecting brick-and-mortar with online. As Etam's Global E-commerce, Marketplaces & Omnichannel Director Romain Sabatier explained to the IADS, "for a long time, there wasn't an omnichannel role. There were digital teams and retail teams." This siloed approach needed to change.
Connecting physical stores with the digital ecosystem meant digitalising the in-store experience through three main projects: a comprehensive clienteling app for sales associates, a ship-from-store initiative to maximise inventory potential and connected fitting rooms to enhance customer service. Along with other key stores, the boulevard Haussmann flagship store is a one-of-a-kind store for the brand and a testing ground for innovative solutions. In November 2019, Etam inaugurated this new flagship store in front of the Galeries Lafayette store. Located in a striking building with a 10-meter-high rotunda, the 500 sqm three-level store emphasises the building’s original volumes while offering a contemporary, apartment-like experience through a mix of raw stone, light wood, glass, and vintage furniture. Strategically located, it attracts a diverse clientele, predominantly tourists, contrasting with the loyal customer base typical of other locations. This unique customer mix provides interesting use cases for experimentation.

Etam’s clienteling app key features: customer identification, personalisation and additional sales

Developed internally, two objectives were assigned to the Etam clienteling master app. Regrouping other scattered existing systems and designed to empower sales associates, it aims to:

-    Create mobility by removing sales associates from their cash registers. Historically, sales associates were confined to their cash registers. Supplying them with Android smartphones equipped with the app has revolutionised their role, created mobility across the store, and developed a more customer-centric business approach.

-  Ensure sales associates are as knowledgeable as customers who often research products online before visiting the store. The app consolidates all necessary tools, enabling associates to offer informed and personalised service.

The clienteling app development started from the traditional customer journey fundamental issue: customer identification typically occurs during the checkout phase, when the shopping journey ends and when it’s too late to propose other items or personalise the relationship. The app transformed this approach by enabling earlier customer identification through natural service touchpoints. Etam develops the app to match customer scenarios coming from actual field experiences. Here are a few examples:/nbsp]

-    One signature scenario involves Etam's bra fitting service. One of Etam's signatures is bra measurement, with all sales associates having a measuring tape around their neck. Many customers don’t know their size, which can vary from one product to another and over time. This service creates a natural opportunity to connect with customers, guiding them to the correct size. This data is then stored in the customer's account.

-    Another scenario is click-and-collect, an opportunity for customer interaction and additional sales. There is no click-and-collect dedicated counter in-store. Instead, customers ask the staff for their order, which is retrieved thanks to the app and fetched by the sales associate. The app transforms pickup visits into sales opportunities by giving associates immediate access to customer information, including loyalty points, wish lists, abandoned carts and cross-sell suggestions. For example, suppose a customer picks up a swimsuit. In that case, the app will suggest the matching pareo or tell the sales associate that the customer has enough points to benefit from a €10 immediate discount.

-   The app supports efficient returns processing. With 80% of Etam's online returns processed in-store, the app allows the store to benefit from this significant number of customer interactions. With RFID-equipped products, sales associates can scan the unique QR code on returned items and instantly retrieve the original purchase information and customer profile (85% of customers are identified). This efficient, hassle-free process allows them to focus on understanding return reasons and offering size or colour alternatives rather than only processing the return.

-    The app also supports CRM development by enabling personalised communication. Sales associates can send product recommendations via SMS, signed with their names, fostering a personal connection with customers. This approach, usually attributed to luxury brands, is democratised by Etam. It can also serve smaller stores which cannot carry the extensive product range. In that case, sales associates can order items for the customer to be delivered at home or in-store. Finally, the app is equipped with a phoning module. Sales associates typically call customers when they have just a few days left to redeem points or use a voucher.

The clienteling app is complemented by a tap-to-pay functionality, reducing lines at the cash desks and eliminating the need for separate payment terminals.

Inventory optimisation and connected fitting rooms

The ship-from-store initiative represents another pillar of Etam's digital strategy. By making store inventory available online, the brand improved stock rotation and delivery times. This required a significant mindset shift for store teams, who needed to embrace order preparation as a new part of their role. The key to this change was to help teams understand that online customers have the same needs as in-store customers, simply accessing products through a different channel.

In select flagship stores, connected fitting rooms with screens allow customers to request different sizes, colours, and complementary items by scanning the product QR code or simply asking for a sales associate's advice. This digital feature is highly relevant in the lingerie business as it prevents customers from dressing and undressing if they want to try other options. Customers’ requests appear on associates' apps. While the customer is informed about who will help them, the sales associate handling the request is identified and visible to other users. Developing these connected fitting rooms requires a delicate balance between offering enough relevant services to customers and avoiding offering them too many, which would slow down the fitting room rotation. For that reason, high-traffic stores are not equipped with connected fitting rooms. They also offer customers the option to request mobile payment for their purchase.

Technology adoption and change management

Before wider deployment, new features are extensively tested in pilot stores across all the group's brands. Being built internally, the app is optimised regularly thanks to a robust internal development team, allowing for rapid iteration and adaptation (2 to 4 weeks) based on real-world feedback, facilitating the adoption. Sales associate feedback is quickly considered, representing a great argument in case of reluctant people. Also, contrary to the cash desk system, only an hour or so is necessary to feel comfortable using the app, making sales, processing payments and managing loyalty. Additionally, consolidating previously scattered tools into a single master app significantly reduced complexity for store teams.

Despite potential resistance to new technology, Etam reports minimal challenges in driving adoption thanks to the leadership playing a pivotal role. The digital transformation initiatives are spearheaded by a team that combines technical expertise with a deep understanding of retail operations. This synergy has been key in understanding the true nature of customer interactions, overcoming challenges and ensuring the successful implementation of new technologies. Training and adaptation have also been crucial. Regular updates and training sessions ensure sales associates are ready to use new features effectively. Finally, the company organises annual meetings to showcase new functionalities and address misunderstandings, fostering a culture of continuous improvement.

Finally, as they work with a store rotating zoning system, sales associates are not individually rewarded for their physical or omnichannel sales. However, 100% of the digital turnover is allocated to the stores according to click-and-collect and catchment areas, making e-commerce adoption easier.

By investing in technology that enhances rather than replaces human interaction, Etam has created a seamless omnichannel experience that bridges the digital-physical divide. The clienteling app, ship-from-store capabilities, and connected fitting rooms represent more than technological innovations; they place customer experience at the centre of the business. The company ensures that technology serves genuine customer and associate needs by developing solutions internally, testing extensively in flagship locations, and rapidly iterating based on real-world feedback. The Etam example is particularly relevant for IADS members as it demonstrates how a century-old, family-owned brand can drive a successful omnichannel transformation. Etam’s clienteling app shows how digital tools can empower store staff, enabling more personalised customer service, early identification of shoppers, and increased cross-selling, concerns widely shared by department stores. Etam's reallocation of online turnover to stores based on click-and-collect and catchment area, combined with the dismantling of silos between digital and retail teams, provides a possible answer to department stores omnichannel tensions.

Credits: IADS (Christine Montard)

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The integration of sustainable practices is no longer an option for retailers across the planet, due to impending national and international regulations, combined with consumers’ growing preference to buy sustainable products and engage with responsible brands. However, if the intention is the same, the execution might significantly differ from one continent to another.It starts with the way national companies handle global guidelines. For instance, the 17 UN Sustainable Development Goals (SDGs) provide a framework for sustainability priorities, but retailers in each country prioritise different SDGs according to their national strategies and culture. For example, Chinese enterprises have focused on “Good Health and Well-being” (SDG 3), “Quality Education” (SDG 4), “Responsible Consumption and Production” (SDG 12), and “Decent Work and Economic Growth” (SDG 8)i . In the meantime, in the US, the private sector has an increased focus on “Clean Energy” (SDG 7) and “Industry, Innovation and Infrastructure” (SDG 9)ii . This difference in sustainability priorities must be reflected in the undertakings of the retail sector attempting to engage and expand in new markets.

Even within regional blocs, differences arise. One of the key takeaways of Bain & Company’s report on sustainability for Asia-Pacific consumers is that fast-growth markets such as India, China, Indonesia and Vietnam care more about sustainability than mature markets like Japan, South Korea and Singapore. A possible explanation cited is that witnessing first-hand the impact of environmental issues in emerging markets makes these threats real and tangible. The average pollution in fast-growing markets is two and a half times that of mature markets, with the highest levels being in India and China.Today, we are seeing an increasing number of retailers and department stores commence or enhance their operations in growing markets such as India and China. India saw the entrance of 27 international retail brands in 2024, including Saks Fifth Avenue, which announced its interest for the market a few years after Galeries Lafayette announced they would open a store in 2026. In China, despite a luxury slowdown, retailers such as Metro AG and the retail conglomerate SM Investments have expanded their Chinese footprint in Tier 1 and Tier 2 cities. Across both countries, the majority of the population is concerned about the environment. But do consumers in these emerging markets have the same definition of sustainability as the West? And to what extent does the notion of sustainability differ from a consumer and retailer’s perspective, in each country, compared to the West?

Consumer sentiment on sustainability in the West: The responsibility lies on brands

According to the European Commission’s Eurobarometer, 78% of Europeans agreed that environmental issues directly affect their daily life and health and over 80% agreed that EU legislation is needed to protect the environment in their countries.

This reflects the fact that, in the West, the onus of creating and maintaining sustainable practices is divided more evenly between the government and the private sector. For 92% of Europeans, companies should pay for the costs of cleaning up their pollution, while 74% agree that public authorities should pay for the costsiii.

Almost 60% of European respondents demonstrated a willingness to pay more for sustainable products that are easier to repair, recyclable and/or produced in an environmentally sustainable way. However, these results differ over research reports with BCG’s 2024 European Consumer Sentiment Report finding that while Europeans consider sustainability while they shop, only 20% declare that they would pay more for green products. Repair has become one of the newer features of sustainability in the West where 77% of European citizens would rather fix a product than substitute it, as of a 2022 survey by the EU. This sentiment has been capitalised on by retailers such as Decathlon, providing bike repair services in-store and online support for customers to self-repair products, as well as Uniqlo’s Repair Studio for repairing and upcycling products.

In the US, 78% of consumers say a sustainable lifestyle is important. Products making ESG-related claims averaged 28% cumulative growth over the past five-year period, versus 20% for products that made no such claimsiv . According to EY’s US Future Consumer Index, sustainable products command a 39% price premium compared with conventional products. Research by OnePoll also showed that 55% of Americans would cease using a brand upon discovering its lack of commitment to environmental sustainability. 42% of respondents said they can tell when a company is trying to greenwash their activities.

Overall, in the US and Europe, sustainability is an important issue to consumers. However, they place the responsibility for sustainable production and consumption more on the private sector than on the government. This may be a feature of already having advanced regulatory standards, especially in the EU. Despite this, consumers in Western countries are only willing to pay between 8 and 10% extra for sustainable products which is lesser than consumers in India and China. The sustainability say-do gap, which reflects the difference between expressed intention and action, looms large in Western countries.

Consumer sentiment in India: Sustainability as an efficiency operation

In India, as in many other developing countries, sustainable actions take the form of operational efficiency. An ingrained reflex for most Indians, reusing, recycling, and repair are foremost cost and effort savers, which now also translate into conscious consumption of sustainable goods. As a saving economy, Indians are prone to avoiding the wastage of goods and services, including money and food. Indian consumers are also cautious regarding greenwashing and paying premiums for sustainable products.

Several sources make it clear that sustainability is an important issue for Indians. 92% of Indians are concerned for the environment, while 66% feel it is at riskv . Two in three urban Indian consumers prioritised environmentally responsible actions taken by businessesvi . Indians also have a dual focus on wellness and sustainability, with 33% stating that they opt for natural products for health benefitsvii . Finally, according to PwC India’s Voice of the Consumer Survey, 46% of Indian consumers view climate change as a significant threat, driving 60% of them to change their behaviour and move toward sustainable products. They are even willing to pay a premium of 13.1% (vs price base lines) for sustainably sourced goods.

However, only 30% of Indians perceive sustainability as the responsibility of private companies with the majority believing it is the government’s responsibility to address sustainability issuesviii .  Despite re-use and repair as engrained practices, there is a sustainability say-do gap in India, which is explained by high prices and limited product information and availability. As a collectivist society with a recently booming economy, Indians tend to place their expectations for responsible actions on the community and institutions. Brands and corporations taking the lead on sustainability can hence build brand value and equity by engaging with the community. Though facing the right direction, the average Indian can be better nudged to invest in sustainable initiatives. A growing number of consumers, especially younger generations, are more conscious about their consumption and which brands they engage with.

The repair culture in India is very developed resulting from a combination of high price sensitivity and low labour cost to repair products. Technicians are available for a low cost to repair almost every product ranging from apparel and shoes to washing machines and microwaves. For example, Decathlon’s bike repair initiative will not make as many gains in India as it does in France due to the existence of cheap and convenient bike repair shops. While Decathlon does run this initiative in India, it has been outsourced to a third-party provider that runs digital workshops with little advertising. Given that most retailers such as Decathlon exclusively repair purchases made in their store or of their brand (i.e. Decathlon repairs only Decathlon brand bikes or other bikes bought at a Decathlon store), it prompts questions on the relevance and perception of such initiatives for Indian consumers with access to cheaper, more convenient, and non-exclusive alternatives.

On the other hand, enhancing value as part of a repair or recycling scheme can resonate with customers who prioritise value. For example, Yves Saint Laurent’s repair services for perfume bottles and refills that can be attached to existing containers can be framed as a value-added service that is also sustainable especially for luxury products. Retailers aiming to enter emerging markets will do well to understand the nuance of repair, where an approach like that in the West could lead to public backlash and accusations of greenwashing.

Consumer sentiment on sustainability in China: Not at the cost of convenience

The government drives the sustainable transition in China; consumers and the private sector are involved but not to comparable levels in the West. Most consumers prefer convenience over sustainability and are still in “consumption catch-up mode”. Large Chinese conglomerates are increasingly publishing ESG reports and pushing sustainability initiatives to keep pace with their Western counterparts.

A feature of sustainability in China is that it revolves mainly around environmental concerns and does not include social issues and human rights concerns as much as in the West. PwC’s June 2022 are willing to switch to brands that emphasise sustainability and corporate responsibility. As an emerging economy focused on savings, China also has a strong availability of low-cost labour for repair. This has also been characterised by a developed used goods market where all kinds of used products are refurbished and prepared to be resold. For example,

Centergate Como in Zhongguancun, Beijing’s IT neighbourhood, is a gigantic six floor shopping mall filled with small electronics shops selling all kinds of used gadgets.

UNDP’s Survey Report on Business and Sustainability in China found that while 89% of Chinese companies surveyed know the SDGs, 42% do not yet know how to measure their contributions towards them. Chinese enterprises have also prioritised SDGs concentrating on health and well-being, education, responsible production and consumption and decent work and economic growth. Enterprises are undertaking sustainable development projects based on their branding and image-building needs. Chinese enterprises have also prioritised SDGs concentrating on health and well-being, education, responsible production and consumption and decent work and economic growth. Enterprises are undertaking sustainable development projects based on their needs of branding and image-building.

According to Ipsos, air pollution was the leading environmental concern for Chinese consumers with 45%. Many families visit play areas in shopping malls because it is deemed safer than playing outdoors. The Credit Suisse Research Institute also reported that more than 50% of Chinese consumers were distrustful of corporate sustainability claims: greenwashing is obvious to most consumers. As a result, luxury groups are more likely to foster higher engagement if there is a greater focus on local green issues. For example, Prada hosted a Re-Nylon pop-up store to engage shoppers at SKP-S in Beijing in late 2020.

While data on the sustainability say-do gap in China is minimal, research shows that consumers are willing to pay greater premiums for sustainable products in emerging markets with high levels of environmental concern. More so than in India, the burden of tackling sustainability is on the Chinese government with private enterprises keeping themselves competitive by increasing ESG monitoring and publishing reports. For consumers, air pollution and other environmental issues top the list of concerns with a significant focus on health but not at the cost of convenience.

L'Oréal: A case analysis of contextualised sustainability by brands

L'Oréal Groupe is one of the global frontrunners in sustainability engagements helmed by the private sector. It has been recognised as a United Nations Global Compact LEAD company for over seven years. As part of its commitment to the Ten Principles for responsible business and for placing the United Nation’s SDGs, L'Oréal launched its second sustainability programme, L’Oréal for the Future, in June 2020.  With a variety of environmental and social commitments, the analysis for this article focuses on three aspects:

• Comparative analysis on the kind of environmental initiatives L’Oréal undertakes in India, China and the US.
• Local adaptations of their global ‘Stand Up’ initiative that aims at combatting street harassment. L’Oréal has also operated in both India and China for nearly three decades through wholly owned subsidiaries.
• The leveraging of local sustainability issues to build value. .

On environmental initiatives, the overarching 2030 objective is to reduce its greenhouse gas emissions of all scopes by 50% per finished product. As a member of the ‘Business Ambition for 1.5°C’ initiative, the Group has also committed to net zero emissions by 2050.

The Chinese teams continue advancing the L’Oréal for the Future programme, from eco-design to plastics recycling. One example is L’Oréal Paris Extraordinary Oil shampoo, an innovation developed by teams in China whereby every part of the packaging, including the pump, is recyclable – a first for the Group.

In India, L’Oréal’s operated sites including factories, distribution centres, research and innovation centres and administrative offices have achieved 100% renewable energy usage. Furthermore, their Green Pathways project focuses on ecological restoration in the drought-prone and water-scarce Yavatmal district in Maharashtra, India. Since its inception in 2021, over 4,500 hectares of degraded land has been restored, enhancing water storage capacity in the region by 150 million litres, benefiting over 1,800 vulnerable farmer families with a 20% increase in income. By 2030, they aim to restore 10,000 hectares of land through this initiative.

L’Oréal USA joined the US Plastics pact, which brings together over 850 organisations over common definitions and concrete targets to accelerate progress toward the US circular economy for plastic. L’Oréal’s commitment to land restoration in India corresponds to Indian consumers’ focus on environmental pollution while in the US, collaborative action for a circular economy is prioritised where the discussion around sustainability revolves around the circular economy.

L’Oréal’s ‘Stand Up’ initiative aims to promote self-defence training to combat street harassment. However, in China, the brand delved deeper into understanding its consumer profile and the social concerns of its target audience. This led to a shift in focus towards addressing sexual harassment in the workplace, making it more relevant to the local context. In India, this programme has trained over 850,000 individuals to effectively address street harassment. While their global initiative is partnered with Right to Be, in India L’Oréal has partnered with Breakthrough, an Indian NGO working against gender-based violence and discrimination. In France, on the other hand, the ‘Stand Up’ programme has online courses and statistics on street harassment with a call to include victims and witnesses of this crime. This manner of responding to their consumers in each country – workplace harassment in China, partnering with local NGOs on gender-based violence in India and directly addressing women in France through their website, reflects a localised approach for their global programmes to enhance the impact of these initiatives.

Not only cascading group level initiatives, L’Oréal’s country subsidiaries also create and run their own sustainability initiatives to leverage locally relevant topics. For example, diversity and inclusion is a priority for L’Oréal USA with the Inclusive Beauty Fund and civil society partnerships with onePULSE Foundation for its scholarship programme. This reflects the ongoing cultural conversation in the US where diversity, equity and inclusion (DEI) is forefront for consumers. L’Oréal USA’s website has statistics on gender, sexuality, disability, Black Indigenous People of Colour, veteran and working parents’ representation in the organisation. While this caters to the US’ approach of affirmative action and upliftment, this kind of representation is unachievable and to some degree, unnecessary, in markets like France where the perspective is based on equal rather than equitable treatment of minorities.

L’Oréal Groupe’s brands showcase a high degree of autonomy when it comes to their approach to sustainability topics. For example, in 2014, Garnier faced backlash as their personal care products were distributed in care packages to female Israeli soldiers by its Israeli subsidiary. Garnier USA then released a statement saying that they do not condone this initiative managed strictly at a local level. This contrarian navigation by both Garnier Israel and Garnier USA shows how brands manage local adaptations including dealing with controversial topics.

L’Oréal’s brands and strategies provide a clear perspective on the mix of group-level initiatives, that align with larger goals and strategies, and country-level initiatives, that correspond to local consumer sentiment and values. The right balance of autonomy and leadership in sustainability related areas is key to build brand value for retailers.

