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

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

The Kai Tak area: ground zero for reinvention

The early vision

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

The masterplan: Kai Tak Development (KTD)

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

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

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

Where the city breathes: parks, promenade and play

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

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

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

Game on: Kai Tak Mall “sportainment” formula

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

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

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

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

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

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

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

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

The upcoming Cullinan Sky Mall

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

The Twins: two towers, two plays

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

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

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

SOGO: 16 floors of everyday premium

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

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

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

SNDO unfolds food, fandom and finds

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

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

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

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

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

Credits: IADS (Christine Montard)

Printable version here

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

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

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

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

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

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

Conferences recaps 

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

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

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

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

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

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

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

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

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

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

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

IADS’ takeaways:

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

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

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

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

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

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

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

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

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

IADS’ Takeaways:

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

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

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

Lessons from a winning value-fashion retailer 

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

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

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

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

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

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

IADS’ Takeaways:

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

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

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

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

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

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

IADS’ Takeaways:

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

Is there too much enthusiasm for AI? 

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

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

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

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

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

IADS’ Takeaways:

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

What AI can and can not do for department stores 

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

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

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

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

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

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

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

IADS’ Takeaways:

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

Beyond “agentic AI”, autonomous business models 

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

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

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

IADS’ takeaways:

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

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

2. Digital labour is essential for competitive survival. 

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

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

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

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

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

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

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

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

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

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

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

IADS’ takeaways:

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

How LVMH is leveraging data and digital 

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

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

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

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

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

IADS’ takeaways:

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

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

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

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

AI without semantic capital is of no use 

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

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

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

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

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

IADS’ Takeaways:

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

A subjective selection of innovative startups - AI 

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

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

A review of new stores opened in 2025 

Must sees 

Bloomingdales 59th Flagship store

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

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

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

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

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

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

Printemps New York

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

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

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

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

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

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

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

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

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

Macy’s ground floor

What: The Cosmetics area has been revamped.

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

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

Meta Lab

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

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

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

Target SoHo

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

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

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

Dossier

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

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

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

Nespresso new flagship 

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

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

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

Try to see if your schedule allows  

The Poke Court

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

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

Buck Mason

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

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

Whole Foods Daily Shop

What: the everyday grocery iteration of Whole Foods

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

Los Angeles Apparel

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

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

Tecovas 

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

Aritzia

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

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

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

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

Lululemon

What: Their brand-new store concept.

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

Reading about them in the press is enough 

Easyplant

What: an amusing concept based on selling plans.

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

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

TM:RW

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

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

Meadow Lane

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

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

Brooks Brothers new Flagship 

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

Banana Republic Archives

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

Another Tomorrow 

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

Credits: IADS (Selvane Mohandas du Ménil)

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CLICK HERE TO SEE THE PHOTOS OF SHEIN

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

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

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

SHEIN’s brief history

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

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

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

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

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

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

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

Sales models: from self-managed to marketplace

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

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

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

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

Expansion left, right, not in the centre

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

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

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

Breaking stereotypes: customer demographics

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

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

SHEIN’s French battleground

SHEIN’s conquer strategy

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

The SHEIN-SGM deal: a calculated risk that backfired

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

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

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

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

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

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

What happened with SHEIN and SGM: everyone said no

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Credits: IADS (Christine Montard)

Printable version of the exclusive here

IADS White Paper - DEI at a crossroads in retail

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

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

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

Introduction: what this moment is telling us

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

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

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

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

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

The human advantage: how DEI supports retail performance

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

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

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

A global imperative, many local realities

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

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

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

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

Lessons from the field

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

Across these examples, several patterns emerge:

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

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

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

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

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

Conclusion: DEI as part of retail resilience

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

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

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

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

Credits: IADS (Maya Sankoh)

PRINTABLE VERSION HERE

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)