PRINTABLE VERSION HERE

Introduction

*With Covid, the search for wellness has become increasingly important for consumers. In a survey from McKinsey, the global wellness market was estimated at USD 1.5 trillion in 2021, with a predicted annual growth of 5 to 10%. In this survey, 79% percent of the respondents said they believe that wellness is important, and 42% consider it a top priority.

As a consequence, retailers started to tip toe in this relatively unknown part of the business, in the intersection of beauty, sports practice, health products and services. Selfridges first launched a wellness program in February 2022. Dubbed “Superself”, the initiative included paid sex counselling sessions, confidence coaching sessions and other services to help customers live a “brighter lifestyle”. This month, they are transforming their Corner Shop into “The Feel Good Bar”, a well-being destination focusing on sex and sleep-enhancing products and services. The cinema at Selfridges will also be part of the program, converting into a sleep session area. Health-based experiences like acupuncture sessions, IV drips, bio-hacking, and oxygen therapy will become available later this year. Also in the UK, on top of a cosmeceutical space, Flannels partnered with Barry’s Bootcamp to open a gym in their new Liverpool store. In the US, mental health initiatives developed in the past months for instance at Walmart, CVS and Rite-Aid drugstores.

In France, last year, Monoprix launched “La Santé au Quotidien”, a new department dedicated to products that are in between traditional beauty offerings and medical treatments. In March 2022, Le Printemps Haussmann store also launched a new beauty floor gathering beauty services such as manicures, pedicures, brow services, hair products and a salon, dermo-cosmetics and food supplements, as well as a spa developed with the Face 2 Une beauty tech brand, proposing no gender services through manual massages and machines. Next September, using a more confidential approach, Le Bon Marché will also open a permanent 150 sqm beauty salon.*

Obviously, initiatives are plentiful but Galeries Lafayette goes further than any other department store in the wellness business. Last week, and after a year in the making, they opened the “Wellness Galerie” in their Haussmann store. On 7 July, Alexandre Liot (Haussmann Store Director) and Arthur Lemoine (Offer and Buying Director) unveiled the new floor. The IADS attended the floor visit for you, and we are delighted to report back this exciting member news.

Check out the a collection of pictures of the Wellness Floor here

The Wellness Galerie in a nutshell: sports, beauty, health, wellbeing, and more

This recent move is part of a larger modernisation plan which already witnessed the revamp of the floors: 2 and 3 (women’s fashion), 4 (women’s shoes) and 5 (kid’s wear). The Wellness Galerie is located on the -1 floor where women’s shoes used to sit, and one of the most important floors in terms of traffic. The idea behind such a space is to make wellness accessible to a larger part of consumers as it is still quite segmented to date in France.

With this new 3,000 sqm department, Galeries Lafayette has an ambitious goal: the holistic concept is set to become the destination for well-being in Paris, where people come to think about themselves and do something good for their body and mind. In a nutshell, the Wellness Galerie splits into 3 main areas: a gym studio and a fitness product offer, beauty and health  (services, and a care-oriented beauty store. Many brands are exclusive, and some are introduced for the first time in France.

In terms of architecture, the Wellness Galerie is full of rounded spaces, even using a reverse cupola to mirror the store’s famous one. Curved walls and ball-shaped private rooms echoing the 70s are emphasizing the impression. Walls are usually tiled with earth-tone ceramics. Hardwood and concrete floors come one after another depending on the area.

Galeries Lafayette gets physical

La Source, a Parisian bootcamp studio, is opening a 200 sqm workout space which will offer group coaching, as well as other classes, such as boxing and cardio starting at EUR 30 for a 50-minute class. With its direct access from the subway station, the gym can open outside of the usual operating hours, from 6:30 am to 9:00 pm (the store is open from 10 am to 8:30 pm). A large sitting area, thirty shower cabins, supplied with bath towels, body soap and lockers make the place a true gym.

This part of the floor also includes a trendy yet technical athleisure product offer, the “Fitness Store”. Some 15 responsible brands recognized for their expertise, from big names (Adidas, Under Armour, The North Face, Eres and Wolford) to emerging brands are gathered on a 200 sqm surface: Born Living Yoga and Alo Yoga (exclusive brands), Luz Collections and Girlfriend Collective for fitness and Pilates, Circle for running and Chlore for swimming are completed by Colorful Standard for loungewear and the latest yoga accessories from Bala and Athlé. Finally, Champion Spirit, sports accessories and equipment that connect digitally, are available to shoppers. The “Fitness Store” doesn’t sell sports shoes.