Conclusion: The collectivist vs. individualist approach to sustainability

Consumers have distinct regional variations in sustainability implementation and consumer attitudes that have an impact on the retail sector. In Western markets, environmental responsibility is shared between government and private sectors, with a strong focus on social and environmental issues both. In contrast, emerging markets like India and China approach sustainability through the lens of operational efficiency and cost savings. Despite showing higher environmental concerns than mature markets, Indian consumers expect governmental leadership in sustainability initiatives while remaining cautious about greenwashing. China presents a unique case where sustainability is predominantly government-driven, focusing primarily on environmental rather than social concerns, with consumers showing increasing scepticism towards corporate sustainability claims.This is due to the cheap availability of labour combined with cultures where saving is prioritised. According to Bain & Company, consumers in fast-growing markets, where environmental concerns tend to be highest - such as India, Indonesia, Brazil, and China - are willing to pay between 15 and 20%, a greater premium than in the West. Additionally, consumers cited the lack of availability of a variety of sustainable products as a challenge. Overall, the Indian consumer is highly price-sensitive and hence focuses on sustainability efficiently. Extremely averse to greenwashing, this group focuses on sustainable products for health and wellness benefits to counter the impact of environmental pollution. An analysis of the repair economy in these three zones shows that while Western countries approach it as a sustainable method with retailers starting to incorporate it into their offerings, emerging markets such as India and China have advanced economies for repair due to operational efficiencies.The sustainability say-do gap reflects the difference between expressed intention and action. While data from the US and Europe shows that consumers will not pay significant premiums for sustainable products, there is a lack of information regarding emerging markets like India and China. Ipsos Behavioural Science White Paper on the sustainability say-do gap details that focusing on enabling actions that people are already inclined to take can facilitate the adoption of sustainable behaviours. This provides a concrete action plan for retailers and brands where they can build brand value by engaging with consumers on sustainable actions that they are leaning towards taking. For example, consumers in the Asia-Pacific region tend far more towards health-conscious decision-making compared to their Western counterparts. They consider making healthier choices for themselves and their families, often evaluating sustainable products to improve health. By adapting their sustainable initiatives and communication around this focus on health and wellness, retailers can build a connection with their customers.L'Oréal's case study demonstrates the value of having a strategic global vision with local execution for sustainability topics. From land restoration initiatives in India, gender equality programmes in China, and diversity and inclusion programmes in the US, L’Oreal has provided guiding principles for retailers on successful market-specific adaptation of sustainability initiatives. It has provided a clear framework on how group-level initiatives like Stand Up can be implemented at a local level to ensure impact and brand relevance. Striking the strategic balance between global vision and local execution has proven increasingly crucial for brands and retailers alike.

Credits: IADS (Anchita Ranka)

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CHECK OUT THE PHOTOS OF FORTNUM & MASON

Fortnum & Mason is the only department store whose core economic engine is food and drink, generating nearly two-thirds of revenue. Located on London’s Piccadilly, the store is 6,000 square metres and employs around 1,000 staff. It currently holds two royal warrants granted by King Charles III and Queen Camilla.i

As for other department stores, such as Galeries Lafayette, Fortnum & Mason is privately owned. Positioned as a heritage luxury department store with a single cultural landmark flagship widely regarded as a tourist attraction, Fortnum & Mason is characterised by a predominance of full-price luxury merchandise and great international brand awareness, attracting affluent travellers.

Over three centuries, the grocer-turned-icon, still trading under the same turquoise colour, has converted from supplying the Crown into profitable retail ventures. Fortnum & Mason offers a blueprint of how heritage meets innovation, how experience can protect against footfall volatility and how operational efficiency enhances brand storytelling.

The origins of a retail institution

The genesis of a brand: from household waste to high-end retail

Fortnum & Mason started in 1707, when William Fortnum, then a Queen Anne’s footman, joined forces with his landlord, the St James’s shopkeeper Hugh Mason. Fortnum’s habit of reselling the royal household’s half-burned candles provided initial funding, and the two partners opened a grocery store in St James’s Market. From this first venture, Fortnum & Mason positioned itself at the intersection of refined taste and commercial flair. By the middle of the seventeenth century, the store had become an unofficial provisioner to royal and aristocratic customers as well as London’s growing mercantile class.

By 1761, Charles Fortnum, grandson of William, entered Queen Charlotte’s service, reinforcing the family’s court connection. Besides bringing cachet, the link to the Crown guaranteed steady and early success. Then, three pillars would remain at the core of the store's business success for centuries: proximity to political power, mastery of import logistics through Britain’s expanding empire, and relentless product novelty, which turned necessities (such as tea, candles, and preserves) into desirable luxuries.

The nineteenth century was an era of growth. During the Napoleonic Wars, the store supplied British officers with dried fruit, spices, and preserves, establishing a reputation for reliability. Queen Victoria famously ordered bottled beef tea for Florence Nightingale’s War hospitals, reinforcing the brand in the national imagination as purveyor of comfort in adversity. These high-profile adventures generated press coverage that no advertising budget could match.

At that time, Fortnum & Mason also invented, or at least popularised, the luxury hamper, an elegant wicker basket packed with provisions for railway journeys and country-house weekends. Hampers became both a revenue stream and a portable marketing billboard for the store. The Victorian decades saw the shop rebuilt on a grand Neo-Georgian scale, with large windows and gas lighting, transforming displays and inviting shoppers to linger.

Modern times: wars, prosperity and change in ownership

In the twentieth century, the two world wars forced Fortnum & Mason to adapt. During World War I, the company provided comfort parcels for officers, and in World War II, it produced Service Chocolate, a calorie-dense bar in a bright pink wrapper which was requisitioned by the Ministry of Food. The emphasis on quality within constraint reinforced, yet again, Fortnum & Mason’s as a purveyor of comfort in adversity.

Post-war austerity gave way to renewed prosperity. In 1951, Canadian businessman W. Garfield Weston acquired Fortnum & Mason, bringing capital for modernisation while retaining the store’s private company agility. Installed in 1964 over the Piccadilly entrance, the iconic four-ton clock has become a tourist landmark. Each hour, automated figures of Fortnum and Mason characters bow to one another, accompanied by chimes. During the 1960s and 1980s, Fortnum & Mason cautiously expanded into other categories, such as fragrances and fine jewellery. Yet food and beverage remained the most significant source of revenue, helping the business weather the department store’s downturn of the past decades.

Now, Fortnum & Mason operates under Wittington Investments, which is controlled by the Weston family. Besides Fortnum & Mason, the company is famous for owning Selfridges until 2021. They now own Heal’s (upmarket furniture chain), real estate, various private equity and property holdings. Additionally, Wittington Investments holds a majority stake in Associated British Foods (ABF), a FTSE 100 conglomerate that owns Primark, Twinings, and British Sugar.

A snapshot of the business: profitability rooted in purpose

Appointed by Wittington Investments in 2020, CEO Tom Athron, who spent six years as Waitrose’s CFO, developed a storytelling, hospitality, and sustainability strategy. Financial resilience has been notable. FY2022 declared turnover was £187 million, returning to a £6,1 million profitability post-Covid. In FY2023, declared revenue was up 11.9 % to £208.6 million, and gross margin improved to 44.4 %. Pre-tax profit rose to £9.3 million in FY 2024 on declared sales of £228 million. Also, the company saw a 20% increase in its wholesale business. Finally, with shipment available in over 120 countries, online sales are now accounting for 36 % of turnover by FY2024.

More specifically, 63% of the turnover is generated from food and drink, including teas, biscuits, preserves, speciality groceries, spirits and wines. The home, beauty and lifestyle categories account for 18%, encompassing tableware, candles, fragrance, accessories and leather goods. Hospitality and experiences generate 9 % of the turnover and include restaurants, masterclasses and events. Last but not least, the famous hampers represent approximately 10 % of sales, with a 10 % YoY volume growth at Christmas 2024. The latter decades saw Fortnum & Mason’s hampers go global, boosted by the rise of air travel and corporate gifting. International luxury ingredients, such as Iranian caviar and Jamaican Blue Mountain coffee, were added to British heritage products, while foie gras was discontinued due to animal welfare concerns. Same-day London delivery and temperature-controlled shipping are available to the 200+ hamper SKUs.

With entry prices such as £5.95 for preserves and £6.95 for tea bags, driving conversion and souvenir appeal, Fortnum & Mason sits at the intersection of everyday luxury and British heritage, mainly attracting three types of customers: affluent international tourists, who represented 40 % of Piccadilly footfall in peak Summer 2024, domestic treat seekers, who are primarily Millennials and GenX Londoners, and finally corporate clients leveraging hampers for softpower gifting.

Fortnum & Mason’s current era: a modern luxury model rooted in legacy

Store organisation: the experiential pivot

To mark its 300th anniversary, the Piccadilly flagship underwent a £24 million refurbishment, reopening in 2007 with expanded hospitality spaces and restored Georgian facades. The investment accelerated a strategic pivot from retail-only to a combination of retail and experiences with restaurants, cookery masterclasses, and immersive window theatre becoming key traffic drivers at a time when footfall on traditional high streets was declining.

With F&B options on four floors out of six, the -1 floor is home to the food hall and the wine cellar. It also features a rather dark wine bar and click-and-collect service. Food-to-go options and the Lower Ground coffee-to-go kiosk are available on this floor to capture a greater share of the local weekday trade. The ground floor, the ‘pièce de résistance’ of the store, is bustling and offers Fortnum & Mason's core products (tea, marmalades, coffee, chocolates, sweets, biscuits and patisserie). Cash desks are positioned on this floor, with entry-price items displayed along the queuing journey. Finally, the 45 Jermyn St. fancy restaurant opens from breakfast to dinner.  The first floor is dedicated to teaware, stationery, accessories, and picnic equipment. The busy The Parlour restaurant is specialised in ice cream. Gift wrapping is available on this floor. The second floor seems to be designed for the female clientele. It offers a large beauty section and a significant niche fragrances section. Unlike the other floors, which primarily sell Fortnum’s own brand products, this floor offers a selection of luxury international brands. The space is complemented by women’s hats and scarves, loungewear and jewellery. Personal shopping services and a beauty room are positioned on this floor. The famous hampers are available on the third floor, offering a service that allows customers to design their own hampers. The Food & Drink Studio occupies a significant section of the floor. When there are no cooking classes, chefs are preparing pastries or pasta, offering a food spectacle to shoppers. A cook shop and a book shop complete the floor, which feels somewhat empty. The 3’6 bar is an intimate, speakeasy-like cocktail bar. Finally, the fourth floor is home to The Diamond Jubilee Tea Salon, an homage to the British tradition of afternoon tea. Queen Elizabeth II formally opened the room in 2012, renewing the special bond between the store and the Crown.

Floors are accessible through elevators and two different staircases, including a double-helix one. While the ground floor is packed with merchandise and customers filling their baskets with tea boxes and sweets, the other floors are airy and sometimes feel empty. During a weekday visit, the upper floors were relatively empty, with only a few customers shopping. Only the ground floor and the restaurants were busy. Some parts of the upper floors could be enhanced with additional products to recreate the ground floor’s product abundance, clearly inviting a food shopping spree.

Retail expansion with intention: scarcity as an asset

Additionally, Fortnum & Mason has developed an international presence over the years, always controlling scarcity. Similarly to Harrods, they demonstrate deliberate resistance to overextension, preserving the brand mystique and ethos. As a result, in addition to dozens of wholesale stockists, they are adopting a selective retail presence:

• A store at St Pancras International rail station opened in 2013, with click-and-collect services.
• A bar and a store at Heathrow International Airport opened in 2014, targeting premium international travellers.
• A store, bar and restaurant at the London’s Royal Exchange boutique opened in 2018.
• A store and restaurant launched in 2019 at K11 Musea in Hong Kong as the first overseas venture, designed as a brand embassy for Asian luxury consumers.

In June 2025, the company announced a regional UK expansion project beyond London, aimed at addressing the surge in demand for its luxury teas, biscuits and jam. While more than one additional store could open, they are currently exploring sites with iconic architecture, continuing to resist a mass rollout.

From legacy to leadership: Fortnum & Mason’s innovation agenda

Tech upgrades and operational efficiency

With a 7% decline in online sales during Christmas 2024 due to issues with hamper deliveries, e-commerce has been a challenge at Fortnum & Mason. The retailer has optimised its supply chain by consolidating its four distribution centres into one, increasing its e-commerce capabilities. While the situation is improving, demand still exceeds their delivery slot capabilities. This is why the company deliberately limits the number of orders, making sure they can fulfil them while maintaining excellent service.

Fortnum & Mason shows great dynamism in optimising operations to improve productivity. From 2024, the company began rolling out an AI-powered forecasting and merchandising system, developed by Relex, across its category buying teams, which were previously using spreadsheets. In-store, they successfully reduced the number of steps in the checkout process, resulting in a five-second decrease in transaction time per customer.

In parallel, in March 2025, Fortnum & Mason entered the on-demand delivery market. They partner with premium groceries delivery platform Zapp to offer 24/7 60-minute delivery across London. No longer seen as a Christmas-focused business, this initiative marks a significant milestone in terms of customer centricity and service for Fortnum & Mason as they claim to be the first of London's high-end stores to partner with an on-demand delivery service.

Subscription service: repositioning the brand beyond Christmas through convenience

Increasingly focused on customer centricity and convenience, Fortnum & Mason unveiled a three-tier subscription delivery service in 2024:

• At £100 annually, the Tea Post subscription offers customers a year’s supply of monthly refills of a choice of Fortnum’s tea blends. Subscribers also receive a personalised china mug, tin and strainer.
• The Biscuit Post, which costs £20 a month, offers refills of the Toffolossus, Chocolossus or Gingerlossus biscuits, available on either three-month, six-month or 12-month subscriptions.
• The third subscription, called the Teatime Dispatch, offers a selection of tea and biscuits, as well as a choice of jams, for £75 a month.

From customer to member: building a brand-led community

In 2025, Fortnum & Mason took another step toward emphasising customer relationships. They launched Friends of Fortnum’s paid membership programme offering exclusive events and early access to product drops. The scheme costs £100 per year. Members will receive a curated welcome gift, seasonal gifts and free next-day UK delivery on all orders over £25. Subscribers will also be able to access tickets for exclusive events, along with other small extras, when shopping in-store or dining at its restaurants. The department store developed the programme in direct response to customer feedback seeking a closer connection to the Fortnum & Mason brand. Despite discreet in-store advertising, the early stages of the launch are said to be very positive. Their re-platformed CRM, powered by SAP Emarsys, enables behavioural segmentation and provides first-party data capture.

Finally, marketing activations have been launched through noteworthy partnerships. They have recently partnered with actor and cooking expert Stanley Tucci for a cookware range and with multi-layered cake brand Get Baked, which has drawn younger crowds to the store thanks to its success on TikTok.

With food and beverage at its core, Fortnum & Mason stands apart as a department store. Turning its historic specialisation into a competitive advantage, the company’s food-centric heritage and royal cachet sustain its cultural relevance. Its deliberate emphasis on experience over expansion, high-margin own-label assortments, and curated internationalisation reflects a relevant approach to luxury retail. Additionally, the company demonstrates that category focus, rather than scale, can define global luxury success.

The future of Fortnum & Mason holds uncertainties, though. Achieving less than £250 million annually, the centuries-old business is real but narrow. Concentration in one flagship, UK tourist tax policy, and high exposure to raw material inflation are threats to the company.

Finally, the consequences of climate change may reveal a more fragile business than the brand aura suggests. Driven by heatwaves and floods, Darjeeling tea output fell to a 170-year low of less than 6 million kg in 2024, and Assam tea production dropped 7.8%, two key products at Fortnum & Mason. While food and drink have always been its core business and a success enabler, this shows how Fortnum & Mason's heavy dependence on certain products could transform into a threat to its future—a cautionary tale to keep in mind.

Credits: IADS (Christine Montard)

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The cyberspace is an increasingly interlinked web where risks are exacerbated by rising geopolitical tensions, speedy adoption of emerging technologies, and regulatory requirements. The growing elaborateness of value chains combined with the lack of oversight into the security levels of suppliers has been identified as the leading cybersecurity risk for organisations by the World Economic Forum’s Global Cybersecurity Outlook 2025. The report also concluded that the widening cyber skills gap is fuelling increased cyber inequity among industries and scales of organisations.

The retail industry accounted for about 24% of all cybersecurity attacks in 2020[1] and faced more data breaches than any other industry.[2] As of 2024, ransomware attacks on the retail industry have increased by 22%[3]. The rise of e-commerce has created new opportunities for cybercriminals to target retailers given the wealth of payment information as well as personally identifying characteristics that retailers possess. As the harnessing of data-driven technologies by retailers grows, cybercriminals have a larger target surface area to attack.

Several brands and department stores have been targeted in recent years. In March 2025, IADS member El Corte Inglés faced a data breach involving sensitive information, including identification and contact details, as well as credit card numbers used for purchases. More recently, in April 2025, Marks & Spencer was cyberattacked by teenage hacker gang Scattered Spider that led to a GBP 700 million loss in valuation and an estimated impact of GBP 300 million on its profit followed by Harrods and the Co-op. In mid-July, Louis Vuitton reported a data breach of over 400,000 customers’ personal information that triggered an investigation by Hong Kong’s privacy watchdog. According to Grant Thorton, less than half retail businesses have a cyber-strategy in place which is below the global average (52%) for all businesses.[4] Given that large retailers collect immense amounts of data from their customers, cyberattacks pose operational and reputational risks.

[1] 2020 Trustwave Global Security Report

[2] 6 ways hackers are targeting retail businesses

[3] Europe Retail Threat Landscape 2024

[4] Cyber security concerns in the retail sector

The growing complexity of retail value chain cybersecurity

Large retailers, including department stores, have multi-tiered value chains reflecting an end-to-end sequence of activities that create dependencies among hundreds of third-party vendors, software modules, and cloud services. This creates an expanding attack surface for cyber criminals with each node forming potential entry points for attackers, especially when visibility into suppliers’ security practices is limited. As organisations adopt new technologies, add digital assets, integrate cloud services, and connect with more third-party vendors, they generate a larger digital footprint making it harder to secure each access point. As a result, organisations face more vulnerabilities with greater complexity and lower visibility over a more dispersed value chain requiring higher security costs.

Smaller suppliers often lack resources to meet robust cybersecurity standards, creating systemic weaknesses. Only 35% of Small and Medium Enterprises (SMEs) report sufficient cyber resilience compared to larger firms.[5] Typically, with smaller budgets and fewer IT staff, most SMEs have limited resources to invest in advanced cybersecurity tools or hire dedicated security experts. Due to this, they often rely on outdated technology or consumer-grade security solutions which are less effective against modern threats. Cybersecurity awareness and training of personnel may be lower due to the common misconception that SMEs are ‘too small to target’. However, the combination of lower security and access to valuable data makes SMEs an attractive target for attackers as an entry point to infiltrate bigger organisations.

Regulatory challenges are increasing value chain cybersecurity risks because organisations must navigate a patchwork of overlapping and evolving regulations across different regions, making compliance complex and inconsistent. At the same time, many companies lack clear visibility into their multi-tier supplier networks, especially with smaller vendors and open-source software, leading to hidden vulnerabilities. These issues are compounded by inconsistent security standards among suppliers, rising compliance costs, and the operational risk of relying on critical third parties, all of which make it harder to detect, prevent, and respond to cyber threats across the value chain. Enforcing consistent security standards across jurisdictions and industries remains difficult. Software value chains are particularly opaque, with vulnerabilities lurking in sub-tier modules. Only 48% of Chief Information Security Officers (CISOs) effectively manage third-party compliance due to fragmented regulations.

In the retail industry, systemic interdependencies turn every supplier, technology partner, and service provider into a potential avenue for a cyber‐attack. For example, a breach at a small third‐party logistics firm handling back-room inventory, or a vulnerability in an open-source e-commerce plugin used by a boutique fashion supplier, can be exploited to “island-hop” into the department store’s core systems. This is how attackers gained entry to Target in 2013 via its heating, ventilation, and air conditioning (HVAC) contractor. Today’s retailers rely on cloud-hosted POS platforms, real-time inventory-management systems, loyalty programme APIs, payment processors and outsourced marketing agencies, often without full visibility into each partner’s security posture. When one node fails, thousands of stores can experience stock-outs, payment-processing outages and breaches of customer data simultaneously. This “concentrated dependency” not only disrupts sales and damages brand reputation but also triggers regulatory fallout and hefty remediation costs.

[5] Risk factors from supply chain interdependencies in a complex cybersecurity landscape

Key value chain cyber risks and mitigations in the retail industry

From Internet of Things (IoT) device vulnerabilities to social engineering attacks and data breaches, these are the main value chain cybersecurity risks retailers face and how they can be combated

IoT device vulnerabilities 

Retail has undergone rapid change in the last decade, bringing rise to e-commerce and customers who prefer shopping online to in-store. Retailers are no strangers to cyber threats on websites and mobile apps, including

• “formjacking,” where hackers inject malicious code into a webpage, most often a payment page form,
• “scraper bots,” that extract content and data from websites for price undercutting and content theft, and
• “electronic skimmers”, that steal payment data from visitors from input fields or fake checkout pages.

However, their physical storefronts are increasingly vulnerable to cyberattacks too. Stores feature diverse IoT devices: “smart” appliances that are connected to the internet. These include customer-facing systems like self-checkout kiosks, smart sensors that track customer paths, monitoring tools that optimise inventory management and climate control systems. While these devices help increase efficiency and improve customer experiences, they are also each tied to the open internet, making them vulnerable to nefarious activity.