A wide array of services focusing on well-being, care, beauty, and fun

What makes the ‘Wellness Galerie’ special also lies in the plentiful service offers. First, through the “Lobby Wellness”, the “Wellness Team” welcomes customers and guides them in choosing the program that best suits their current objectives. The Wellness Team can also carry out a broader assessment of one’s physical, mental and emotional condition to guide clients toward the right treatment. A dedicated platform on Galeries Lafayette’s website is available to book any service.

When it comes to brands and partners, the space proposes unexpected pure health-related or well-being services such as Aantomik. Created by 2 osteopaths, services combining prevention and treatment such as cryotherapy, hyperbaric chamber, osteopathy, meditation, muscle strengthening, yoga and Pilates in group sessions are available. Many other services oriented towards well-being and beauty are also proposed: Belleyme offers sessions in their infrared saunas for detoxing, disconnecting, and regenerating your body. The famous Martine de Richeville combines Chinese medicine and psychology to remold the body through her special and renowned massage technique that targets fatty deposits, circulation issues, deep skin tissue, and internal organs. L’Institut Nathalie Duarte is a physiotherapist, masseuse, and official trainer of the Renata Franca method. Les Bains du Marais brings ancestral rituals for beauty and well-being thanks to a hammam and a collection of bathing products. And Alexandre de Paris will open a hair salon in the  Wellness Galerie in September.

To improve body figures, Skinneo delivers anti-ageing and silhouette-enhancing treatments by using exclusive technology to care for the face and body. Chronodiète offers nutritional coaching for diet and well-being using a methodology based on chronobiology and the glycemic index to adapt to the rhythm of each person for an efficient weight loss journey.

More oriented towards beauty, the Galeries Lafayette buying team recruited Chillhouse in New York to differentiate their manicure offer. The brand offers fun and accessible body, face, and nail services. Le Boudoir du Regard develops innovative bespoke eyebrow waxing, eyelash and eyebrow dyes, long-lasting eyelash extensions and permanent make-up services to provide structure and harmony to the face. Finally, Djula proposes piercing services with a trendy line of body jewelry made from 18 Carat gold, diamonds and other precious metals and gemstones.

Two “bubble spaces” are available for private bookings. In these two cocoons, customers can celebrate a birthday, a bachelorette or bachelor party, or any other occasion. Some treatments can be organized in the intimacy of the “bubbles” as they can be entirely personalized. Nutrition being a key aspect of wellness, a restaurant, the DS café, has been designed to offer healthy meals and juices, to stay or to go.

The Beauty Store is focusing on care

Central to the floor, the 600 sqm Beauty Store is divided into shop-in-shops and a multi-brand area. New names mix with famous ones that were previously available on the ground floor. The idea here was to leave the tri-axis brands such as Chanel or Dior, the perfume and makeup brands on the ground floor and to move the more care-oriented ones to the Wellness Galerie: for instance Augustinus Bader, Origins, The Ordinary, Clinique, Aesop, Shiseido, Kiehl’s, Aveda, Clarins, Dermalogica, LA:Bruket, Rituals. New brands are introduced such as Seasonly, the 100% clean and vegan French line of beauty products, benefiting from a large area. Sunday Riley provides innovative and exclusive formulas to see rapid results and rebalance skin for the long term. And 111SKIN which reproduces surgical and clinical treatments through innovative formulas.

Brands developing alternative products have also been onboarded. L’Officine Immortelle combines phyto-aromatherapy and grimoires to bring ancestral formulas up to date through its herbal teas, oils, treatments and elixirs all 100% organic and made in France. Aromatherapy Associates has been a leader in the wellness industry for over 35 years by producing handcrafted natural formulas using essential oils designed for physical and emotional health. Finally, a food supplement section with Sensiness and Maison Louno, and a book store gathering 500 books are also available for a 360° product offer.

Conclusion

Department stores recently entered a relatively new business: wellness. Being about beauty, well-being, ageing, nutrition, health and sport makes this holistic trend and the market coming with it difficult to be clearly defined. While the wellness trend remains unframed, retailers are experimenting with various options from traditional beauty treatments to healthcare-related services. Some department stores are even going further by offering injectable services like Saks Fifth Avenue in the US. In France, Galeries Lafayette certainly takes the lead in this area by devoting an entire floor to its Wellness Galerie. It also marks an additional venture into experience and service offerings.