Social engineering attacks

Phishing and other social engineering attacks are primary threats to the retail industry. RH-ISAC’s Retail & Hospitality Industry Insights Report confirms that 90% of reported cyber incidents in the retail industry result from social engineering, system intrusion, or basic web application attacks. Threat actors can access retailers’ networks via social engineering attacks, where they manipulate employees and trick them into revealing confidential information, granting unauthorised systems access, or otherwise compromising cybersecurity.

Not limited to their own employees, a common tactic is to send phishing emails or call the support desk of a retailer’s vendor. The methods are largely the same: a hacker poses as a trusted source, such as someone from an HR, IT or accounting team. Once trust has been secured, threat actors ask victims to hand over login credentials or direct system access.  Because many retailers and vendors share login credentials, this oversight can end up giving hackers full access to a retailer’s network, allowing them to deploy ransomware, install malware, or steal sensitive data. Advances in artificial intelligence and deepfake technology have led to social engineering attacks becoming more realistic and successful than ever.

Third-party vendor breaches

Retailers’ systems are often directly integrated with third-party vendors’, such as suppliers, logistics providers, and payment processors. These partnerships help streamline data transfers and improve efficiency, but also open doorways for bad actors to attack. If a hacker manages to exploit a vulnerability in a vendor’s system, they can take advantage of the retailer-vendor connection to gain access to the retailer’s network. While APIs and other connections enable seamless communication, they can also enable data theft. If connections are not sufficiently secure, hackers can easily intercept them to steal data during transfer, such as customer payment information. Vendors that do not have a direct connection to a retailer’s systems still represent a vulnerability. Data theft is the most obvious and immediate. But retailers can also face ransomware attacks, operational downtime, loss of customer trust, reputational damage, and even regulatory penalties in the wake of data breaches.

Experts from the UK’s National Cyber Security Centre (NCSC) stress that cyber risk should be a corporate governance theme, treated with the same seriousness as financial and legal risks. Incident response planning, including clear plans for operating without IT systems for extended periods and rebuilding tech infrastructure post-incident, should be a non-negotiable requirement for executives to develop actionable disaster recovery plans. The human factor in cybersecurity remains a persistent vulnerability. Most organisations conflate awareness with training by bombarding employees with information instead of practical skills. Secure practices must be easy to adopt and embedded into daily routines without creating trade-offs between productivity and security. Regular exercising and simulation including tabletop exercises are necessary to make the threat tangible and clarify roles and responsibilities for board members.

When one supplier fails: how the Marks & Spencer hack rippled through UK retail

Several UK retailers were recently hit by cyberattacks, with the most notable being on Marks & Spencer by the Scattered Spider hacking group. The breach resulted in a GBP 300 million hit to operating profits and wiped GBP 700 million off its market value. The breach, attributed to human error at a third-party supplier, forced the suspension of online operations for over three weeks, disrupting GBP 3.5 million in daily digital sales and affecting services including contactless payments and click-and-collect services. The disruption lasted almost three months, until July 2025. While no payment details or account passwords were compromised, the attack exposed customer personal data, including contact details and online purchase histories, leading to a class action lawsuit. The incident has significantly impacted consumer confidence, with recommendation rates dropping from 87% to 73%, though underlying trust remains at 82%. CEO Stuart Machin is facing a GBP 1.1 million reduction in compensation, reflecting the growing accountability for cyber security at the executive level. The breach has wider consequences for the retail sector, driving a 10% increase in cyber insurance premiums and highlighting the critical importance of robust security measures in modern retail operations. Four suspects in connection with these coordinated cyberattacks have since been caught. As part of rebuilding efforts, Marks & Spencer and Co-op launched promotions for customers and staff to thank them for their support.

Interestingly, this recent slew of cyberattacks on UK retailers has revealed a significant disparity in risk management approaches, with Harrods and Co-op lacking cyber insurance coverage while Marks & Spencer maintained substantial protection. The attacks forced the Co-op to suspend contactless payments in approximately 10% of its stores and led to Harrods reporting unauthorised system access attempts. While Marks & Spencer faces potential losses of GBP 300 million, their GBP 100 million cyber insurance policy, arranged by WTW with Allianz as the primary carrier, provides crucial financial protection. The incidents have prompted industry experts to predict increased demand for cyber insurance, though insurers are expected to enhance their scrutiny of coverage applications. This series of attacks occurs against a backdrop of evolving cyber threats, with UK cyber claims showing a 20% decrease in 2024 while remaining significantly higher than pre-2023 levels. While cyber-insurance can be a tool for risk transfer, it cannot substitute for foundational controls. Targeted policies, addressing both first and third party costs, are important with mature providers offering valuable incident response services.

The systemic interdependencies within industries and markets are evident, given that the incident at Marks & Spencer triggered similar attacks on Harrods and Co-op, also claimed by Scattered Spider. According to RH-ISAC, ransomware now accounts for 30% of retail security incidents, with average losses reaching USD 1.4 million per attack. The breach's origin through third-party supplier vulnerability emphasises the complex challenges retailers face in securing their digital infrastructure. This wave of attacks highlights that the need for effective cyber risk management in retail demands comprehensive insurance coverage and rigorous oversight of third-party suppliers and coordinated incident response strategies to ensure effective management of these crises.

Conclusion: From cascading vulnerabilities to cyber resilience in the value chain

A rise in digital innovation has transformed the retail industry into a highly interconnected ecosystem, expanding the attack surface and amplifying systemic vulnerabilities. Large department stores rely on multi-tiered value chains spanning hundreds of third-party vendors, cloud services, and IoT devices, with each interaction offering potential entry points for threat actors and creating blind spots that are difficult to monitor and secure. Furthermore, smaller suppliers, which often lack the budgets and expertise for robust cybersecurity, introduce further weak links. Cyber inequity has been identified as one of the leading cybersecurity risks. By supporting smaller organisations in meeting security standards, larger, resource-rich organisations can strengthen the entire network’s security, ensuring a more resilient cyber ecosystem.

Building resilience against value chain cybersecurity threats in the retail sector requires a holistic and proactive approach rooted in best practices and robust frameworks. Retailers must prioritise risk-based supplier assessments, conduct rigorous due diligence, and implement clear contractual requirements that define security controls and incident response protocols. Continuous monitoring by leveraging technologies like automated risk assessment platforms and Software Bill of Materials (SBOMs) is essential to maintain real-time visibility into supplier security and swiftly identify vulnerabilities. Adopting industry-recognised frameworks such as NIST and ISO 27001, and aligning with regulatory standards like PCI-DSS (Payment Card Industry Data Security Standard), further strengthens the foundation for effective cybersecurity management. Collaboration is equally critical: sharing threat intelligence, participating in industry initiatives like IADS partner RH-ISAC’s LinkSECURE and the NCSC’s Cyber Essentials framework, and supporting the cyber maturity of smaller suppliers all help close gaps across the value chain. By embedding these best practices into everyday operations, retailers can mitigate the risk of operational disruptions and data breaches while fostering trust with customers and partners transforming cybersecurity from a compliance requirement into a driver of sustainable business growth.

Credits: IADS (Anchita Ranka)

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Depending on countries, there are different ways of sharing company ownership, whether it’s through partnerships, worker cooperatives, ESOPs (Employee Stock Ownership Plans, collective pension trusts in which employees do not have to put up their own money) in the US, or employee stock purchase plans, which allow employees to buy company stock at a discount. Company ownership can also be shared with customers.

At a time when younger generations look for more meaningful jobs and a sense of belonging in responsible companies, shared capitalism in its different forms is interesting to consider. Taking the opportunity of the IADS welcoming John Lewis & Partners department store among its members, the article reviews three other retailers with different shared capitalism models besides the partnership model: System U supermarkets in France, Walmart, and outdoor retailer REI in the US. How do these models work? What are the benefits for the stakeholders and the limitations for companies?

Four examples of how shared capitalism works

John Lewis Partnership

The John Lewis Partnership (JLP) model is a unique employee-owned business structure in the UK. It operates John Lewis department stores and Waitrose supermarkets. JLP is owned by a trust on behalf of its 70,000+ employees, known as Partners. All employees are Partners but do not buy, sell, or hold personal shares. Instead, they automatically become Partners with a non-transferable collective stake that only exists while employed. As a result, there is nothing to give back when they leave, as their participation in the ownership ends automatically upon their departure. JLP abide by a constitution and has a democratic governance system where employees have a voice in company decisions. The power is shared between the Chairman, the Partnership Board and the Partnership Council. Employee influence operates through multiple channels:

• The Partnership Council: A group of elected employee representatives reviews strategic decisions, such as significant investments, operational shifts, or company restructuring. The Council has three vital decision-making powers:
  • To elect three Trustees of the Constitution, five Directors to the Partnership Board and four Trustees to serve as Directors of John Lewis Partnership Pension Trust.
  • To change the Constitution, with the Chairman’s agreement.
  • To dismiss the Chairman.
• Local and regional forums: employees can express concerns and ideas through smaller councils at store and department levels, which report to higher decision-making bodies.
• Annual partnership vote: Partners vote on key policies and leadership performance, influencing the company’s direction.
• Consultation on strategic changes: while Partners do not directly set strategy, leadership consults them on significant initiatives, including pay structures, business transformation, and store operations.

Employees primarily influence leadership accountability via votes of confidence in management, workplace policies (including benefits, working conditions, and store operations), company values, and ethical stances. However, they do not directly control high-level commercial strategies (acquisitions, major cost-cutting measures, for example) but have a voice in how these are implemented.

Walmart stock purchase plan

Another model is Walmart’s Associate Stock Purchase Plan (ASPP), which offers almost all employees the opportunity to purchase company stock. Employees can enrol in the plan and select a contribution amount deducted from their paychecks. Associates choose to contribute a portion of their paycheck, with options ranging from $2 to $1,000 per pay period.

Walmart employees who participate in the ASPP and own Walmart stock in their name have the legal right to vote on shareholder matters, including the election of board members. When an employee purchases Walmart shares through the ASPP, they become a registered shareholder and receive proxy materials yearly, including ballots to elect directors to the Board and participate in advisory votes on executive compensation and shareholder proposals on ESG issues, labour, governance, etc.

However, individual ownership is small at Walmart. Even if many employees vote, they rarely represent a large enough bloc to influence outcomes, and unlike co-op or trust-owned models, Walmart does not reserve board seats for employees. The ASPP aligns employee interests with company performance, supports a shareholder-centric culture and offers financial benefits to employees, but its underlying strategic purpose is corporate-driven.

Système U federation

Système U is one of France’s most prominent retail cooperatives, operating a network of supermarkets and hypermarkets under banners like Super U, Hyper U, U Express, and Marché U, representing around 1,600 stores across France and over €20 billion in annual revenue. It stands out in the French retail landscape due to its cooperative model, which is owned and governed by independent retailers, not by a central corporate entity. As a result, Système U is not a single company but a federation of independent store owners, each owning and managing their store(s). These store owners are members of regional cooperatives, which in turn are members of the national cooperative, Système U.

Each member has a say in strategic decisions, based on the one person = one vote principle typical of cooperatives, regardless of the size of their store. Members hold voting rights to influence various aspects of the cooperative's operations:

• Elect individuals to the Board of Directors.
• Vote on significant strategic initiatives, including expansion plans, major investments, and changes in business focus.
• Pricing strategies, marketing campaigns, and other operational policies may be subject to member approval.
• Vote on the annual budget and how members' profits are distributed.
• Any proposed amendments to the cooperative's bylaws, which govern its operations and member obligations, require member approval.
• Existing members may vote on the acceptance of new members into the cooperative and on disciplinary actions, including potential expulsion.

Major decisions are made during General Assemblies, where members discuss and vote on various issues. These assemblies provide a platform for members to voice their opinions, debate proposals, and collectively shape the cooperative's direction. For specific areas such as marketing, logistics, or product selection, committees and working groups comprising member representatives may be formed. These committees make recommendations, which are then voted on by the broader membership.

REI co-op

Unlike the retailers mentioned above, US outdoor retailer REI (Recreational Equipment, Inc.) operates as a consumer cooperative, a distinctive business model in which the company is owned by its members, the customers, who purchase a lifetime membership currently priced at $30. REI grants customers voting rights in board elections and annual dividend eligibility based on purchases. Every year, REI members can elect members to the board. Those members work with the president, CEO, and senior leadership team to set the co-op's direction.

The benefits of the models

For companies: business longevity, improved performance

John Lewis Partnership fosters long-term stability. Since there are no external shareholders and no dividend pressure, it focuses less on short-term profits. This allows for long-term strategic planning and reinvestment into the business. The company can make decisions prioritising business longevity rather than immediate stock market reactions, reducing the pressure of short-term financial targets, an advantage also mentioned by REI’s CEO back in 2017 when the company posted excellent results closely tied to REI’s cooperative business model. The UK Treasury analysed data from confidential tax records on tax-advantaged share schemes at over 16,000 UK firms and found that employee ownership is linked to improved firm performance measures, such as value-added and turnover. Also, JLP employees have an ownership mindset and tend to be more engaged because they have a direct stake in the company’s success. IZA World of Labour studies show that employee-owned businesses often have better performance, lower turnover, and higher retention rates. Forbes mentions that “employee-owners are typically more committed to the client experience than regular employees are. […] People often take better care of what they own than what they don’t.” Engaged employees offer better service, aligning with John Lewis's reputation for high-quality customer care.

Besides, the company’s employee ownership model can be a competitive advantage, attracting customers and employees who appreciate “ethical” business practices. This is the case for Walmart. As one of the world's largest private employers, the ASPP positions the company as socially responsible by promoting employee participation in capital markets. It supports the company’s messaging around economic opportunity and upward mobility for hourly workers.

In the case of Système U, store owners are directly involved in operations and profits, ensuring strong local responsiveness and motivation.

For employees: profit sharing

Although this has fluctuated recently, JLP has historically shared annual profits with employees through a Partnership Bonus. For example, in March 2025, despite steady financial performance, the partnership continued its bonus freeze. However, it has invested GBP 114 million in partners' pay, reflecting a strategic shift towards regular staff support rather than annual bonuses. Also, the partnership model fosters stability as there are likely fewer layoffs during recession times, as there are no shareholder returns.

Unlike JLP, where participation in the ownership ends upon employee departure, shares are legally owned by Walmart’s employees who are part of the ASPP, even when they leave the company, offering them potential profits beyond their tenure at Walmart. Also, the company matches 15% of the associate's contributions, up to $1,800 in contributions per year. In January 2024, Walmart announced a 3-for-1 stock split to make stock ownership more accessible to associates. For each share owned as of February 2024, associates received two additional shares. This move aimed to encourage greater participation in the ASPP and to encourage associates to think like shareholders.

While not owned by employees, REI is known for investing most of its profits into initiatives like employee profit-sharing. The company has been acknowledged as a leading employer, earning accolades such as Forbes' Best Brands for Social Impact and Best Employers for Diversity & Women.

The employee-ownership model fosters a collaborative and inclusive culture, leading to higher job satisfaction, better work-life balance, stronger workplace culture, and a sense of purpose and belonging.

Customer benefits: the specific case of REI

Also valid for JLP, the public perception can improve as the company benefits from a reputation as a fair employer with ethical stances such as prioritising workers’ well-being or community engagement. REI's structure emphasises member engagement and community involvement, setting the company apart from traditional retail corporations. REI’s marketing has long been built around positioning the company as a positive force for the environment and society. It is known for investing parts of its profits into initiatives like ecological programmes. Turning 10 in 2025, a significant example is the #OptOutside campaign, in which the company shuts down each year on Black Friday so staff can spend time outdoors. Also, REI offers programmes like the Co-op Racial Equity, Diversity & Inclusion (REDI) Learning Series, with over 15,000 employees participating to enhance their understanding and engagement in these critical areas.

Joining the co-op by buying a membership gets customers an annual 10% cashback on all eligible, full-price purchases and other membership benefits such as free shipping with no minimum order, a full year for most returns, coupons for gear and discounts on shop services and classes. REI advertises that members’ voices matter in shaping the products REI makes, the stories they tell, and the co-op's future. Members can share their story on REI social media, be considered a model or crew for an upcoming photo or video production, be selected to give feedback on product design, and vote for the co-op’s Board of Directors.

REI’s Board of Directors determines each Spring whether and how dividends are distributed, based on the co-op’s financial health. In years with substantial profits, members receive a dividend as store credit. Despite weak financial results in 2023–2024, REI’s website advertises that members earned more than $200m in co-op Member Rewards from their eligible 2023 full-price purchases. The dividend is not a legal profit share or stock dividend—it’s a cash-back system based on spending and available profits. As a result, can it be considered a great loyalty programme with cashback and a tool to foster strong community-building?

Challenges and limitations of shared capitalism

Financial and other pressures

In a highly competitive retail sector, JLP has struggled in recent years with declining profits, leading to store closures and restructuring and limiting bonuses, which can impact Partners’ morale. In March 2025, despite a 73% increase in pre-tax profit, JLP is still in turnaround mode, which explains the glum message about UK retail sent to employees explaining the absence of bonuses. Overall, operational costs can also be higher due to extensive benefits. Finally, research on JLP mentions the partnership democratic model entails slower decision-making and challenges in expansion or if radical transformation is needed as it might be difficult to balance commercial and financial pressure with Partnership principles.

In the case of REI, sales began to decline after more than a decade of growth before the pandemic and a 36% post-COVID sales rebound in 2021. REI reported a net loss of $311 million for 2023, partly attributed to its dividend for co-op members, once the very reason for the company's success. In 2023 and 2024, REI implemented cost-cutting measures, including layoffs and reduced employee hours. CEO Eric Artz emphasised a more realistic approach: “there is no mission without margin.” The company must now reconcile financial realities with its employee-first identity and maintain its cultural distinctiveness while remaining competitive in the retail landscape.

Low employee engagement

The actions taken at REI have triggered discontent among employees as many feel the company is becoming indistinguishable from traditional big-box retailers. In response, ten REI stores have unionised, and staff have organised protests and worn pins saying, “Ask Me About My Pay Cut,” challenging REI’s branding as an ethical employer.

Additionally, employee ownership is subject to the free-rider problem since the rewards from individual effort are shared with other workers, with ownership and bonuses distributed equally or based on tenure rather than individual performance. As a result, the direct incentive to work hard may be weak, which can lead valuable workers to leave. Overall, the system can avoid penalising low performers and rewarding high performers.

Also, employees who own stock should be more likely to be motivated by company performance, productivity, and long-term profitability. This is why Walmart encourages employees to be part of the ASSP. However, the truth is that only around 25% of Walmart employees participate in the plan, which shows that employee engagement might remain limited. Research on JLP shows that some Partners feel disconnected from democratic processes and don’t actively engage with democratic structures. Also, they can demonstrate resistance to change and modernisation.

The diverse models of shared capitalism in retail demonstrate both the potential and complexities of alternative ownership structures. The experiences of John Lewis Partnership, Walmart, Système U, and REI reveal that success requires carefully balancing democratic principles with commercial imperatives, employee interests with financial sustainability, and idealistic values with practical realities. As traditional retail continues to evolve under pressure from e-commerce and changing consumer expectations, these models offer valuable lessons about alternative ways to organise retail businesses, even if they may not represent a universal solution for the sector's challenges. For a company, shared capitalism, especially the partnership model, can foster stability, resilience, and brand differentiation. For employees, it offers profit-sharing, a say in governance, higher job security, and a strong workplace culture. However, financial challenges and market pressures mean the model must continuously evolve to remain competitive. So far, the JLP model has proven resilient and successful over its long history, though it faces increasing pressure in the modern retail environment.

Credits: IADS (Christine Montard)

PRINTABLE VERSION HERE

Check out the photos of IKEA Oxford Street

It took IKEA a long time to open stores in city centres. Set to develop from 2002, the first city-centre stores only opened in 2014 in Hamburg and 2019 in Paris, followed by many more. At the heart of this transformation lies a core question: what should an IKEA store look and feel like in the centre of a global city? Beyond simply shrinking its footprint, IKEA seeks to redefine the role of retail within urban ecosystems, from a warehouse to a hub for inspiration, interaction, and services.

With its first store opening in 1987, IKEA is already present in the UK, where it operates 22 stores and employs nearly 12,000 staff. The retailer has five locations in London, adding a sixth one with the muchanticipated London Oxford Street IKEA City store which opened on 1 May 2025, 18 months later than planned. Requiring huge investments, the new store demonstrates the company’s faith in the success of high street outlets. Even London Mayor Sadiq Khan praised the store and considers it a “vote of confidence in London, in our economy and in our plans to rejuvenate Oxford Street”.

The store is the brand’s most significant investment in a single site to date, and most probably its most high-profile store. Announced with much anticipation and fanfare, the store promised to signal a new chapter for IKEA in the heart of London. But does it deliver on that ambition? And how far does it really depart from the IKEA playbook?