Credits: IADS (Christine Montard)

PRINTABLE VERSION HERE

Introduction

*Among the many consequences for retail stemming from the Covid-19 pandemic, which we are exploring at length, a major one is the international tourism crash and the closure of China, which historically steadily contributed to department store companies’ growth in the past years. Even considering the recent closures taking place in Shanghai, Beijing and other Chinese cities, the business has flourished domestically for the past 2 years in China and the acceleration of retail digitization has also taken place there. The road seems to be still very bumpy, but there is definitively a light at the end of the tunnel. What can we learn from what took place in China and are there lessons to have in mind? To answer this question, we interviewed two specialists from Mobile Now Group and Clientela.

Mobile Now Group, founded in 2009, is a development studio with a focus on digital experiences, products, and platforms. With offices in Shanghai, Hangzhou, and Changsha, in addition to their Singapore office, they have a commanding understanding of the Chinese market and its evolution. They have worked on more than 100 projects with leading companies in the world such as Richemont, Cartier, IWC, Montblanc, Sephora, DFS, Hennessy, Lane Crawford, Shiseido, NARS, SMCP, La Samaritaine, and others.

Clientela, a software company based in New York founded in 2010, has developed a complete suite of acquisition, clienteling and retail operations for stores, in order to cater to customers’ needs through an optimal experience, while maximizing efficiency and profitability for retailers. They have developed solutions for several leading global brands, such as Cartier, Benefit Cosmetics, Marc Jacobs, Chloé, MaxMara, and Carolina Herrera, and they have led a pilot project with IADS member Magasin du Nord in Denmark.

Mobile Now and Clientela partnered in 2020 realizing that retail clients needed a global clienteling approach that brings together two important approaches:*

• The maturity and knowledge of global clienteling best practices,
• The specificity of the Chinese digital ecosystem, especially in mobility, social commerce, and O2O commerce.

We interviewed Thomas Meyer, co-founder of Mobile Now, and Arnaud Barbelet, COO and partner at Clientela. Thomas spent 20+ years in Asia (14 in China) and most of his career in tech and mobile development before co-creating Mobile Now Group 12 years ago, with experiences at Wunderman, OgilvyOne, and WPP among others. Arnaud has 18+ years of experience in start-up development centred on customer approach and understanding. He brings a complementary eye to what’s going on in China and helps draw conclusions for retailers from other regions.

IADS – With your combined experience, what are the key learnings and innovations that you noted over the past years in China? What should the rest of the world be aware of?

TM, Mobile Now - Social commerce, and how it became central for Chinese department stores and international brands, is on top of my mind and especially WeChat. Many players are operating in social commerce: Douyin (equivalent of TikTok), Little Red Book… They all work a bit differently and most of them are in reality engagement and branding platforms. For me, WeChat stands out from the crowd.

WeChat has a multilayer spectrum:

• There, brands can build their apps (Miniprograms) hosting the whole product catalogue, acting like websites or native apps we know in the West. In addition, these Miniprograms include WeChat Pay and easy user identification.
• It is at the same time a livechat platform, used by brands and sales associates for anything: pre-sales, sales and after sales, making appointments in stores and reserving products.
• It also offers retailers a wide range of analytic data, through WeCom (a professional sister app) to track KPIs and perform additional analyses.

Not all brands have jumped onto WeChat online-to-offline (o2o) commerce and in some way, this is what seems to differentiate losers from winners in China. For customers, the possibility to use WeChat customer service and Miniprograms now make a difference between good and bad service.

AB, Clientela – For me, international department stores willing to attract Chinese shoppers once the pandemic restrictions end have no choice but to invest in WeChat or other significant national super apps (such as Kakao for Koreans or Line for Japanese customers). However, China has crafted this business model, we see WeChat as a sort of digital lab for social o2o commerce. The Korean and Japanese examples show that this model might very well happen in other countries as well (for instance, India).

IADS – Thomas, e-commerce in China is extremely different, and much more competitive, than in other markets. How have Chinese department stores adapted to the digital ecosystem and what were their main innovation points?

TM, Mobile Now - E-commerce in China is a completely different ecosystem, and structural changes are constantly happening, which complexifies the picture. The way the different platforms work changes over time, which can be disorientating for outsiders.