Experimentation: how IKEA is prototyping the city-centre store

Since its inception in city centres in 2014, IKEA has followed a test-and-learn process for its small-format stores. Always eager to adapt to local specifics and evolving consumer needs, the company has tried various formats. Here are a few representative examples:

• A Decoration Store opened in Paris in 2021, offering 1,900 home accessory references (still operating to that day).
• Not a store per se, the Everyday Low Price Truck touring in Hong Kong during Summer 2021 was not selling anything but instead acting as a drive-to-store and data collection mechanism.
• Planning Studios opened in London (2018), Copenhagen (2019), NYC (2019) and Paris (2021), with uneven results.
• A three hundred square metres Close to You concept store opened in 2021 in Hong Kong, mixing 110 home furnishing products with 120 Swedish signature gourmet products.
• An unprecedented temporary nine sqm store opened in Paris, showcasing 10,000 products and 60 room sets in real size 3D, with the brand website only a click away.

While the most developed city-centre concept appears to be the IKEA City store, IKEA's experiments show how much the retailer’s strategy has pivoted from its long-standing model of large, car-accessible “big box” warehouse stores to an innovative, city-centre, strategically positioned, integrated, and community-focused flagship strategy. The shift responds to significant changes in consumer behaviour: online shopping is rising, car usage is declining, and there is a growing expectation that retail spaces serve broader cultural and social purposes. As a result, IKEA is willing to reinvent its physical retail spaces, aiming to transform itself from a product-based retailer into a lifestyle enabler, weaving its brand into the urban fabric to go far beyond the sale of furniture.

At the heart of this transformation are heavy investments in urban flagship locations, such as the acquisition of what was once the Peter Robinson department store and, more recently, the Topshop store on Oxford Street. This prime location offers unparalleled brick-and-mortar presence, foot traffic and brand exposure, as well as a billboard for the brand itself. As is the case with other city-centre stores, the new Oxford Street location intends to be more than a miniature replica of traditional warehouses, but a hybrid space where people gather, share, and engage. Does the store live up to its ambition?

Immersion, play and anticipation: IKEA’s Hus of Frakta prelude to the Oxford Street opening

With the building acquired for £378 million and an investment of tens of millions of additional pounds in renovation, the store is IKEA’s biggest investment by far in a single shop, according to Ingkai, only adding to speculations and expectations of what the store could look like.

The store opening was anticipated with a notable activation, the fun, engaging and imaginative Hus of Frakta (House of Frakta) pop-up in November 2024. Based on the iconic, ubiquitous blue carrier bag (IKEA reports that 45% of UK households own one), the pop-up was an all-blue immersive experience celebrating the bag in a way that felt part gallery, part luxury, and part playful. Visitors were greeted by a dramatic giant Frakta sculpture at the entrance. Inside, a “Blue Edit” display showcased a selection of blue products presented as if in a gallery. A key highlight was “The Atelier”, where visitors could personalise their Frakta bags with initials for a modest £3 fee (free for IKEA Family programme members). Shoppers would receive a certificate of authenticity with their personalised bag, further reinforcing the pop-up's blend of humour and luxury. Additionally, the pop-up transformed a mundane object into a multi-sensory experience through an immersive mirrored room, simulating being inside a Frakta bag, accompanied by a designed ASMR soundscape that mimicked the bag’s crinkling. Finally, playful surprises included a candy floss dispenser activated by a button in a curtained nook, offering blue cotton candy as an Instagram-ready feature. Following this significant and innovative activation, expectations were even higher for the opening of the flagship, fuelled by the long wait and the prominence of the location. Many anticipated a bold, experiential approach that would set this store apart from the standard IKEA formula.

Not quite the revolution: the Oxford Street store delivers practicality over vision

Instead, what has opened is essentially a miniature 5,800-square-metre version of the familiar IKEA model. It certainly ticks the efficiency box, like grabbing essentials in under an hour during a lunch break. With no parking space, the Oxford Street IKEA City store is designed for people travelling by public transport and unlikely to leave with large items. This is why the home delivery service was emphasised with a specific campaign featuring taxis loaded with IKEA products, amplifying the delivery angle. The store feels like a typical IKEA, without requiring a half-day commitment.

This feeling is reinforced with the typical big-box customer journey that features a showroom, market hall, and self-service furniture area. Spanning three floors, it offers approximately12,000 SKUs, with about 3,000+ items available for immediate take-home (advertised with specific tags), striking a balance between showroom inspiration and convenience.

IKEA aims for the store to blend seamlessly into the local culture. To that end, the store features a ‘London vibe’, with showroom room sets co-created with locals, highlighting resident styles. Sadly, the Londoners appear more like marketing personas, with the hipster guy focused on repair culture, the drag queen on her wigs, the middle-aged, tidy lady who’s all about organisation and storage, the old, traditional yet quirky British lady, and more. Still, while it feels a bit artificial, it is the only feature adding a bit of flair to the store.

More in detail, the Oxford Street store is organised as follows:

• Exterior: The entrance is flanked by a large window on each side. These windows are only large digital screens, alternatively featuring service and product offerings. This choice trades aspiration for convenience. It appears to be a mixed opportunity for offering city dwellers what London's retail and department stores are known for: exceptional window displays.
• Ground floor: Relatively small, it primarily serves as the store's entrance. Still, it features a selection of affordable products tailored to the season, IKEA-brand merchandise, promotion of the IKEA Family programme, self-service points, and a sneak peek into furniture with a wall of chairs and other small furniture pieces. The first products customers see upon entering the store are £0.50 candles, consistent with the rest of the store, which features numerous items under £3. Besides affordability, the product selection on the ground floor doesn’t tell a cohesive story.
• -1 floor is home to the showroom. As usual, it is organised by room sets and product types (living room, living room storage, workspaces, kitchen, dining, bedroom, bathroom, and children's), alternating with product showrooms (such as sofas, chairs, storage options, etc.). Considering Londoners live in small spaces, there is an untapped opportunity to offer beneficial inspiration and solutions for small-space living, including more dedicated room sets for studio apartments. This floor also features a planning space for one-to-one consultation services. At the time of the visit (weekday at 6 pm), only one planner was available and not busy. However, a larger section with several planner desks is open on weekends. The customer service for exchanges, returns, and click-and-collect is also located on this floor, at the end of the guided journey, as well as a small children’s play area surrounded by large digital screens that alternately feature metaverse-like nature views and cultural content. Finally, the floor tour concludes with the Swedish Deli food store and 130-seat restaurant. Ordering only goes through digital screens. The customers are invited to pick up their orders and find a seat. A part of the seating area can be used for community events. While the floor was relatively quiet, the restaurant was packed at the time of the visit. Escalators to the -2 floors are only visible once you end the -1 floor tour. On both floors, a few shortcuts are featured on information banners.
• -2 floor is home to the market hall, starting with cookware and tableware, then featuring textiles, lighting, home organisation, rugs and decoration. The floor journey ends with the self-service furniture area. Interestingly, checkouts are all at the end of the floor, forcing customers to walk the entire store. Only digital, the checkout counters were supervised by two associates at the time of the visit. On both floors, while digital interactions are encouraged through several self-service points, large screens, and “Scan & Go” app features, around ten sales associates were available to assist customers.

Overall, the store aligns with IKEA’s global omnichannel strategy, which integrates planning services, in-store ordering, at-home delivery, and click-and-collect functions. This approach is consistent with combining physical presence with digital infrastructure. The IKEA Kreativ tool, available in the app, features 3D and augmented reality design capabilities, enabling consumers to co-create their living spaces and interact with IKEA consultants across both physical and digital channels. From that perspective, rather than competing with the digital platform, the store amplifies it, a strategy also shared by department stores opening small-format stores, as is the case with IADS members Magasin du Nord in Denmark and Bloomingdale’s in the USA.

With its scale, location, and financial commitment, IKEA Oxford Street was never just another store. It was meant to be a flagship store and a prototype of the future. In that sense, the store is a paradox: efficient yet unremarkable. Sure, it delivers the essentials of the IKEA experience, convenience and familiarity, with urban adjustments (no parking, more delivery, digital touchpoints), but without fundamentally reimagining what IKEA could become in a city centre.

The result is a store that satisfies the operational brief but falls short of the innovative and experiential leap that many expected, especially considering the company’s test-and-learn philosophy. Probably intentional to make the store profitable, the execution plays it safe, rooted in the familiar logic of showroom, marketplace, and self-service flow.

Yet this outcome is not without value. It shows that prototyping at scale remains complex, especially for a brand as systematised as IKEA. The Oxford Street store is less a breakthrough than an important iteration in an ongoing process. The next challenge is to make it feel as alive and unexpected as the cities it seeks to inhabit.

i : Ingka operates 90% of Ikea stores globally.

Credits: IADS (Christine Montard)

PRINTABLE VERSION HERE

In an industry where information is plentiful but time is limited, retail professionals are seeking ways to make ideas more digestible, shareable, and memorable. This is why the International Association of Department Stores (IADS)  has decided to evolve from static formats to dynamic audio content, with the launch of IADS Retail Park, an AI-powered podcast series. Importantly, we have not abandoned our static formats; instead, we are embracing this new approach alongside them.

What started as an experiment to convert written exclusives into human-like audio stories has matured into a repeatable system that mimics the ebb and flow of honest conversations. This model bridges language gaps, compresses production timelines, and leverages AI not just for speed but for simulated connection.

This Exclusive aims at sharing the key learnings made so far with our members.

Why audio, why now?

Retail teams today are drowning in information but starving for meaning. Between dashboards, presentations, and constant communications, there's often little time to digest the why behind the what. Audio fills that gap by enabling passive yet meaningful learning, allowing retailers to learn while they do.

Unlike conventional media, podcasts provide an intimate listening experience that feels personal and relatable. As Scott Galloway notes, “When people approach me in the wild, it’s easy to discern where they’ve been exposed to my content. […] If they greet me like a friend they haven’t seen in a while, podcast. It’s a very intimate medium. You are physically in somebody’s ear, in a private setting — washing the dishes, working out, walking the dog. It’s just you and them.” When hosts interact with their listeners in a warm, familiar tone, it fosters a sense of connection and companionship, making the audience feel included in a conversation rather than just receiving information passively. This personal relationship boosts listener engagement and loyalty, encouraging audiences to return to voices that resonate with them on an emotional level. In a world full of distractions and competing sources of information, this personal touch can elevate a podcast from just another show to a vital source of insight and motivation.

The growth of podcasting is no longer speculative. With over 500 million listeners worldwide and platforms like YouTube spearheading its popularity, podcasts have become an integral part of our information landscape.

The attention deficit in retail

Retail professionals today face an overload of communication (constant emails, dashboards, decks, messages). But volume doesn't equate to understanding. The real issue is a scarcity of high-quality attention. McKinsey’s 2025 report on the “attention equation” argues that time spent engaging with media tells only part of the story. The quality of attention, measured by focus and intent, is what truly drives understanding and action.

Audio offers professionals to absorb targeted insights during “in-between” moments—on a stockroom break, during a morning commute, or while resetting a display. Rather than carving out extra time to consume content, employees absorb insights seamlessly within their routines, increasing the likelihood of information retention and action.  McKinsey’s findings show that consumers in the top quartile of attention spend twice as much as those in the bottom quartile. In an internal business context, this translates into more focused and better-informed retail employees who make smarter decisions and are more likely to act in alignment with company goals. With generative AI now able to simulate human tone and behaviour, these insights can be delivered in voices that sound intuitive and familiar.

Why podcasts work

Unlike traditional text-based communications, podcasts are intimate and emotionally resonant. They invite listeners into a shared space, creating what Galloway calls "companion media"—where the delivery feels less like a broadcast and more like a conversation. The spoken voice, especially when generated with attention to tone and cadence, can signal curiosity, authority, or empathy. It reinforces ideas not just through what is said, but also through how it's said.

Moreover, podcasts reduce cognitive friction. There’s no need to sit down and read. The message comes to the listener in a form that’s easy to consume and, often, more memorable than the written word. Podcasts are becoming the modern analogue to print magazines and newspapers—media consumed not only for entertainment, but also for education and professional development. Roughly three-quarters of podcast listeners use the same platform to stream both podcasts and music, making audio content an ambient part of their media diet. The podcast medium is also dynamic—27% of listeners consume content at accelerated speeds, particularly among Gen Z and millennials.

This emotional resonance is further enhanced by AI voice cloning, which enables podcast hosts to sound not only human but familiar, often replicating the tone and cadence of a known executive or contributor. This is increasingly relevant in retail, where leadership visibility is vital but usually limited by logistical constraints. Hearing a trusted voice (even an AI-generated one) can reinforce a sense of connection and clarity across teams. A study led by Cornell University found that students who listened to personalised AI-generated podcasts not only enjoyed the experience more but also retained information better and learned more effectively. Meanwhile, separate research shows that 80% of people perceive AI-generated voices as real, and most struggle to distinguish them from actual human speakers.

A clear example of this in action can be seen with Langham Logistics, which partnered with Stratablue to implement an AI voice agent that processes employee call-ins and immediately delivers updates to managers, ensuring consistent, human-like messaging across its workforce. Applied in internal retail briefings, this level of consistency helps forge emotional bonds between leadership and frontline teams. That’s powerful: when a familiar executive voice is mimicked believably, team members are more likely to trust the message and stay aligned unconsciously.

The result is a new paradigm for business communication. A podcast episode, briefing, or internal memo can now be drafted, voiced, and distributed in hours rather than days. And unlike conventional content formats, these audio pieces carry a personal tone that encourages engagement rather than obligation. This strategic use of audio enables retail organisations to create emotional resonance and align teams across locations, turning communication into connection and information into momentum.

Retailers already on air : Department stores and frontline voices

IADS is not the only one embracing audio as a strategic tool. Several department stores and retail groups already run their own podcasts. Galeries Lafayette’s Minuit aux Galeries shared behind-the-scenes stories after hours to celebrate their 150th anniversary. Harrods’ True Tales from Harrods brings in designers and creatives to explore what luxury means today. The Chalhoub Group runs The Podcast by Chalhoub Group (YouTube), an ongoing series that began in 2021 and remains active today, hosted by Lynn Al Khatib, VP of Communications. The show features regular conversations with internal leaders, partners, and industry figures on topics such as innovation, sustainability, and organisational culture, making it one of the few department store group podcasts consistently produced. Ámbito Cultural (YouTube), the cultural arm of El Corte Inglés, extends its in-store programming (literary events, exhibitions, and performances) through online recordings and talks, using digital content to broaden its cultural reach. Nordstrom’s The Nordy Pod, hosted by Pete Nordstrom, is a familiar example of how retailers are shifting from sellers to storytellers—using podcasts to share culture, leadership, and customer stories, and enhancing customer connection and brand visibility. These examples reflect what the industry already recognises: audio is now an established tool for connection, storytelling, and visibility

At the same time, there’s growing recognition of the value in podcasts hosted by or featuring front-line employees. Shows like Frontline Fridays, Retail Warzone, and Frontline Innovators bring unfiltered perspectives from the shop floor. They share stories about store operations, leadership, and workplace culture that rarely appear in formal communications. These voices bring balance to leadership messaging, revealing how strategy is put into practice.

Building the podcast – The IADS workflow

Since the IADS is committed to continually learning and sharing with its members and the retail community, we have developed a process from scratch and are now sharing the key learnings, with the hope that this information will be useful to retailers.

From page to prompt

The podcasting process at IADS begins with a clear editorial strategy: repurpose written content into audio dialogue that feels conversational rather than read. The first step involves using tools like Dust.tt to convert editorial pieces into a back-and-forth format, assigning roles and simulating a casual rapport between two hosts. Prompts are crafted not just to summarise content, but to inject realism—pauses, clarifications, side comments—that mimic natural speech. Human editors then refine the AI-generated draft to improve clarity and flow, preserve the core insight while removing any robotic inflexion or repetition. This is the first checkpoint where editorial sensibility meets automation.

In the early stages of development, several AI platforms were tested. Tools like Google’s NotebookLM, then still in beta, showed promise in converting written materials into podcast-ready dialogue. However, its automated scripting often lacked editorial precision, reordering ideas or inserting speculative commentary that strayed from the intended narrative. For IADS, having 100% control over what was said and how it was said was critical. This prompted a broader search and trial of platforms including Podcastle, Play.ht, and Murf.ai. While many offered high-quality voice options and intuitive features, few provided the level of script fidelity and voice customisation required to simulate truly editorialised dialogue. The takeaway: no single tool could meet every need. Instead, IADS developed a modular system that combined best-in-class AI capabilities with human oversight at each stage.

This process wasn’t just about finding the most advanced tool; it was about identifying the right fit. IADS needed a system that supported scripted conversations with editorial control, a familiar vocal presence, and the flexibility to iterate quickly. The human editing team remained central throughout, shaping scripts, correcting tone, and aligning each segment with the voice of the original piece. The result is a format that scales efficiently while preserving nuance, intention, and warmth.

Vocal authenticity through AI

Once the script is finalised, it moves to voicing. Using platforms like Speechify, cloned voice profiles for regular hosts read the scripts aloud. These voices have been trained on their real speaking styles, enabling a more personal and recognisable listening experience. Adjustments to tempo, pitch, or emotional emphasis are manually applied where needed to reflect the appropriate tone.

Particular care is taken with pronunciation, especially with brand names or geographic references such as "Printemps" or "Monoprix." Editors will often use phonetic spelling or AI-specific markup to ensure accuracy. The acronym "I.A.D.S" is also spelt out, never read as a word, to maintain consistency and clarity.

Editing, packaging, and distribution

The final audio file is edited in tools like Audacity, where sound levels are adjusted, music bumpers are added, and segments are stitched together to create a seamless flow. Intro and outro jingles—short, branded audio cues—bookend each episode.

Episodes are distributed through a multi-platform strategy. They are hosted on Substack (which doubles as a transcript archive) and repurposed for YouTube and internal platforms. This distribution model allows IADS to reach listeners where they already are, whether browsing podcast platforms or catching up on content via email.

The entire pipeline—from drafting to final publication—can be completed in under a day. This allows IADS to respond to new developments or highlight stories quickly, reinforcing its value as a real-time knowledge partner.

Human-centric AI and the sound of storytelling

AI simulating human rapport

One of the key innovations powering the IADS Retail Park is its ability to simulate the nuances of human conversation through generative AI. Traditional AI-generated content often sounds either overly scripted or unnervingly robotic. IADS addressed this challenge by developing agent-style dialogue structures that incorporate elements of natural interaction, including interruptions, clarifying questions, and expressions of curiosity. This approach builds on recent advances in large language models, which now simulate not only coherent dialogue but also context-aware personas. These agents mimic not only human speech but also interpersonal dynamics, creating a sense of shared understanding.

This aligns with research from Stanford HAI showing that generative agents can replicate real-world answers with 85% accuracy, and with Auxiliobits’ findings that “unstructured data gathered from social media interactions” supports AI systems in learning emotional context and decision heuristics. This isn’t mimicry, it can be, though, out of operational empathy. To maintain trust and coherence, every episode undergoes a three-step loop: content grounding using memory modules, dialogue naturalisation with conversational pacing, and listener persona simulation to test clarity and emotional tone. Only when each layer passes do hosts go to voice, with phonetic disambiguation added for complex names.

Cloning voices, not people

The voices featured in each episode are not chosen randomly. They are based on real people who work at IADS, like Maya or Anchita, but enhanced by cloned voice models. These profiles are created through ethical voice training, with complete transparency and approval. This cloning allows for consistency across episodes while also maintaining a personal touch. Now, contributors whose voices are cloned opt in through recorded samples and are kept informed of how their voice models are used.

It’s important to note that these voices aren’t static. Human editors adjust pitch, cadence, and pauses based on the episode’s tone. Whether it’s a light-hearted commentary or a serious policy review, the sound is tailored to fit. In doing so, IADS avoids the uncanny valley of synthetic speech and instead delivers something closer to radio journalism.

This level of sonic authenticity helps overcome a barrier in AI adoption, listener trust. When a podcast sounds warm and familiar, it becomes easier to accept that it’s AI-assisted, not AI-imposed.

Designing for emotional intimacy

The strength of podcasting lies not only in what is said, but in how it’s felt. At IADS, this emotional resonance is deliberately designed. Dialogue is scripted to feel conversational, familiar, human, and unscripted, using templates that encourage back-and-forth exchanges. Host 1 might respond to Host 2’s point before moving to the next question, while Host 2 offers brief reflections before answering. These moments create the rhythm of a real conversation. To support this tone, reusable scripting templates were developed to guide structure and phrasing. Editors asked prompts like: “Can Host 1 relate to what was just said?” or “Can we replace robotic affirmations like ‘Absolutely’ with more natural responses?” Pauses were added manually (e.g., [pause 0.25s]) to simulate human timing and improve flow.

AI-cloned voices were refined through repeated editing to improve pronunciation and tone. Tools like Perplexity and Grammarly helped rewrite scripts to sound more like natural speech. Voice outputs were regenerated up to three times per segment to fix mispronunciations or flatten robotic inflexion. Phonetic spellings were often used to ensure clarity for names and non-English words. This wasn’t just about getting the script “right.” It was about crafting something that felt warm, relatable, and thoughtful. The result isn’t artificial realism—it’s a listening experience that feels intentional and human, even when powered by AI. This approach is supported by growing research showing that emotionally resonant media improves retention and can drive behavioural change.

What this means for retailers

Retailers as publishers

The learnings made along the IADS Retail Park development journey offers some insights for retailers looking to explore audio content. At its core, the model positions the retailer not just as a merchant but as a media entity. Any brand that generates insight—be it in customer experience, sustainability, or product design—can turn those ideas into episodes. These aren’t promotional ads; they’re value-driven conversations.

Retailers can easily turn employee onboarding guides, product explainers, or executive interviews into digestible podcast episodes. These can be distributed internally for training or externally to bolster thought leadership. Furthermore, with AI tools automating most of the pipeline, the barrier to entry is significantly reduced. Retailers should ask themselves: what insights are trapped in decks or reports that could live more vibrantly in a voice?

Generative AI now enables role-specific audio content on demand. Weekly voice briefings for merchandisers or planners, tailored by region or function, are already in use. These human-like segments bridge the gap between leadership and frontline teams, delivering updates in a way that feels natural and intuitive.

Starting small, learning fast

What sets IADS apart is not just the outcome but the approach. The Retail Park podcast was born as an experiment, refined in public, and improved with feedback. Pronunciation issues, pacing oddities, and tonal misfires were addressed not with overhauls but iterations.

This agile development approach, more familiar in the tech sector than in retail, allowed IADS to refine its content engine continuously. Retailers exploring similar projects need not fear imperfection. The key is to start with a manageable scope, such as one series, one team, or one story.

Over time, these pilots can evolve into full-fledged audio programs. With AI doing the heavy lifting and editors steering tone and intent, the process becomes less about production muscle and more about editorial vision. Ultimately, retailers that adopt a test-and-learn mindset—focusing on utility, authenticity, and speed—will find that audio isn’t just a trend. It’s a new layer of brand presence.

What IADS has accomplished with Retail Park is not simply a creative experiment—it’s a signal of what’s possible when legacy institutions embrace emerging technology without losing sight of human connection. This project proves that audio can be more than entertainment or marketing filler. It can serve as an operational tool, a cultural artefact, a knowledge vehicle, and, above all, a strategic asset.

For retailers, the message is clear: you don’t need a recording studio to sound present, or a celebrity voice to sound human. You need clarity of purpose, a willingness to prototype, and the right blend of AI and editorial input to turn your everyday ideas into experiences that travel. Whether you’re onboarding seasonal staff, communicating sustainability goals, or simply reinforcing company values, audio, especially when assisted by generative AI, offers unmatched speed, reach, and relatability.

So if you’re in retail and wondering what the future of brand communication sounds like, don’t just imagine it. With summer knocking at your door, let the  IADS Retail Park join you —whether you’re poolside, in transit, or recharging between meetings. Pop in your headphones and catch up on smart, surprising retail stories that travel as well as you do.(Available now on Apple Podcast, Spotify, Substack, and Youtube)

Credits: IADS (Maya Sankoh)

PRINTABLE VERSION HERE

Check out the photos of Three Tokyo Stores

Japan's retail performance has been buoyant in recent quarters, driven by rising wages, strong inbound tourism (especially from China), a competitive currency making prices attractive, and ongoing digital transformation.

Total retail sales peaked at 15.6 trillion yen in December 2023 (USD 105.6bn), then reached 14.2 trillion yen in November 2024 (USD 96bn), and 14.06 trillion yen in March 2025 (USD 85.5bn), indicating performance is cooling. However, Q1 2025 still grew year-over-year (+2.9%) and quarter-over-quarter (+1.5%). Overall growth is expected to moderate, with projections of 1.6% to 1.8% YoY for 2026 to 2027.

Japan’s luxury retail market is flourishing. The luxury goods market was estimated at USD 34.9 billion in 2024, with a projected compound annual growth rate (CAGR) of 4.42% through 2033. The luxury fashion segment alone was valued at USD 6.5 billion in 2024 and is expected to reach USD 10.7 billion by 2033, marking a CAGR of 5.3%. Tokyo, particularly the Ginza and Shinjuku districts, saw a surge in luxury flagship store openings: 24% of all new openings in 2024, up from 20% in 2022.

The IADS had the opportunity to visit Tokyo and review the iconic Isetan Shinjuku and the Ginza Six mall. Another standout location during the visit was Parco Shibuya. Below is a review of these store visits, focusing on how Japan animates stores by playing with adjacencies and brand associations.

Navigating Ginza, Shibuya and Shinjuku areas and their differences

Shinjuku is a major business and entertainment district, home to numerous skyscrapers and the world’s busiest railway station (3.6 million passengers daily). The area offers a variety of shopping options, from luxury department stores like Isetan, Odakyu, and Keio to electronics retailers such as BicCamera and Yodobashi Camera. Shinjuku’s entertainment district, Kabukicho, is one of Japan’s largest, with a concentration of bars, clubs, karaoke venues, pachinko parlours, and themed establishments. The district also includes drinking alleys like Omoide Yokocho and Golden Gai and Ni-chome, known for its LGBTQ-friendly venues.

Ginza, Tokyo’s historic upscale shopping district, is characterised by wide streets lined with flagship stores, luxury boutiques, and department stores such as Mitsukoshi, Matsuya, and Ginza Wako, along with upscale malls like Ginza Six and Tokyu Plaza. Beyond retail, Ginza is known for art exhibitions and cultural events, supported by a concentration of art galleries, boutique shops, and high-end dining establishments, including bistros and tea salons.

Shibuya is regarded as the centre of youth culture, fashion, and entertainment in Tokyo. In addition to landmarks such as the Shibuya Scramble Crossing, it features a wide array of retail spaces: department stores (Seibu, Takashimaya), malls (Shibuya 109, Parco), and shopping streets (Center-gai, Cat Street) popular for youth-oriented fashion and novelty shops. The area is also known for its nightlife, including large clubs, bars, karaoke venues, game centres, and live music spots. Shibuya is a focal point for contemporary pop culture and trends, attracting local and international visitors.

Visiting Isetan Shinjuku, Japan's premier department store

Historical insights: from a kimono shop to a department store chain

Isetan’s history begins in 1886, when “Iseya Tanji Drapery”, a kimono shop, opened in Tokyo’s Kanda district. In 1907, seeking to modernise its image, the store’s name was simplified to “Isetan Drapery”, combining the first two syllables of “Iseya” with the first syllable of the founder’s name, “Tanji”. The original Kanda store was destroyed in the 1923 Great Kanto Earthquake. It re-opened the following year, expanding its merchandise beyond kimonos to include children’s clothes, toys, cosmetics, household goods, and food, effectively becoming a department store. In 1928, the owners recognised that Kanda was no longer the optimal location, leading to the decision to relocate.

After considering other locations, Tanji Kosuge II (the founder’s son-in-law) chose Shinjuku. The area had begun developing after the opening of Shinjuku Station in 1875 and experienced significant growth following the earthquake. The Shinjuku flagship store opened in 1933, in a then state-of-the-art steel-reinforced concrete building featuring Art Deco elements. Shortly afterwards, the company was formally incorporated as Isetan Company Ltd. and began expanding within Japan and overseas, including in Singapore (1972), Malaysia (1990), China (1993), and other locations since closed. In 2008, the company merged with Mitsukoshi under a joint holding company called Isetan Mitsukoshi Holdings Ltd., creating Japan’s largest department store group, representing a 6 trillion yen business.

The Isetan Shinjuku Main Store is the group’s flagship and top performer. In the financial year 2023 (ended March 2024), the store recorded sales of 375.8 billion yen (USD 2.3 billion), representing a 14.7% year-on-year increase and far exceeding the pre-COVID ten-year average of 254.2 billion yen. The upward trajectory continued in 2024: Isetan Shinjuku surpassed 400 billion yen in sales (USD 2.43 billion) for the first time. The flagship is one of Japan’s most influential department stores, often the first to showcase new trends and products. The store comprises two interconnected buildings: the nine-floor Main Building facing Shinjuku Street (from - 2 to +7) and the Men’s Building opposite, also with nine floorsi (from -1 to +8). The proximity to Shinjuku station (including direct access to the stores) enables the store to attract considerable footfall.

Visiting the Main Building 

While Japan has long been perceived as slow to adapt to international clientele, much has changed at Isetan. Visitors are now invited to use a QR code to download the store map onto their mobile phones via the free Wi-Fi connection, while dedicated screens allow them to purchase and arrange shopping delivery. At the time of the visit, foreign customers could use these screens to pay in euros, US dollars, and pounds sterling, although the Chinese yuan was unavailable. Notably, tax-free sales at the store increased by 67.7% in 2024.

The basement levels offer a diverse range of experiences. Level -1 houses a gourmet store and food court, which, shortly after opening, attracted considerable footfall during the visit. Nationally reputed as a “gourmet paradise”, this area allows visitors to experience the full spectrum of Japanese culinary culture. Notably, the department transforms throughout the day, creating vibrancy and an atmosphere reminiscent of a food festival. Each dish prominently displays calorie information, and the confectionery is artfully presented as cosmetics. Audio advertisements are played in Japanese and Chinese. On level -2, the beauty apothecary focuses on wellness brands such as Aveda, offering skincare, haircare, and body treatments in a health-oriented environment, including food supplements (10% of the floor).

The -2 level is peculiar: it does not have the same size and surface than the -1 level, and for that reason, all escalators going downstairs from the ground floor do not lead to -2, which can be a challenge for customers looking specifically for this category, as they will have to find the right escalators in the food court. Also, it is quite surprising to see that Isetan has made the decision to spread the cosmetics category on three level, as, in addition to the -2 display, cosmetics are also available on ground floor and first floor, which suggests that the Japanese cosmetics market is highly segmented with extremely different types of customers.

On the ground floor, the fine jewellery section is displayed in standard furnishings with brand reminders. Similarly, the eyewear section is fully built to Isetan’s concept; each brand has a standard brand marker. To the left, a sophisticated perfume and cosmetics area features semi-personalised points of sale from brands such as Byredo and Jo Malone, with central cash desks enhancing accessibility. The accessories zone, with brands like Saint Laurent, reinforces the luxury atmosphere, as most labels are presented in corners with discreet signage.

Two multi-brand locations (Chance Encounter and Isetan Seed) on this floor testify to the strong footfall. They offer accessible and reasonably priced products: textile accessories, home perfumes, incense, costume jewellery, and umbrellas. It is noteworthy that these categories, also found on the upper floors, are displayed near the entrance to encourage impulse purchases.

Ascending to the first floor, the focus is on women’s fashion, shoes, and accessories, complemented by a newly revamped Isetan beauty zone (refurbished in 2019). This floor is characterised by its bright, fresh, and brand-focused layout, with seating provided in every area. The make-up space features over 30 make-up brands, including an artist make-up zone where customers can receive personalised lessons and services from professional make-up artists representing 11 different brands. The cosmetics area showcases numerous Japanese brands, from the historic Shiseido to environmentally conscious newcomers such as Shiro.

The fashion area is understated in its branding, displaying a cohesive concept for the contemporary segment, including labels such as Westwood, Red Valentino, and Onitsuka, cleverly located alongside a café, The Stand, offering granola and juice, and a champagne bar, the Stand. The Japanese fashion section is articulated with a jewellery stand, facing a Dior Backstage and Louboutin make-up area. Each section is interconnected: fashion leads to shoes (from bespoke to trainers, and including a repair bar), and shoes lead to cosmetics. A fashion space, Isetan The Space, and a sizeable Astier de Villatte stand, complete this extensive offering, encouraging browsing and discovery.

The second floor specialises in luxury, young brands, women’s lingerie, and plus-size fashion, with a concept that blends brand-specific peripheries with central Isetan branding. The lingerie section is particularly effective, with dedicated mirrors, flooring, and lighting. A central space showcases emerging brands and curated collections, including Ganni and Victoria Beckham. An ultra-luxury zone presents various categories, including accessories, in a highly constructed and scenographic layout, while a smaller area behind features brands such as Mackintosh and Polo, leading through a tunnel to the Isetan men’s section and a café.

On the third floor, the emphasis is on formal wear and jewellery, with a unified concept for brands such as Theory Luxe, Icicle, Herno, and Yohji Yamamoto. An Isetan Select pop-up with a T-shirt brand adds a casual contrast. The formal section is meticulously detailed, encouraging customer engagement. Adjacent is the Michelin-starred restaurant Jacques Borie, near Chanel, offering a refined dining experience. Goyard and Chanel shoes, along with a selection of luxury shoes and accessories, are prominently featured. A second-hand space, Re-Style, is also included.

The fourth floor, dedicated to home goods, includes a sleep concierge service. The fifth floor caters to children, providing services such as gift stations, cafés, and juice bars. There is a central toy area and dedicated service zones for pushchairs with seating. The children’s fashion area is treated with the same sophistication as adult 1 This is the largest sales floor area in Asia dedicated exclusively to men's products. fashion, eschewing childish themes for a more concept-driven approach. The sixth floor integrates restaurants with traditional Japanese kimonos and optical offerings.

Each floor of Isetan is designed to offer a unique identity. However, floor segmentation and brand adjacencies are distinctive and quite different from standard practices in department stores worldwide.

Visiting the Men’s store

Thanks to its size and breadth of assortment, the men’s building is a true differentiator for the Isetan Shinjuku store. It has become a destination in its own right for fashion-conscious male shoppers from Japan and abroad.

The basement, which features shoes, luggage, and underwear alongside a Tomorrowland display gallery, connects directly with the gourmet section of the Main Building. The footwear department offers a wide range of styles in a generic layout, except Church and Weston, which have beautifully designed, dedicated concept spaces.

On the ground floor, the focus is on cosmetics, perfumes, small leather goods, hats, jewellery, and pop-up sections. The space is not limited to accessories; it includes another Tomorrowland gallery and an Ambush corner.

Ascending to the first floor, the emphasis shifts to men’s creators, where a vast Balenciaga space dominates the area near the escalator. Comme des Garçons also features a specialised concept. The remainder of the floor is occupied by more generic offerings from brands such as Thom Browne, Ann Demeulemeester, Versace, Balmain, and Acne Studios, in contrast to the women’s segmentation, which highlights Yohji Yamamoto, Undercover, and Rick Owens as ultra-fashion labels.

The second floor is dedicated to men’s designers, featuring high-end labels such as Celine, Jil Sander, Saint Laurent, Gucci, Givenchy, Dolce & Gabbana, Bottega Veneta, Dior, and Prada. The men’s building maintains a more homogeneous concept throughout, ensuring a consistent luxury experience, compared to the Main Store, which is more diverse.

On the third floor, luxury takes centre stage with immersive concepts, though the overall layout remains generic. Brands such as Fendi, Loewe, Berluti, Armani, Louboutin, Tom Ford, Zegna, Brioni, Brunello Cucinelli, and Dunhill occupy substantial spaces.

The fourth floor blends made-to-measure and formal wear, resembling a classic department store layout but with a clear focus on tailoring and materials. The formal section includes suits and smart-casual offerings (shortsleeve shirts, polos, and T-shirts).

Contemporary fashion is found on the fifth floor, with brands like Kenzo, APC, and Ami Paris presented without a specific overarching concept, particularly in the denim section. Despite the presence of trendy labels like Bathing Ape and Maison Kitsuné, the presentation places little emphasis on the brands themselves.

The sixth floor is dedicated to Polo, Brooks Brothers, Mackintosh, and Joseph Abboud, alongside Japanese-licensed and contemporary brands such as Boss, Tomorrow, Joseph, and Theory.

Finally, the seventh floor, known as “the residence”, offers an eclectic mix of ready-to-wear, accessories, writing instruments, and Santa Maria Novella products. The floor also includes a restaurant, flowers, eyewear with an outstanding concept, and home goods.

What to think of Isetan Shinjuku?

Isetan Shinjuku illustrates why it is considered Japan’s benchmark department store: meticulous visual presentation, comprehensive service at every touchpoint, and a merchandise mix that reflects the upper tier of global luxury. Notably, on every floor in both buildings, knowledgeable staff provide attentive service, from product selection to styling advice, including in English.

However, the arrangement of these elements can be unexpected for overseas visitors. Categories typically consolidated elsewhere—such as beauty, accessories, or children’s goods—are spread across multiple levels, and labels that compete in other markets often sit side by side without distinct hard-shop environments. This unconventional sequencing reflects two factors. First, Japanese shoppers are comfortable navigating vertical retail; logical adjacencies are less critical than curating a themed experience on each floor. Second, Isetan actively uses its layout to encourage discovery, treating circulation paths as part of the offer rather than simply a means to reach it.

As a result, the format can feel disorienting to visitors accustomed to Western department-store zoning. Yet it also highlights Isetan’s particular strength: translating global brands into a retail vocabulary that resonates locally, while still driving high productivity.

Visiting Ginza Six, Tokyo’s luxury hub

A luxury mall in lieu of the first Ginza department store

Ginza Six, a joint venture by Mori Building Company, J. Front Retailing, Sumitomo Corporation, and L Catterton Real Estate, is a shopping complex in Ginza 6-chome, which opened in 2017. The site holds historical significance, as the Matsuzakaya department store previously occupied itii . However, the redevelopment went far beyond repurposing the former store: the project spans two blocks, with a 115-metre-long frontage that allows six brands significant exposure on Ginza. Each contributes a distinctive façade, reshaping the Ginza skyline—some stores even span six floors. The building rises 56 metres and comprises 18 floors (including six basement levels), with approximately 148,700 square meters of floor space.

Alongside its 47,000 sqm of retail space (home to 241 stores), this mixed-use development features Tokyo’s largest office spaces across six floors, 24 dining establishments, a banquet hall, a 480-seat Noh Theatre, and a 4,000 square-meter rooftop garden. The complex provides facilities catering to tourists, including a bus terminal, currency exchange services, duty-free shopping, and multilingual concierge support.

In terms of market performance, Ginza Six has attracted a diverse range of visitors: in its first year, the complex welcomed around 20 million people, with a demographics from 20 to 60 and an even gender split. From the outset, Ginza Six targeted premium customers, offering premium lounges, valet parking (a first for Ginza), and cultural programmes. This strategy has paid off, with a customer base comprising affluent Japanese and international tourists.

The mall’s success is partly driven by its flagship store strategy: 130 brands operate their most spectacular Japanese stores in Ginza Six, ensuring sustained footfall. In addition, management ensures the complex remains relevant and appealing through a strategy of freshness and tenant rotation, with fixed-term leases allowing approximately 40% of stores to be refreshed over a six-year period.

Visiting Ginza Six 

Within the mall, the customer journey is layered and engaging, thanks to a skilfully curated mix of established luxury brands and emerging fashion and lifestyle concepts, all while ensuring footfall is channelled throughout the building.

As expected, the ground floor serves as the gateway to luxury cosmetics and accessories, with brands such as Saint Laurent and Loewe surrounding a vast atrium dedicated to pop-ups and seasonal events. Interestingly, Rolex and Jaeger-LeCoultre also have stores here, despite the fourth floor being devoted to watches and jewellery. While all brands on the ground floor are in the luxury segment, it is notable that they are not spatially segregated; fashion houses sit alongside watchmakers. This eclecticism is apparent across all floors.

The first floor is dedicated to luxury brands, including Dolce & Gabbana, Givenchy, Chaumet, Cartier, Delvaux, Clergerie, and Gucci. It offers a concentrated luxury shopping experience—again, mixing all categories within a single journey.

On the second floor, the emphasis remains on fashion, with a broad selection of international brands. Valentino is prominently featured in a double-height store, alongside Lucien Pellat-Finet, AMI Paris, and Patou.

The third floor transitions towards fashion and lifestyle, with brands such as Margaret Howell, Theory, and Lululemon, alongside high-fashion names like the upper level of Valentino, Helen Kaminsky (hats), Petit Bateau, and United Nude. The fashion multibrand store Parigot features Stella McCartney and Isabel Marant Étoile. Another concept store, Cibone, integrates lifestyle products and Japanese art.

Segmentation becomes even less defined on the fourth, fifth, and sixth floors, with a mix of Breitling watches, Lanvin Collection fashion, home furnishings by Bo Concept, and hi-fi from Devialet. These floors also showcase Leica cameras, Diesel apparel, a broad selection of handbags and bathing accessories, and an extensive range of golf brands. A Tsutaya bookshop occupies a large area on the sixth floor. The seventh floor is home to restaurants.

How Ginza Six is different from other malls? 

Ginza Six was conceived as a “vertical boulevard”, where circulation emulates a stroll along Chūō-dōri rather than a conventional ascent through stacked floors. A six-storey atrium, uninterrupted sight-lines of approximately 35 metres, and escalator banks positioned at opposite ends of the void require visitors to move laterally across each level before ascending or descending. Heat-map data released by the operator in 2023 show that average dwell time per floor exceeds seven minutes—two minutes longer than in comparable Tokyo malls. This confirms that, here also, the design succeeds in extending horizontal browsing behaviour into a vertical format.