For instance, many brands heavily invested in Alibaba’s TMall without taking a broader look at the whole ecosystem, and forgot to build brand awareness and engagement prior to these heavy investments.

To avoid this, WeChat really stands out as a Swiss Army knife: it is at the same time a platform for brands, their omnichannel commerce enabler, bridging online to offline and vice versa. By acting as a DTC platform for brands, WeChat has been central for Chinese department stores, and probably for others located outside the country and who wanted to catch the train.

In any case, investments need to be made step by step, and with thorough due diligence: WeChat is not the only option. For instance, when it comes to dynamic marketing and engagement, Douyin, Weibo or Little Red Book (aka XiaoHongxu) are adequate platforms for social PR and Communications teams and agencies. To make a parallel, this is more or less the difference between Facebook and Instagram outside China.

IADS - What is your understanding of the Chinese customers’ expectations now that they have everything available at home at the same price (Hainan…)? How have they evolved?

TM, Mobile Now - Hainan has indeed gone through an amazing development for home-based Duty-Free business in China in the past couple of years. But this situation may not last, as Chinese consumers can’t wait to also be able to travel again internationally.

Many brands are still cheaper to buy in Europe, US or Australia than in Hainan due to other costs than taxes or pricing policy differences. And Chinese consumers know very well that brands are usually cheaper in their original market andoffer more choice and improved experience.

Once the restrictions stop, we believe, and analysts do so as well, that the Chinese will be heavily travelling again.

AB, Clientela – Actually we expect a massive revenge travelling and shopping behaviour to take place. As the Chinese have waited a long time for this to happen, they are comparatively richer than prior to the pandemic, they have more savings, and prices are higher in China (even in Hainan) than in most international brands’ home countries. So, we expect a wake-up call and surprise revenge shopping spree.

IADS - How can department stores in the rest of the world prepare to welcome Chinese tourists again? To what extent are we talking about a shift in terms of the offer, store experience, or anything else?

AB, Clientela –The Covid-19 pandemic took marketing and IT departments by surprise as they had to identify and set up new digital solutions quickly, such as e-consultations and masterclasses, but also with queuing and online booking solutions. Department stores can’t afford to make any new mistakes, especially by waiting for Chinese tourists to ask employees to install WeChat. By “install WeChat” I mean to set up a new technical environment, teach sales associates how to use it and define new business flows to collect data, better prepare boutiques visits and provide results.

In addition, there is a trend for department stores to differentiate themselves according to the audience they want to serve (international travellers vs local crowds, such as La Samaritaine vs. Le Bon Marché, or Les Galeries Lafayette Haussmann vs. Champs-Élysées in Paris) and we expect it to continue.

This positioning differentiation (international vs local) will be paramount in defining traffic generation strategies, leading to strategic decisions to make. International travelers-focused stores will probably double down on Chinese tourists once they are back, and will need to re-activate and refresh their plans very quickly.

For us, the key steps to efficiently preparing the Chinese travelers’ return are:

• Brand awareness and reputation,
• Chinese focused product/brand assortment and overall experience,
• Chinese-speaking sales staff and consultants,
• Mastering Chinese platforms and delivering above expectations on omnichannel and clienteling services, (and that’s clearly WeChat first and foremost, but also other social media platforms as well) to optimise their customer experience and journey. This is paramount as it naturally drives word of mouth, creating a virtuous circle.

IADS – And what about international department stores’ digital tools and ecosystem?

AB, Clientela – It is important for department stores not to miss the Chinese revenge shopping spree we expect to happen eventually. This is why Clientela and The Mobile Group have teamed up to help our partner clients, mono brands, and department stores to be ready to welcome Chinese customers.

They use WeChat to prepare for their trip, book their shopping experience, pay, reserve products, share with friends, and ask questions to the Sales Associates they are bonded with. They expect a truly o2o shopping experience. Like what they have at home. It is crucial for department stores to be ready for that. And like in China, there will be international winners and losers.

IADS - What would be needed which is not yet implemented outside China?

AB, Clientela – Provide a differentiated and relevant experience including a product catalogue, Customer Service, the ability to reserve products, book their shopping visit and enjoy their VIP experience with other perks and services. They come with very high expectations. The trip is like the realisation of the dream, and the risks of disappointing them are therefore very high.

TM, Mobile Now – Such an approach based on WeChat will help customers to ensure a direct connection with Chinese-speaking sales associates. In turn, sales associates and retailers will have access to tools helping them to better manage this customer flow, help them, and know them or track them in a more efficient manner.