Because the traffic pattern is deliberately non-hierarchical, pricing and brand prestige are distributed rather than tiered. Luxury flagships such as Saint Laurent, Cartier, and Rolex share ground-floor frontage with lifestyle labels like Lululemon; on the upper floors, Breitling watches, Lanvin Collection apparel, and Devialet audio equipment are adjacent to golf brands and a Tsutaya book lounge. Leases are allocated so that at least 30 per cent of units on every retail level fall outside the dominant price segment for that floor (a policy confirmed by Mori Building’s leasing brief). The result is a controlled form of category adjacency: shoppers entering for mid-market goods are routinely exposed to high-end names, and vice versa, without the psychological threshold created by traditional “luxury floors”. Footfall conversion studies conducted during the 2022 Golden Week period indicate that 18% of customers who began their visit in lifestyle or sports tenants transacted in luxury boutiques on the same trip. This illustrates how vertical flow and mixed merchandising combine to broaden the luxury customer base while maintaining brand exclusivity.

Visiting Parco Shibuya, a new generation urban catalyst

A lifestyle company from its roots

Over seven decades, Parco has repeatedly leveraged three core capabilities—urban real-estate development, cultural curation, and design-driven marketing—to stay ahead of consumer shifts. Its corporate origins trace back to Ikebukuro Station Building Co., Ltd., established in 1953 to operate a railway-adjacent shopping facility in northwest Tokyo. A year later, the company pivoted from landlord to retailer, rebranding the site as Tokyo Marubutsu, a department store aimed at the mass-market commuter trade. The store operated until 1969, before closing to reopen as Ikebukuro PARCO: a multi-tenant “young adults’ shopping centre” conceived by Seibu Department Stores, then Parco’s parent company.

The PARCO format combined fashion tenants with gallery space, live performance venues, and provocative avant-garde advertising campaigns directed by art director Eiko Ishiokaiii . Expansion followed in Japan—Sapporo (1975), Kichijoji (1980), Shibuya (1981)—and internationally with a Singapore location in 1991. The company diversified by launching a credit card in 1989, a side-business incubator in 2002, and a digital marketing company in 2017.

Facing e-commerce headwinds and ageing flagships, Parco demolished the original Shibuya store in 2016, replacing it in 2019 with a ¥65 billion mixed-use tower (USD 437 million) comprising retail, theatre, and co-working floors. A month after this opening, J. Front Retailingiv made a tender offer to acquire all of Parco’s shares, making it a wholly owned subsidiary and the group’s specialist for youth-oriented urban malls. This integration enabled Parco to co-develop credit, omnichannel, and real-estate projects—most recently, the rollout of Zero Gate and mini-PARCO formats in secondary Japanese cities—while giving JFR exposure to a demographic its legacy department stores underserve, by treating retail as a social platform first and a merchandising venue second.

Visiting Shibuya Parco 

The Shibuya store is a mixed-use retail complex where consumption, culture, and technology converge within a building that is itself a piece of urban infrastructure. While the original store incubated a generation of designers, musicians, and artists, its second iteration, opened in 2019, quickly re-established itself as the gravitational centre of Shibuya’s fashion and creative economy.

The tower offers 64,000 square meters of gross floor area across nineteen floors above ground and three below. Retail occupies basement level 1 through to the eighth floor and part of the tenth; the ninth floor is dedicated to “PARCO Studio”, a flexible production and co-working space for fashion and entertainment start-ups. Circulation within the retail space is engineered around an outdoor, spiralling path that stitches the street to every retail level, allowing shoppers to move fluidly between the building and the neighbourhood. Beyond aesthetics, the structure incorporates seismic dampers, on-site emergency supplies, bicycle parking, and energy management systems designed to reduce lifetime CO₂ emissions.

Financially, Shibuya PARCO is one of four “key stores” (the others are Ikebukuro, Nagoya, and Shinsaibashi) earmarked for accelerated investment under the group’s 2024–2026 medium-term plan. The rationale is straightforward: the property delivers higher average sales per square meter than legacy suburban sites, benefits from a dense tourist catchment—Shibuya Station handles more than three million passengers a day—and provides a live laboratory for concepts that can later be rolled out to smaller community malls. Since reopening, the store has consistently outperformed internal KPIs for tenant revenue and footfall, with inbound duty-free sales rebounding strongly as border restrictions eased.

Merchandising follows a borderless, ageless, and genderless creed. The approximately 180 tenants range from Japanese avant-garde labels and luxury-street hybrids to pop-culture anchors such as Nintendo TOKYO (the brand’s first official store worldwide) and the expanded PARCO Theatre, which hosts live performances and film premieres. For example, Paris Saint Germain faces Japanese avant-garde brand Anrealage and phone accessories label Casetify, creating excitement and surprise. This deliberately eclectic mix is designed to attract customers who prioritise novelty and experience over traditional demographic cues, and has proved effective in sustaining shopper traffic throughout the week rather than concentrating it at weekends.

Digital infrastructure amplifies the experiential layer. In-store analytics, dynamic signage, and a proprietary smartphone app feed data back to both tenants and Parco’s central CRM platform, enabling managers to finetune layouts and events in near real time. These capabilities were showcased in 2023, when Parco launched a dedicated Gaming Business Department and partnered with content studio XENOZ to stage e-sports tournaments and game-themed exhibitions; floor sales and ticket revenues spiked, but just as importantly, the initiatives drew Gen Z consumers who now cross-shop fashion, food, and entertainment within the same visit.

In the basement, known as "Chaos Kitchen", visitors encounter a variety of food options alongside unique retail offerings. This area includes a sports card game shop positioned between a sushi belt conveyor and a craft beer bar, and a CD shop located between an insect-based restaurant and a fried pork specialist—offering an eclectic mix of dining and shopping opportunities.

A range of luxury brands on the ground floor present unique retail concepts. Shoppers can explore a Gucci arcade room and visit specialised stores like Dior Beauty and Hermès in colours, along with a florist.

The first floor, themed "Mode and Art", features fashion labels such as Marc Jacobs and Ami Paris, alongside avant-garde brands like Undercover and fragrance label Byredo. With additional offerings like Margiela Replica fragrances and an Officine Buly stand, the floor also houses art galleries, blending fashion with art.

The second floor, labelled "Advanced Contemporary", showcases an eclectic mix of boutiques, including Santa Maria Novella, MM6, Kolor, Ganni, Anrealage, and Paul Smith.

On the third floor, called "Fashion Apartment", visitors find the Parco Museum and a variety of Japanese brands, from the well-known Zucca to the lesser-known Kaneko Gankyoten optical frames.

The fourth floor, branded as the "Parco Outdoor Park", includes popular outlets such as Starbucks, Nordisk Camp supply store, Timberland, and Condomania, alongside a service counter.

The fifth floor, "Cyberspace Shibuya", is a treasure trove for gaming enthusiasts and pop culture fans, featuring the Pokémon Center, Nintendo, Capcom Store, and Godzilla Store.

The sixth floor hosts a diverse food court with seven restaurants, while the seventh floor offers theatrical and cinematic experiences. There is a public stage on the eighth floor, and the ninth floor is dedicated to production and co-working space.

What makes Parco Shibuya so special

Shibuya PARCO closes the loop between cultural programming and commercial performance. Management refreshes roughly a tenth of the tenant line-up each year, pairs long-term anchors (such as Nintendo and PARCO Theatre) with time-limited pop-ups, and monitors the impact using store-wide traffic sensors and CRM data. The result is a sales-per-square-meter figure well above the average for PARCO's urban stores, alongside consistently high occupancy and dwell-time indicators, as disclosed in the company’s FY2023 materials.

Maintaining this level of “controlled churn” while preserving a coherent identity requires capabilities that remain uncommon in global retail: a leasing team able to balance avant-garde labels with mainstream attractions, an inhouse events unit that can turn an e-sports tournament into incremental fashion spend, and an analytics platform robust enough to translate soft cultural signals into hard operational decisions. Shibuya PARCO demonstrates that when these elements are in place, culture becomes a quantifiable asset and continuous reinvention a repeatable—though rarely replicated—competitive skill.

Tokyo’s three headline stores—Isetan Shinjuku, Ginza Six, and Shibuya Parco—are frequently praised for their record sales, enviable footfall, and visual flair. Yet their true breakthrough runs deeper: each demonstrates that the most powerful floor plan is no longer a map of neat, product-based zones, but a sequence of curated encounters that deliberately scramble categories and price points. Isetan disperses beauty across three levels, Ginza Six mingles Rolex with Lululemon, and Parco juxtaposes Nintendo with avant-garde fashion and a craftbeer bar. This calculated eclecticism transforms vertical circulation into a discovery engine, keeping shoppers moving—and spending—far longer than orthodox layouts ever did.

Crucially, the curiosity these pairings spark is monetised, not merely romanticised. Michelin-star dining, atrium installations, and e-sports tournaments all turn “experience minutes” into incremental sales, pushing revenue per square metre well above historic benchmarks. Experience is no longer a halo around the merchandise; it is merchandise.

Yet the three stores prove there is more than one way to sustain such performance. Parco’s 10% annual tenant refresh relies on perpetual novelty, while Isetan’s century-old prestige floors trade on institutional trust. Both succeed because each has a clear, disciplined stance on how much to churn versus how much to preserve.

In short, Tokyo’s flagships point to a post-zoning future for department stores: one where curated surprise replaces rigid adjacencies, where experience has a measurable P&L line, and where either controlled churn or heritage stability can win—provided the choice is strategic.

i: This is the largest sales floor area in Asia dedicated exclusively to men's products.

ii : Matsuzakaya was the first department store to open in Ginza in 1924. It famously was the first retail location in the country to allow customers to enter all floors with their shoes on (so far, customers were requested to remove them and wear slippers).

iii: Ishioka is also known for designing Olympic uniforms for the 2002 Salt Lake City and 2008 Beijing games, in addition to winning an Academy Award for her work in Francis Ford Coppola’s Dracula movie.

iv: Owner of Daimaru-Matsuzakaya.

Credits: IADS (Selvane Mohandas du Ménil)

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The IADS attended the 2025 VivaTech conference in Paris to spot interesting startups and key technology trends relevant to the retail sector for our members. This year, the conference welcomed over 14,000 startups, 180,000 attendees and 3,600 investors. Being Europe’s largest start-up and tech event, VivaTech connects startups, technology leaders, large companies and investors.

At VivaTech 2025, Jensen Huang, co-founder and CEO of the semiconductor company NVIDIA, emphasised the necessity of digital sovereignty for countries and companies alike in his keynote speech. With AI technology driving results and becoming increasingly central to firms’ operations regardless of sector, NVIDIA announced collaborations with beauty conglomerate L’Oréal Group and French startup MistralAI.

Addressing a wide range of tech topics, spanning mobility, retail, defence, climate and finance, among others, startups and established companies provided a comprehensive overview of the key issues in the technology space across sectors. Two takeaways were clear:

-    Every company is looking at enhancing its AI and technology usage as a performance driver in real terms.

-    The significance of technological self-sufficiency was highlighted throughout various talks at the conference.

Digital sovereignty: What does it mean for retail?

Jensen Huang accounted NVIDIA's transformation from a PC-era chip company to an AI industry leader: starting in 1993 during the Windows 3.1 era, the company capitalised on the unique horizontal structure of the PC industry, which separated chip makers from system manufacturers and software developers. This structure, unprecedented in the history of the computer industry, enabled NVIDIA to establish itself as a chip company building sophisticated computing solutions. The company's journey from graphics, physics simulation, to eventually AI highlights the significance of constant innovation and adaptation to fill new gaps. Huang’s leadership philosophy, of setting modest expectations while maintaining rigorous work standards, has enabled NVIDIA’s evolution from gaming graphics to positioning the company at the forefront of the AI revolution.

Huang’s keynote at VivaTech 2025 underscored digital sovereignty as an urgent strategic priority for both nations and businesses in the age of artificial intelligence (i), warning that outsourcing core digital infrastructure risks losing control over economic competitiveness and security. A concept uncommon among big tech companies, yet gaining traction among early-moving startups in the tech sector, digital sovereignty refers to businesses independently controlling and protecting their digital assets according to their own rules. With tighter regulations, such as GDPR, the growing use of AI, and localisation demands, companies must manage their digital assets to comply, avoid penalties, and reduce their reliance on foreign providers. This strengthens resilience against supply chain and political risks, while robust data governance gives businesses a competitive edge as data security becomes a customer priority.

This message resonates powerfully in the retail sector, where the rapid growth of online transactions and the handling of sensitive customer data make comprehensive data management essential. Digital sovereignty is vital as digital transformation accelerates and most transactions move online. Retailers handle large volumes of sensitive data and face frequent cyberattacks. Controlling data storage and processing helps retailers comply with laws, avoid fines, and adapt quickly to market changes. Reducing reliance on external vendors builds trust, loyalty, and a competitive advantage in privacy-conscious markets, making digital sovereignty a strategic necessity for innovation and long-term success. L’Oréal Group’s partnership with NVIDIA, utilising its AI Enterprise platform for the rapid development and deployment of AI, announced at the event, showcases how companies are internalising these processes to maximise impact. L’Oréal-backed startup Noli, an AI beauty matchmaker, also unveiled the AI Refinery, in collaboration with NVIDIA and Accenture, built with NVIDIA AI Enterprise software.

During a separate presentation, Cohere showcased its secure, enterprise-focused AI platform that deploys solutions directly within client environments, prioritising data sovereignty, security, and multilingual support. Cohere’s platform offers flexible usage including Virtual Private Cloud (VPC), on-premises, and air-gapped systems.

IADS note: Recent cyberattacks at major retailers such as Marks & Spencer and the Co-op, and the industry’s ongoing challenges with data accessibility and scaling AI highlight the value of self-sufficient digital infrastructure. For retailers, embracing digital sovereignty not only ensures compliance with evolving regulations but also fosters consumer trust, reduces vulnerability to cyberattacks, and lays the groundwork for innovation and long-term resilience in a fiercely competitive market.

AI hyper-personalisation for online and offline customer experiences

The usage of AI technology for personalisation has been one of the most heralded applications for the retail sector. McKinsey’s Next in Personalisation report found that 71% of consumers expect companies to deliver personalised interactions, and 76% get frustrated when this expectation is not met (ii). Furthermore, fast-growing companies generate 40% more revenue from personalisation compared to their slower-growing counterparts.

Key retail use cases, many of which are already deployed or being augmented by large retailers, include personalised product recommendations, dynamic pricing and promotions, AI shopping assistants and chatbots, predictive analytics, augmented reality and virtual try-ons, and hyper-localised real-time marketing. As usual at VivaTech, French companies such as LVMH and L’Oréal showcased their latest developments, including

• L’Oréal’s ‘Beauty Genius’ that enabled visitors to experiment with personalised campaigns,
• Lancôme's ‘nano-surfacer’, a beauty device that boosts cosmetic penetration,
• La Roche-Posay’s dermatological suggestion device.

VivaTech 2025 also featured several startups focused on leveraging AI for enhanced online and in-store user experiences. Highly personalised and interactive customer journeys are no longer limited to digital shopping with solutions offering targeted insights irrespective of channel. Most startups utilise advanced technologies, such as machine learning and computer vision, to generate high-quality, hyper-targeted insights.

Here is a selection of interesting startups spotted during our visit:

• Kahoona: The winner of LVMH’s Best Business Prize at its Innovation Awards, Kahoona is a real-time predictive audience segmentation solution for anonymised online visitors.
• JARVIS: Leveraging advanced audio and video analytics software, JARVIS’ GDPR-compliant in-store camera platform delivers real-time insights that can power personalisation strategies for retail by tailoring customer experiences based on nuanced behavioural data.
• PulpoAR: Offering virtual try-ons for beauty products through augmented reality technology, this beauty tech startup enables customers to receive tailored product recommendations and interactive, individualised shopping experiences.
• NeuroPixel: Developing a suite of generative AI tools that use computer vision and deep learning to create photorealistic models and backgrounds for fashion e-commerce, this deep tech startup allows brands to tailor visual experiences and product recommendations to individual customer preferences.

As a result, bolstering AI personalisation to enhance customer experiences across channels for retailers is now a necessity, not an added benefit.

Second-hand categories: catalysts for transformation

IADS insights from recent meetings with its members have found that second-hand categories have emerged as powerful growth drivers in retail, offering brands the opportunity to reach new consumer segments and fuel expansion. The rapid rise of second-hand commerce has outpaced traditional retail, driven by younger, price-conscious, and sustainability-focused shoppers (iii). According to Consumer Edge, shoppers aged 25 to 34 are leading this trend with a large majority opting for pre-owned items due to their affordability, unique styles, and environmental concerns.

VivaTech 2025 showcased a few startups focused on integrating second-hand sales into retail applications. However, the focus on sustainability seems to be tapering off compared to the previous editions of VivaTech with the broader focus this year being on AI applications for user experiences.

• The Cloov: a platform that helps brands integrate resale, rental and repair into retailers’ core businesses.
• The PAAC: a fashion leasing, rental and resale platform that promotes circularity.

Second-hand categories are an untapped opportunity for retailers to access new consumer segments, especially younger, sustainability-focused shoppers, while aiding compliance with increasingly stricter regulations. Ultimately, sustainable startups enable retailers to adopt greener practices while staying competitive.

Conclusion: New technological priorities shaping the retail industry

Since its inception, VivaTech established itself as the European innovation hub for the retail industry and beyond, bringing together startups, tech leaders, investors, and policymakers to address the most pressing digital challenges and opportunities. IADS partner and retail innovation platform, RetailHub underlined the trend among startups at VivaTech 2025 focusing on using AI for operational efficiency and user experience which aligns with broader industry trends.

Digital sovereignty is becoming essential for retailers, as stricter data regulations and the need for secure, independent control over digital assets drive the industry to prioritise data security and reduce reliance on external providers. At the same time, AI personalisation has evolved into a core feature, with advanced algorithms enabling tailored recommendations and real-time online and offline engagement. While sustainability remains important for younger consumers, the current focus for many retailers is on strengthening data protection and harnessing AI to meet operational and customer expectations.

i: A topic also raised in London during the last World Retail Congress by Schwartz Digits, available here.

ii: The value of getting personalisation right—or wrong—is multiplying

iii: Reduce, Reuse, Resell: Resale growth outpaces traditional retail

Credits: IADS (Anchita Ranka)

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Check out the photos of New Jersey Malls here

Ah, New Jersey—the land of reality stars, endless highways, and the eternal debate over whether Central Jersey exists. But beyond the clichés of big hair, bad drivers, and diners on every corner lies a state where malls are not just shopping destinations but cultural landmarks. One of the smallest states in the country, it is also the most densely populated (410 inhabitants per sq km), logically leading to a high concentration of retail centres, which explains why New Jersey has long been known as the "Mall State".

Two modern retail and entertainment icons stand out: the American Dream Mall in East Rutherford and the Westfield Garden State Plaza in Paramus. Both destinations showcase the evolution of U.S. shopping malls and highlight the unique character of New Jersey's retail landscape.

The American Dream Mall, a sprawling 278,000 sqm complex, redefines the mall concept by blending retail with world-class entertainment. From an indoor ski slope and water park to luxury shopping, including a Saks Fifth Avenue branch, and family attractions, it offers an immersive experience that caters to visitors of all ages. Meanwhile, the Garden State Plaza, New Jersey’s first major shopping centre, has remained a cornerstone of the state’s retail scene since its opening in 1957. Constantly reinventing itself with high-end stores and modern amenities, it exemplifies resilience and innovation in changing consumer habits. It also houses three department stores, Macy’s, Neiman Marcus and Nordstrom, all very differently positioned.

These two malls represent different facets of New Jersey’s mall culture: a futuristic entertainment hub and a timeless retail institution. Together, they provide a glimpse into why New Jersey remains central in shaping the mall experience in America. The IADS visited both last January.

Westfield Garden State Plaza: history and context of a Jersey old lady

Westfield Garden State Plaza, situated at the junction of Routes 4 and 17 in Paramus NJ, just 15 miles west of Manhattan, is a landmark in American retail history. Originally adjacent to a 1930s-era drive-in theatre and known when it opened in 1957 as the Garden State Plaza, the site became one of the most significant shopping centres in the U.S.

In the early 1950s, discussions between Allied Stores and Macy's about a joint project on the site were abandoned, leading Allied Stores to develop the Bergen Mall nearby (now the Bergen Town Center). Meanwhile, R.H. Macy & Co. announced plans for Garden State Plaza in 1954, establishing a subsidiary to own and operate the property. By 1955, JCPenney committed to a 7,700-square-meter standalone building.

The open-air shopping plaza cost $26m ($291m in 2024 dollars). It was New Jersey’s first suburban mall, drawing 75,000 shoppers when it opened on May 1, 1957, featuring a 31,500-square-meter Bamberger's department store (a company created in 1892, sold to Macy’s in 1929, and renamed in 1986) and 60 other retail stores. The mall quickly expanded its offerings, adding Russeks in 1957, Gimbels and JCPenney in 1958. These additions solidified the mall's status as the largest shopping centre globally and attracted shoppers from New York due to New Jersey's lower sales taxes and exemptions on clothing.

In 1975, the mall embarked on a project to enclose its open-air design due to competition from newer malls. It added 37,000 square meters of retail space, followed by new retail floors between 1981 and 1984. Westfield Group acquired the mall in 1986 and launched the development of an "entertainment lifestyle precinct" featuring an AMC theatre and speciality retail stores in the early 2000s, and a "fashion district" in 2014.

Regarding tenants, in 1990, Nordstrom had opened a store on Gimbel’s former site (closed in 1987), followed by Lord & Taylor in 1991 (which closed in 2020). An expansion in 1996 introduced Neiman Marcus and a remodeled JCPenney, alongside new parking structures and a Venetian carousel.

Today, Westfield Garden State Plaza is the 16th-largest shopping mall in the US, with 196,800 square meters of leasable space. It is home to over 300 stores and is considered a “super-regional mall.” It offers valet parking, currency exchange, guest lounges, and diverse dining options. Its retail mix effectively combines upscale brands with initiatives supporting local and minority-owned businesses through flexible leasing programs.

The mall benefits from a high-income catchment area with over 2.1 million people residing within a 10-mile radius. Despite restrictive ‘blue laws’ limiting Sunday retail operations to 6 hours (vs. 11 hours the rest of the week), the city of Paramus generates over $6 billion annually in retail sales, more than any other ZIP code in the U.S., and sales per square meter consistently exceed national averages, thanks to its four anchors, Macy's, Nordstrom, Neiman Marcus, and AMC Theatres. The area's strong schools, low taxes, and vibrant commercial scene contribute to its economic vitality.

Visiting the Garden State Plaza

The first feeling when entering the mall is that, while it is spread in terms of surface, it is not impressive, especially when arriving from the car park. It directly leads to the mall’s ground floor, which is zoned paradoxically: while luxury brands are located on this floor in the “luxury zone”, the way brands are distributed in the rest of the mall suggests that the “étage noble”i  is the first floor, where the most attractive non-luxury brands (from Apple to H&M, Lululemon, Sephora or AMC Theatres) are located. All three department stores are spread vertically, including on a top floor that is specific to them, not a mall floor.

The mall is structured as follows:

• The luxury zone, where Neiman Marcus is, includes Louis Vuitton, Gucci, Tiffany & Co., Burberry, and Versace on the ground floor and Tory Burch and Michael Kors on the first floor.
• The “fashion district” is more budget-oriented on the ground floor, with the likes of Old Navy, Pink, Express Men, and PacSun, and aims to bring more inspiration to customers on the first floor, with Skims, Banana Republic (an old concept), Zara, Hollister, Gap, J. Crew, Sephora, or Abercombie & Fitch. Not far from these brands, Apple, Tesla, and Yeti (a recent addition) reflect the mall's focus on innovation and first-to-market concepts.
• Restaurants are strategically located, with fast-food options on the ground floor (Chick-fil-A, McDonalds…, etc.) and family-oriented or higher-positioned options on the top floor (Fogo de Chao, Grand Lux Café, Eddie V…, etc.), mostly between the AMC theatre and Macy’s.

The sections feel overly segmented; for example, luxury shoppers may not venture into mid-tier zones, limiting cross-category spending. Also, the mall's vast horizontal size can make navigation overwhelming: while natural light-filled glass entrances create a welcoming first impression, the sheer scale of the mall can lead to "decision fatigue," especially for new visitors unfamiliar with its layout.

Nordstrom: forget about the City’s glitz & pizzaz, go for functionality

Nordstrom presents an understated shopping environment, characterised by a moderate size compared to its competitors (due to the ceiling height and its structure, it feels smaller than Neiman Marcus, which is the smallest of all three). Its main entrance is adjacent to Intimissimi and Zara on the ground floor and luxury lingerie brand Honey Birdette and Laderäch Swiss chocolates on the first floor (two rather surprising adjacencies).

Ground floor: upon entering, shoppers are greeted by a welcoming bar area, setting a relaxed tone for their visit. The ground floor is a substantial open space dedicated to women's fashion, shoes, and children's apparel. Despite the ample space, the section between escalators to the first floor feels notably sparse, lacking decorative elements or thematic staging.

Sale signage was ubiquitous (the visit was in mid-January 2025): discounted items occupied almost a third of the floor space. The click-and-collect order pickup area is straightforward and highly visible, eschewing any elaborate concealment or branding. The design is fundamentally basic, with a uniform concept across the floor (no shop-in-shops) and minimal peripheral branding or signage.

First floor: it houses an array of shoes, cosmetics, accessories, and men's fashion. While the presentation is consistent, certain shoe brands are afforded a semblance of luxury, elevating their display. Cosmetics are organised into branded corners, allowing for targeted browsing, while designer handbags receive special attention, enhancing their appeal.

Accessories and shoes benefit from a more thoughtful presentation than the somewhat flat approach to men's fashion, which lacks vibrancy. During the visit, the visual merchandising team worked on the floor displays and ironed garments while shoppers were there.

Second floor: The second floor is dedicated to elevated women's ready-to-wear (WRTW), evening attire, activewear, and lingerie. The only brands made highly visible are Skims, Nike, and women’s fashion brand House of CB.

Overall, Nordstrom effectively leverages its space, offering a straightforward yet functional shopping experience. While the store lacks dramatic staging or decor, its layout facilitates easy navigation and access to diverse product categories. The focus on simplicity and functionality, complemented by select displays of luxury, makes the store accessible but somewhat surprising for anyone used to the sophistication of the New York stores.

Macy’s: the oldest store in the mall shows its age

Macy's, the oldest department store in the mall, is also the largest, divided into three floors of unequal sizes. Foot Locker and men’s suits brand Indochino flank the entrances on the ground floor, and Sephora and jewelry brand Gorjana on the first floor.

The ground floor is divided into several distinct zones, which can be a bit confusing. The children's section is notably integrated with Toys "R" Us, offering a separate RTW space dedicated to children's products up to age 20. Despite its broad range, this area lacks inspirational design elements and presents a straightforward, functional layout.

Adjacent to this is the home section, which straightforwardly presents its kitchenware, unlike the more typically staged displays. Though vast, the bedding area lacks character and offers a very sanitised shopping experience. A notable feature is the expansive coat and swim section, positioned past the bedding area.

A seasonal promotion space provides direct access to the main shopping corridor, ensuring high visibility for featured products.

The first floor houses an extensive cosmetics section, arranged in an atrium at the entrance, alongside a seemingly endless men's department. The layout here is more segmented, with specific areas dedicated to various product categories, including accessories, sportswear, and women’s shoes. Despite the abundance of products, the sheer volume can make it challenging for shoppers to locate specific items easily, compounded by frequent promotions and sales.

Certain brands like Boss, Levi’s, and Nike enjoy prominent wall displays within the men's section, while others are presented more generically. The ambiance is characterised by wooden flooring and focused lighting on lower ceilings, providing a distinct shopping atmosphere. Customer interaction is encouraged through technology, offering incentives for scanning customer reviews to make informed purchasing decisions. However, there is no specific merchandising around these devices to promote cross-shopping.

The second floor is dedicated to women's fashion, where organisation by brand is more pronounced than in the men's section. Despite visible brands, the floor suffers from a ceiling in disrepair, which detracts from the overall aesthetic.

This level features a substantial plus-size section, positioned across from a petite section, catering to a wide range of body types. Brands like Anne Klein and Karl Lagerfeld are prominently displayed as shoppers arrive via escalator, alongside Macy's proprietary brands like INC and On 34th Street.

Overall, the store targets too many customers simultaneously, reflected in the complex mix of abundant product offerings and overwhelming store layout. Also, despite technology-driven initiatives aiming to facilitate a seamless shopping experience, the store feels old, with spacious yet occasionally uninspired areas and some parts that would benefit from a refresh.

Neiman Marcus: a stark and seemingly effortless contrast with its competitors 

Compared to its two competitors and considering the neighborhood, the Neiman Marcus store most closely resembles a larger flagship typically found in central urban areas—one where tourists would likely feel at ease. It also appears the least “suburban,” thanks to its refined and sophisticated atmosphere.

Its entrance, in the luxury section of the mall, feels less cluttered than its competitors', thanks to an ideal location under a glass ceiling, in front of an atrium flanked by Tiffany’s & Co., Louis Vuitton, a Chanel store being refurbished at the time of visit, Gucci and Ferragamo just in front on the ground floor, and Tory Burch and Kate Spade on the first floor.

The ground floor sets the tone: the execution of the luxury concept is evident in the selection of brands and the meticulous attention to detail in their presentation. The cosmetics section, though relatively small compared to other areas, is nestled amidst high-end women's handbag brands such as Bottega Veneta, Chanel, and Loewe, creating a refined atmosphere. This section is positioned next to men's shoes and RTW collections.

Ascending to the first floor, shoppers are greeted with an elevated sense of style, focusing on women's designer fashion and jewelry. Carpeting defines these areas, offering a warm and inviting atmosphere that contrasts with the more utilitarian spaces of other department stores, such as Macy's.

The second floor caters to children and luxury fashion, featuring brands like Chanel and Moncler. Dedicated corners for each brand, such as Balenciaga and Casablanca close to Loewe, create distinct shopping zones that highlight the exclusivity and prestige of each label. The home section is cleverly integrated with children's offerings and conveniently located near a restaurant, the Rotunda, providing a pleasant and relaxing shopping environment for families, particularly appealing to women.

Overall, the thoughtful arrangement and execution of luxury at Neiman Marcus reflect a commitment to providing an upscale, cohesive shopping experience. The strategic placement of high-end brands alongside essential services ensures that the mall meets the diverse needs of its clientele, maintaining its status as a premier destination for luxury shopping.

The American Dream Mall: the cool new kid on the block

Located in East Rutherford, the American Dream is the second-largest mall in the U.S., surpassed only by the Mall of America. Its history has been shaky: everything began in 2003, under the name Meadowlands Xanadu, proposed by the Mills Corporation. Construction kicked off in 2004, but the project quickly encountered significant challenges. By 2007, Colony Capital had taken over, only to be stymied by the 2009 bankruptcy of Lehman Brothers, halting construction even though the project was leased at 70%. The Triple Five Group, the Mall of America’s developer, expressed its intent to take control in 2011, officially acquiring the mall and its surrounding site two years later. Yet, progress remained elusive, with construction ceasing again in 2016 due to financial and legal complications.

Construction didn't resume until 2017, thanks to the injection of $1.67bn in the project, even though it experienced a series of "chronically delayed" openings. The initial building phases finally opened in 2019, with the Nickelodeon Universe theme park (the largest indoor theme park in North America) and the Big Snow American Dream indoor ski slope (the first of its kind in North America), only to be closed in March 2020 due to the COVID-19 pandemic, just as it was poised for a broader unveiling, including the DreamWorks Water Park (the world’s largest indoor wave pool). It took seven months, in October 2020, for the mall to fully reopen and unveil its newest attractions. By 2021, the complex had introduced several new attractions, including Sea Life Aquarium, Legoland Discovery Center, and The Avenue luxury wing. Despite these expansions, financial challenges continued, with reported losses due to the pandemic, the local “blue laws” related to opening hours during the weekend, bond payments, and other setbacks.

Nowadays, the mall has an occupancy rate above 80% and hosts approximately 450 retail tenants, offering everything from high-end retail to innovative entertainment experiences. Approximately 55% of the space is dedicated to attractions, designed to make the most of the catchment area (and generate additional revenue) characterised by:

• A densely populated region with affluent households in northern New Jersey.
• Access to over 65 million annual visitors to the tri-state area.
• An estimated annual footfall of 40 million visitors, with half projected to be tourists interested in the unique experiences.

However, the financial strain from delayed openings, debt obligations, and high operational costs contribute to skepticism regarding its profitability. This skepticism is also based on its power to attract Manhattan residents (VIP amenities include helipad access for affluent customers traveling from Manhattan or the Hamptons) while the luxury shopping options it offers already exist locally. Also, critics raised the issue that the retail offerings might be underwhelming compared to the entertainment options, and the same goes for the dining options.

Finally, the mall is just under 20 minutes by car from Garden State Plaza.

Visiting the American Dream Mall

Spanning three levels, the American Dream Mall emphasises a horizontal layout over verticality, allowing for expansive floor space dedicated to its myriad attractions and retail offerings. But international visitors beware: the experience can be underwhelming when comparing the mall to international references, such as The Dubai Mall or malls in Asia, even though the American Dream claims to compete with them in terms of surface and array of experiences. While the sheer scale of the mall can make navigation confusing for first-time visitors despite signage, some areas feel disconnected due to stark contrasts in design or audience focus (e.g., luxury vs mass-market zones).

The mall emphasises experience, which is central to its appeal. It differentiates from the Garden State Plaza with unique experiences that seek to go beyond traditional shopping. Despite the ongoing presence of hoardings indicating areas under development or renovation, the mall remains a dynamic and engaging environment for visitors. The luxury wing, "The Avenue," features stores designed to evoke an open-air shopping experience, providing a fresh and upscale environment that contrasts with the much more conventional Garden State Plaza.

In addition, there are some details that give a unique flavor to this mall: for instance, with Tesla charging stations conveniently located in its parking areas, the mall caters to the needs of eco-conscious visitors while enhancing the overall accessibility and convenience for shoppers.

Visiting Saks Fifth Avenue

The Avenue, the luxury segment of the American Dream Mall, aims to offer shoppers an elevated retail experience reminiscent of open-air shopping streets. The design is ambitious, and branded stores, such as the Saint Laurent or the Hermès ones, are truly spectacular, to the point of making the Saks Fifth Avenue anchor almost invisible.

The department store is situated at the far end, making it less visible and accessible to casual visitors, and spans two floors.

The first floor is dedicated to men's and children's fashion and also features a gallery and a café that remained unopened at the time of visit (January 25). Despite its aesthetic appeal, the space lacked foot traffic and engagement, with entire sections remaining unlit and devoid of greeters, contributing to a sense of emptiness.

The Saks Club and a small lingerie section are present, but their placement feels inconsistent with the overall design, creating a disjointed shopping experience.

The ground floor offers women's RTW, cosmetics, shoes, and accessories. The cosmetics section, centrally located with various stands, disrupts the visual flow, while the periphery hosts luxury leather goods, including Louis Vuitton and Saint Laurent. The latter has a prominent double-decker store opposite the main area, which raises questions about the brand saturation in the mall.

Despite these high-end offerings, the ground floor was noticeably deserted when visited. Cash registers are tucked away in corners, making them difficult for shoppers to locate. Eyewear stands are flashy yet incongruous with the surrounding decor, with flashing lights that clash with the luxury theme.

In fact, lighting is a significant issue, particularly in the RTW section, where poor illumination hampers product visibility. Sale racks are pushed to the back, further diminishing their appeal. The jewelry section, intended to be a highlight, remains mostly empty, lacking the vibrancy one would expect from such a luxurious setting. The absence of visible staff exacerbated the feeling of desolation, leaving shoppers without guidance or assistance.

While The Avenue at American Dream has the infrastructure and branding to direct high-end shoppers towards Saks Fifth Avenue, its execution falls short and feels somewhat disconnected from the grand ambition the mall itself is trying to provide to its visitors.

These two New Jersey malls reveal something far more profound than just retail spaces - they represent a uniquely American contradiction. In a country that birthed modern consumer culture and exported it globally, these suburban retail cathedrals expose a striking disconnect between America's self-perception and the international standard.

The stark contrast between New York City's sophisticated retail environments and these suburban counterparts is jarring. What's particularly remarkable isn't just the quality gap but the American consumer's apparent acceptance of this disparity. While Westfield Garden State Plaza generates over $6 billion in annual sales and boasts impressive statistics, the experience feels outdated, fragmented, and fundamentally utilitarian rather than inspirational.

This phenomenon speaks to a broader cultural characteristic: American suburban retail often prioritises functional consumption over experiential excellence. The emphasis on volume, convenience, and accessibility has created environments that would be considered subpar in many international markets, particularly in Europe and Asia, where retail design has evolved to blend commerce with culture and aesthetics seamlessly.

Even American Dream Mall's attempt to innovate through entertainment-focused retail feels like a compensatory mechanism—an acknowledgment that the traditional American mall needs extraordinary attractions to remain viable in an era when pure shopping no longer suffices. Yet despite its ambitions, it struggles to deliver a cohesive, sophisticated experience.

Perhaps most telling is the Saks Fifth Avenue at American Dream, a luxury retailer whose presentation undermines its premise. The poor lighting, confusing layout, and absence of attentive staff reveal a fundamental misunderstanding of what luxury retail should deliver. It's as if the concept of luxury has been reduced to brand names alone, divorced from the experiential elements that define true luxury elsewhere in the world.

This disconnect reflects America's complex relationship with class, consumption, and identity. In a society that simultaneously celebrates wealth while maintaining an egalitarian self-image, these suburban retail environments embody a peculiar compromise - spaces that offer luxury brands but within environments that remain fundamentally accessible and unpretentious, even when this undermines the very experience they aim to deliver.

For international visitors accustomed to the seamless integration of commerce, culture, and design found in retail destinations worldwide, these New Jersey malls offer a fascinating window into American consumer culture - one that reveals how the birthplace of modern retail has, in many ways, fallen behind the global standards it once established.

Credits: IADS (Selvane Mohandas du Ménil)

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Generation Alpha Infographic

Generation Alpha, born between 2010 and 2024, is emerging as a significant consumer group. With an estimated USD 5.46 trillion economic footprint by 2029, Gen Alpha’s spending power is almost as much as that of Millennials and Gen Z combined. The demographic is now closer to working and shopping independently, requiring the retail industry’s attention.

Caught off guard by Gen Z, brands and retailers are already implementing several strategies with “tweens” to effectively appeal to both Generation Alpha and their parents. Social media, climate change, and efforts in prioritising transparency and inclusivity shape Gen Alpha’s world. They value authenticity, sustainability and brands that align with their social values. Similar to Gen Z, their loyalty to brands is not a given.

As a consequence, marketing to them requires a different approach, as they are strongly influenced by peer recommendations on social media and gaming platforms and expect stores to be amusement parks.

The below illustration shows how Gen Alpha differs from the others.

![GEN ALPHA

McCrindle – Decoding Gen Alpha

At the crossroads of tech maturity, social media and gaming

Technology as a way of life

Millennials grew up with personal computers, leading the way in internet usage and technological adoption. Gen Z was raised in the era of smartphones and social media, with limitless information always within reach. Gen Alpha has grown up with advanced technology and has never known a world without AI, AR, or gaming. No single technology or platform defines Gen Alpha. Instead, their distinctiveness lies in their overall tech-savviness and ease with emerging technologies. This generation naturally navigates new tools and technologies in ways we’ve never seen before. They interact with AI tools like ChatGPT and virtual assistants, making spatial computing and augmented reality their norm.

Unlike previous generations, and seeing technology as an integral part of life, they blend physical and virtual experiences, from gaming and socialising to shopping. As a result, they expect seamless integration between online and offline shopping experiences, pushing retailers to focus on creating personalised interactions and ensuring a smooth omnichannel presence. This includes user-friendly websites, mobile apps, and in-store technologies that enhance the shopping experience.

Social media platforms are crucial, but gaming platforms get traction

Retailers should create content that resonates with Gen Alpha, utilising popular platforms and collaborating with influencers. According to the Harvard Business Review analysis of Generation Alpha, unlike Millennials who favoured Facebook and then Instagram, Gen Alpha prefers TikTok and engage in popular trends such as "get ready with me" videos and "shelfies" (videos showcasing products on bathroom shelves). But more than the usual social media platforms, Gen Alpha is investing time in gaming. According to the Business of Fashion, they now spend a bit more time on gaming platforms (Roblox, Fortnite, Minecraft) than on social networks, with 5.2 hours vs. 5.1 hours per week. User-generated gaming is rising, with kids preferring to create their game environments and avatars rather than just playing pre-made ones. Gen Alpha even asks parents for virtual currencies instead of traditional allowances. For example, Robux, the Roblox currency, allows users to customise their avatar or to buy additional functionalities.

Also, according to retail consulting firm J.C. Williams Group, Gen Alpha is used to creating relationships through technology. Unlike Gen Z, they are comfortable with never meeting people and may develop friendships online. So, Gen Alpha interactions with friends are shifting toward the metaverse, where WhatsApp groups, Discord servers, and Roblox DMs are replacing traditional platforms like Instagram and Snapchat.

Current and future shopping patterns

It’s a family business: targeting parents

Gen Alpha and their parents influence each other’s purchases. Gen Alpha is impacting their parents' shopping habits and has USD 300 billion in spending power through parental influence, so brands need to have a dual-focused marketing approach and keep on marketing to adults, as parents greatly influence their purchases. Trends extend beyond Gen Alpha and resonate with older generations as well. For example, Gen Alpha greatly influences their family's entertainment choices, preferred food and delivery services, home technology adoption, and hygiene products. Their emphasis on health, wellness, and sustainability significantly shapes their parents' purchasing decisions.

A generation focused towards adult brands

Due to social media and digital influence, Gen Alpha is more brand-aware than other generations but doesn’t have many dedicated spaces or brands targeting their specific needs. Unlike previous generations who had “tween” brands catering to their needs (for example, Tammy Girl in the UK in the '90s’), Gen Alpha tends to gravitate towards adult brands, preferring to shop where their Millennial parents shop, such as at Lululemon and Sephora. Also, many young shoppers share the same favourite brands as their parents, like Amazon. As a result, the concept of a “tween” market is fading, and brands prefer to expand product sizes instead of creating separate lines. As a result, many retailers now market to parents, knowing Gen Alpha influences their spending decisions. Gaming platforms become brand discovery spaces as 60% of Gen Alpha discover new brands through gaming experiences. Success stories like Fenty Beauty's Roblox contest,  which led to real product launches, demonstrate effective gaming engagement strategies.

Trends are now popular with multiple generations, often based entirely on trying and reviewing different products. This phenomenon is visible with skincare and makeup, but also with clothes, accessories, furniture, and more. Brand audiences are no longer defined by narrow demographics: everything is for everyone. Millennials and their Gen Alpha kids are likely to share the same viral cult products, such as the Stanley the tumbler for example.

Will Gen Alpha be the first generation to prioritise CSR concerns?

Like every other demographic, younger consumers are price-conscious, which is evident in Shein's success. Among Gen Z, 52.6% of 16-24 year-olds in the UK ordered from abroad in 2023, of which .

Will it be different with Gen Alpha? They will feel the growing impacts of climate change more than any previous generation. Also, they will have to cope with massive social and geopolitical shifts, widespread mental and environmental health crises, and ongoing struggles for equality. Under such circumstances, like Gen Z, Gen Alpha declares is a key concern. Retailers should continue their sustainability efforts, offer eco-friendly products, reduce waste, and support ethical practices. Creating second-hand or resale programmes can also appeal to this demographic's eco-conscious concerns. Gen Alpha values inclusivity and diversity. Retailers should ensure their products and marketing campaigns reflect various cultures, identities, and experiences. However, it’s uncertain if what Gen Alpha declares will reflect in their purchases once, freed from their parents’ choices, they can fully decide what they buy.

What does Gen Alpha want? Customisation, entertainment and curation

Experience, personalisation and co-creation

Offering customisation options allows Gen Alpha to express their individuality as they engage with technology as creators and world builders. They ‘build together with’ or ‘play with’. Also, they are truly “the builders and users of the metaverse.” Gen Alpha might finally give true value to this technology. This is mainly due to platforms like Roblox, Minecraft, and Fortnite, which have revolutionised gaming by enabling players to design their own worlds, characters, storylines, and rules. Gen Alpha has embraced this creative freedom, using it as a means of self-expression and innovation. Their deep connection with experiential technologies also shapes their engagement with the physical world. In the US, while their parents might visit attractions like the Museum of Ice Cream to take Instagram-worthy photos, Gen Alpha prefer experiences like Meow Wolf, an immersive art experience that blends storytelling, technology and exploration, focusing on participation rather than documentation. With their enthusiasm for these interactive spaces, retailers who build experiential attractions and provide personalised products or services can capture young consumers' attention and wallets.

Stores are entertainment parks: beauty retailers ahead

Physical shopping experiences like visiting Sephora or big-box retailers feel like amusement parks for Gen Alpha as they enjoy interactive retail environments. Already aware of the fact, beauty retailers Sephora and Glossier are hosting children's birthday parties, transforming stores into experiential celebration venues. These events combine educational elements, such as age-appropriate skincare tips and makeup tutorials, with entertaining activities like store scavenger hunts. At Sephora, makeup artists teach young guests about "dewy skin" techniques, while staff create beauty sample goodie bags as party favours. Glossier's flagship locations accommodate planned events and impromptu celebrations, seeing increasing demand for beauty-themed gatherings. The trend signals a significant shift in beauty retail strategy, where stores are evolving from pure shopping destinations to true experiential venues that forge emotional connections with future consumers. The trend extends beyond major retailers, with specialist brands like Rile, a teen beauty brand, offering skincare education parties led by teen ambassadors. This approach allows retailers to engage with both parents, who appreciate the structured learning environment, and children, who enjoy the interactive experience. For brands, it represents a significant opportunity to build brand loyalty during formative years. Beauty seems to lead the way for entertaining Gen Alpha, but toy retailer Camp in the US was a pioneer with their family experience combining retail with interactive play, offering shop/play hybrid experiences and rotating themes.

Curating relevant product offer: the example of Nordstrom

Department stores are also launching strategies to attract Gen Alpha. In October 2024, Nordstrom demonstrated this shift by launching dedicated in-store "young adult" beauty kiosks and a new online category dedicated to this segment. Reminding of the likes of Galeries Lafayette’s unprecedented “Club 20 ans”,i opened in 1969 and gathering several product categories (fashion, trinkets, music, etc) for teenagers, Nordstrom’s kiosks are located on teen apparel floors, feature popular brands like Kiramoon and Kaja beauty brands, alongside clothing from brands such as Pacsun and Asos. Currently available in six locations and online, the initiative offers over 850 products. Nordstrom's strategy involves leveraging data from TikTok and its website to identify trending categories, such as the "everything shower” trend (products to use in the shower beyond soap and shampoo), which has led to successful product additions like Oui The People shaving brand. The key to success here is to focus on youth-coded but not overly juvenile products.

These strategies reflect retailers’ understanding that today's experiences are shaping tomorrow's consumers, with retailers balancing entertainment, education, and brand awareness. Also, these Gen Alpha recruitment tactics seek to offset challenges in the luxury market by tapping into alternate revenue streams. This trend toward early customer engagement was further evidenced in 2024 when Ulta Beauty introduced collectable miniature replicas of popular products targeting children as young as six.

The rise of Gen Alpha as a key consumer group represents a significant shift in retail strategies, as this generation’s tech-savviness and unique shopping preferences reshape the retail landscape. Prioritising authenticity, digital influence, experiences seamlessly blending digital and physical retail, customisation initiatives, and interactivity presents new opportunities for retailers to engage and retain their loyalty. Retailers must adapt by offering personalised experiences, leveraging immersive technologies, and emphasising sustainability. Additionally, as this generation has an increasing influence on family purchasing decisions, brands must align their marketing efforts to resonate with both Gen Alpha and their parents, ensuring they are well-positioned to capture future market share.

i : Galeries Lafayette’s « Club 20 ans » was featured in the Paris Cité de l’Architecture exhibition “La Saga des grands magasins”whose contributions include Galeries Lafayette, Magasin du Nord, El Palacio de Hierro, SKP and the IADS

Credits: IADS (Christine Montard)

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Check out the photos of small format stores here

Department stores and big-box retailers have traditionally believed that larger spaces and inventory would make them more appealing to shoppers, which was true for many decades. For many reasons, including consumers favouring e-commerce and more convenience and the challenge of finding and supporting the cost of operating big-box locations, a significant shift is taking place as US department stores Macy's, Bloomingdale’s and Nordstrom* open smaller-format stores. This approach isn't about scaling back, as these small stores are not about limiting customer options. Instead, retailers break away from the stereotypes often associated with big stores: overwhelming layouts and product selections offered in inconveniently located stores. The small format concept is designed to provide a more curated selection of products, focusing on convenience, services and localised shopping experiences, concepts that have gained traction since Covid.

Seen as an opportunity to get closer to where the customers are with a smaller investment, Nordstrom Local opened its first location in 2017, and Bloomie’s in August 2021. Both companies have been expanding their footprint in these formats since then. Outside of the US, Magasin du Nord opened two small formats in 2024. This article will focus on these three companies’ journey and efficiency.*

What is a small-format store anyway?

A small-format store could be defined as follows:

• Curated product selection: a carefully selected assortment of products tailored to the local market's needs and preferences. It allows retailers to focus on specific demographics and provide a personalised shopping experience.
• Location and accessibility: these stores are often located in urban areas and densely populated neighbourhoods. This strategic placement maximises convenience for local shoppers and allows retailers to penetrate markets that may not support larger store formats.
• Omnichannel integration: many small-format stores integrate online-to-offline services such as in-store pickup, returns, and kerbside pickup. This enhances the customer experience by providing flexibility and convenience.
• Cost efficiency: with a smaller footprint, these stores are easier to find and typically have lower operating costs, allowing retailers to expand their reach in high-priced real estate markets while securing profitability.

The shrinking storefront: Bloomie’s rethink scale, relevance and reach

In response to mixed reviews of its traditional stores, Macy's has adopted small-format stores to simplify shopping and enhance integration with its digital shopping ecosystem. At about 20% of the size of traditional locations, these smaller stores, Market by Macy’s and Bloomie’s, provide a curated selection of private label and national brands tailored to local markets, along with various online-to-offline services. Early results were encouraging, with Macy's reporting that these stores open for at least a year were achieving sales growth on par with full-size locations. Back in 2023, Macy’s was planning to open 30 additional small-format stores by the end of 2025, in addition to the existing 15 small-format Macy’s and Bloomie’s stores already in operation. However, in early 2025, they announced that they would close four of their 24 Market by Macy’s small-format stores, a shift from the acceleration announced in 2023.

On its side, Bloomingdale’s has been experimenting with small-format stores since August 2021. Their Bloomie’s locations are:

• Fairfax, Virginia, on 2,000 sqm, opened in August 2021,
• Skokie, Illinois, on 4,600 sqm, opened in November 2022,
• Seattle, Washington, on 1,800 sqm, opened in November 2023,
• Shrewsbury, New Jersey, on 1,900 sqm, opened in November 2024i.

These openings reflect the three possible approaches underlying each decision:

• Filling a void when Macy’s Inc. closes a department store, but there are still loyal customers in the area. Bloomie’s Skokie store illustrates this approach. In this specific case, a Bloomingdale’s store closed and was replaced by Bloomie’s.
• Entering a market untapped by Macy’s Inc. The Bloomie’s Seattle store is a perfect example as it enters the Nordstrom land without Macy’s Inc. stores.
• Densifying its presence in a market where Macy’s Inc. already operates a department store and sees an opportunity to fill in with another store to serve customers better and capture new ones.

Bloomie’s store in Fairfax reflects this approach since it supports the two existing Bloomingdale’s stores in the region. In November 2024, Bloomingdale’s opened the fourth Bloomie’s store at The Grove Shopping Centre in Shrewsbury, New Jersey. It is designed to complement Bloomingdale’s presence in the state, which includes four full-line shops and three outlet stores.

This latest store features services like styling, alterations, gift wrapping, and a grab-and-go food spot. Rachel Abeles, Bloomingdale’s SVP of Customer and Revenue Growth, said that “Bloomie’s is a perfect example of how our brand continues to evolve with our shoppers’ needs and preferences.” Reflecting this, the store is the first to offer an all-women’s assortment, which includes contemporary RTW, accessories, beauty and fine jewellery.

Bloomie’s store design is flexible, allowing the company to grow or reduce presentations of brands and trends depending on their success. Store assortments stick to local preferences as exemplified in the Seattle location, which offers women’s, men’s, beauty, accessories, home and gifts, with a strong focus on contemporary labelsii.  However, it also introduced new brands, Sandro and Maje, which were their first-ever brick-and-mortar presence in Seattle at the time of the opening. The Seattle store also has a space for rotating pop-ups and trend presentations. Despite limited surfaces, Bloomie’s product offer is not as small as it looks, as Bloomie’s can source merchandise for shoppers from other Bloomingdale’s stores and the NYC flagship.

Contributing to the halo effect of online activities in the regions where the stores are located, Bloomingdale’s plans to open more Bloomie’s locations. They will probably open another couple of them to prove further the viability of the format and the relevance of a possible rollout across the country, with the next one to open in Texas in 2026, a major and untapped market.

i : By comparison, Bloomingdale’s department stores are usually 14,000 sqm to 19,000 sqm.

ii: Intimates, kids, furniture, food and designer labels are not part of the mix

Strategic compactness: Magasin du Nord’s small stores drive loyalty and synergy

In the Fall of 2024, the Danish department store opened two small-format stores. The concept brings a “taste” of Magasin du Nord to local customers with good-quality products at reasonable prices in a convenient format, also introducing the brand’s full online offerings. Magasin du Nord aims to fuse physical presence more tightly with its online platform as part of their omnichannel strategy. As a result, these stores serve as both a point of contact for e-commerce customers and an animation space, enhancing customer engagement and operational flexibility.

The first opening was in Slots Arkaderne shopping mall in Hillerød with a concept targeting both local consumers and tourists, providing goods that are not widely available elsewhere. The second, in Odense's Rosengårdcentret, Denmark's largest shopping centre, spans 700 sqm. Magasin du Nord expects this new format to create synergies with their existing Odense city centre store, supporting each other in sales, experiences, and staffing. DKK 2.5 million capex were invested in each store.

Both stores focus on offering a curated mix of women’s fashion, women’s accessories, lingerie, beauty, food and home products along with services:

• With the most important surface, Women’s Fashion dominates sales in both stores.
• Cosmetics & Beauty performance varies from one store to another, but the category is well-positioned in terms of sales.
• The Home & Decor categories might expand as they exceed expectations and sometimes beat Cosmetics & Beauty with similar surfaces.
• Other categories (Lingerie, Women’s Accessories, Food) together represent a small part of the total sales. In the future, they should give each category a permanent space and increase the surface given to gifting during peak seasons, especially as these stores are positioned as top destinations for convenient, seasonal, grab-and-go gifting options.
• Within product categories, both stores carry Magasin du Nord Collection private label, presenting a full seasonal assortment. The stores are prioritised for stock options and deliveries, focusing on best-selling and best-value permanent styles like NOOS (Never Out Of Stock) products.
• Customer service is a key pillar, offering click-and-collect, order from store, complimentary coffee, spacious fitting rooms with lounge areas, gift wrapping, and product return.

Magasin du Nord noted that weekly replenishment and delivery of new products have positively impacted the NPS and footfall. Hillerød sees traffic spikes on delivery days (Wednesdays), and the store achieved an NPS of 70.6 in 2024, showing customer satisfaction. From analysing online sales from customers’ zip codes, there’s room to expand assortments by adding successful online products and top-performing brands not yet stocked in-store.

The layout is designed around fixed category zones with flexible space allocation depending on performance, and newness is emphasised through a bi-weekly product rotation. The optimal layout is 700 to 1,000 sqm on a single floor with box-like proportions and the following features:

• A unique payment point near the entrance with four cash desks,
• A clear flow from entrance to exit,
• Four to six fitting rooms,
• Flexible, generic fixtures,
• High-density merchandising,
• A commercial yet inspirational ambience.

The primary customer base is from the shopping centres’ footfall, mostly women aged 35-70, with a secondary target of younger females aged 15+, often daughters of the primary target. Magasin du Nord sees success in growing customer loyalty, exemplified by the Hillerød store, where 600 new loyalty members have joined since the store’s opening, marking a 66% increase in that area. Marketing is hyper-localised through shopping centre apps and Facebook, targeting stores’ zip codes. The model de facto saves on customer acquisition costs or, in other words, these stores could be considered an investment for online performance.

The strategy behind the new format is to utilise smaller, more specialised retail spaces to quickly adapt to market changes and consumer trends. While it is in a testing phase with a very small team for strategy and operations, the company plans to unveil more locations for similar local stores in the future. Several potential locations are under review, including possible ventures in Sweden and Norway.

Retail reversed: how Nordstrom Local takes the store to the customer

One of the many questions retailers always have on their minds is how to attract more people to their stores. Instead of focusing on bringing people to the store, Nordstrom Local reversed the question to “how do I get more of my store to where the people are. It’s a switch worthy of attention because it gets retailers away from the idea of a central, fixed location as the driver of their businesses.”

The Nordstrom Local retail concept was launched in Los Angeles in October 2017 and has developed since then. These commercial spaces are not stores per se, but rather merchandise-free service hubs operating as support units to Nordstrom stores located in the same area. Nordstrom Local now accounts for four locations in California (instead of five a few months ago) and two in NYCiii.  Nordstrom Local service hubs are relatively small, usually between 100 sqm and 300 sqm. Considering their size, such locations are relatively “easy” to find and to run, and most importantly, to fund. Units are located where the population is wealthy and/or very young and very active.

The concept harkens back to an idea at the core of Nordstrom's value proposition: service. From a customer’s perspective, Nordstrom Local provides easy access to personalised services. The format is mainly relevant in areas where distances and traffic are important factors: the convenience of picking up merchandise nearby is a game-changer for customers. The store design and services are adapted according to the neighbourhood atmosphere and needs. Depending on local needs, Nordstrom Local offers a wide array of services, including BOPIS, kerbside pick-up and easy returns, alterations, personal shopping and virtual styling, but also gift wrapping, leather goods and shoe repair, and a community meeting space. Some locations offer more unusual services, demonstrating how Nordstrom Local sticks to the local needs: tuxedo rental in Los Angeles, stroller cleaning in NYC’s Upper East Side location, and sneaker cleaning in NYC’s West Village.

In 2019 Q1, company representatives said that Nordstrom Local customers spend more than two-and-a-half times as much at Nordstrom as regular customers. The launch of the two NYC service hubs led to a 400% increase in local shoppers taking advantage of its BOPIS service. Also, Nordstrom Local performed above average compared to flagships during the pandemic. In general, Nordstrom said its customers in Nordstrom Local spend more and return goods faster, giving the retailer a better chance of reselling returned products.

Nordstrom hasn’t opened more Nordstrom Local stores since 2020, raising questions about the concept’s long-term success as is. In February 2025, while creating a new Director of Luxury Styling role for Neiman Marcus veteran stylist Catherine Bloom, Nordstrom converted the Melrose Place Local store into Catherine Bloom for Nordstrom luxury service space. Bloom will bring extensive experience serving high-profile clients, including Hollywood stars, executives, and international elites. The appointment leverages Bloom's expertise in curating personalised wardrobes and made-to-measure services. The Nordstrom Local transformation demonstrates a bigger focus on high-value customers, reflecting the luxury sector's increased emphasis on personalised experiences and customer relationships. Will it serve as a blueprint for other Nordstrom locations?

iii: California locations are in Brentwood, Manhattan Beach and Newport Beach. NYC locations are in the Upper East Side and the West Village.

Small format, big debate: are small-format stores the future or a distraction for department stores?

Retail experts’ opinions are mixed on how smaller format stores can really improve department store results. In the case of Nordstrom, the units are relatively small and don’t involve inventory, “only” supply chain capabilities (delivery and reverse logistics), a few fixtures and limited staff. Nordstrom Local stores can consume resources, though, as NYC rents are incredibly high.

In the case of Macy’s Inc., Market by Macy’s and Bloomie’s stores are certainly an interesting evolution of the department store concept. Still, they are not a solution to Macy’s planning to close 150 stores, as they represent a small part of Macy’s Inc.’s business. However, as Neil Saunders, GlobalData Managing Director said, Bloomie’s stores are “strategically important as they are a future vehicle for growth. It is much easier to open a smaller format as there are more locations where these stores are viable, and expanding the concept is less capitally intense.” Besides, in the case of Bloomie’s replacing a larger-format store that was not ideally positioned (this was the case in Skokie), the change showed impressive results: despite reducing the footprint to about 25% of the original store's size, they maintained roughly 100% of the sales, demonstrating the format's efficiency.

Still, not all analysts are convinced by small formats. In 2023, retail analyst Walter Loeb criticised Market by Macy's plan for rapid small-format expansion, comparing it with Bloomie's more measured approach and methodical expansion of well-edited stores, suggesting the latter's strategy may be more sustainable. This strategic divergence highlights the risks and opportunities in department store transformation, where rapid expansion must be balanced against maintaining brand value and operational efficiency. While Macy's aims to penetrate new markets rapidly, critics argue this approach could divert attention and resources from improving flagship locations.

Finally, according to Nick Egelanian, president of retail development firm SiteWorks, opening small-concept stores may be a good idea. Still, it won’t take away from the fact that Macy’s, with its traditional large locations, has been highly challenged: “everything else Macy’s does] consumes critical resources and focus that should be laser-focused on the primary task at hand — coming up with a viable business in their core markets,” Egelanian said. In [Q4 2024, Macy’s comparable sales were down 1.9% on an owned basis, Bloomingdale’s owned comparable sales grew by 4.8%, and Bluemercury net sales increased by 6.2% on an owned basis.

*The rise of small-format stores signals a significant shift in how department store operators rethink their presence, purpose, and profitability. Whether positioned as service hubs, curated local experiences, or omnichannel support centres, these formats reflect a broader desire to reconnect with customers on more relevant, agile, and cost-efficient terms. Nordstrom, Bloomingdale’s, Macy’s, and Magasin du Nord each approach the model differently, yet all seek to solve the same equation: how to remain visible, valuable, and viable in a world where footfall is unpredictable and digital expectations are high.

While the format shows promise, whether through Bloomie’s near-equal productivity on a fraction of the space, Nordstrom Local’s customer engagement metrics, or Magasin du Nord’s local loyalty growth, questions remain about scalability, long-term efficiency, and strategic alignment. Other department stores have tried small-format stores such as Falabella in Chile and Peru. The strategy is paused for now due to the local market structure. In fact, growth is difficult in cities without stores, as there is no halo effect, contrary to Bloomie’s and Magasin du Nord's small stores. Ultimately, small-format stores are not a universal fix, but rather a strategic instrument whose performance depends on execution, contextual relevance, and alignment with broader company goals.*

Credits: IADS (Christine Montard)