IADS - Can we expect Chinese tourism to be the same kind of fuel for growth for department stores as it used to be in the past? And how can it be combined with local customers that have been (successfully) courted for the past 2.5 years?

AB, Clientela – Eventually, borders will reopen, and I am personally convinced that the return of Chinese travellers will totally and positively surprise flagship retail and related tourism business. I think it is clearly going to be even stronger than before.

TM, Mobile Now – Of course, the tricky topic is to define the nature of the Chinese tourists who will come back. But keep in mind that change is constant in China and during the 14 years I spent in China I have been surprised every year to see how fast decisions could be made, right from the top, and how impactful they can actually be for business. When I talk to Chinese friends, I hear how eager they are to travel back across the world (Europe included, of course) and I personally believe this will happen sooner than most people think.

Credits: IADS (Selvane Mohandas du Ménil)

Check out the review of NK in pictures here 

pRINTABLE VERSION HERE

Introduction

*The IADS had the occasion to travel to Finland, Sweden and Norway to visit Stockmann, NK and Steen & Strom respectively. All those three venerable companies, true institutions in their countries, have started a transformational post-pandemic journey in order to become destinations again in their respective cities.

At a moment when tourism is starting again and the three countries seem relatively immune to the difficulties created by the war in Ukraine, we review where they stand, their innovations worth noting and why their transformation is far more than just a revamp or a digital reset: for at least two of the three companies, they are challenging their own business model to the point of admittedly literally learning a new job.

Let’s embark north of the 60th parallel to see what is going on!

This second part is dedicated to NK in Sweden.*

Company history: a leaser learning the art of retail

A founding member of the IADS (1928-1991), Nordiska Kompaniet was founded in 1902 in Stockholm by Karl Ludvig Lundberg and Josef Sachs, who wanted to bring a store with the same level of service that what Paris or London has to offer at the time. The Stockholm flagship store opened in 1915 and took its inspiration from American department stores, with a steel structure and a granite façade (which still contributes to the dramatic aspect of the store today). The emblematic circular neon sign was installed on the façade in 1939 and is still a well-known sight in the city today. NK is reputed for having brought both innovation (for instance, the first escalators) and fashion to Sweden: it was for instance visited by Mr Dior who decided to open a salon there.

Today, the company operates 2 stores (Stockholm, Gothenburg) and is owned by Hufvudstaten, a real estate company, which posted total net revenue of €168m in 2021, down -4% vs. 2019. An interesting point, however, is that until 2020, NK was exclusively operating under leasing agreements and, therefore, was only focused on the maximization of the assets. During the pandemic, one of their operators, an importer of fashion, cosmetics and jewellery brands, went bankrupt. Given the fact that this operator represented 25% of the total offer (turnover 2019: €72m), NK made the decision to repurchase its activities for €5.5m in February 2021 (the value of the inventory) and launched a new division, NK Retail, which generated an additional turnover of €59m and a profit of €9m from February to December 2021.

As the President, Bo Wikare, put it when the IADS met with him, “before the pandemic I was running a real estate company with 40 people, now we are collectively learning the retail job and how to manage 450 people”. Mr Wikare joined Hufvudstaten in 1994 and was appointed CEO of Hufvudstaten and President of NK in early 2020. Q1 2022 showed promising trends as turnover (both from property management and retail activities) already exceeded the same period back in 2019.

Visiting the store: a true temple to luxury

The monumental entrance, fully covered with granite, still works its magic more than a hundred years after its opening: the store is spectacular and can face even the most modern competition, as during the visit, the impression made was probably on par with La Samaritaine which re-opened two years ago. It displays, on 5 floors including the basement, a spectacular assortment of Swedish art de vivre and international luxury brands, all organised around a central well of light, just like what La Rinascente has done in the Via del Tritone location, but significantly bigger, giving a true sensation of space.

The monumental ground floor is dedicated to international luxury shop-in-shops (Hermès, Loewe, Balenciaga, Burberry…) including the newly opened Saint Laurent space, near a high-end café and restaurant. The space then unfolds on the cosmetics, shoe, accessories, jewellery and watches sections, all sold in multi-brand zones by third parties, meaning that each zone has its own cash desk and anti-theft system (an incongruous sight for anyone more familiar with continental department stores). The cosmetics area features all international brands with their own concept and is a first taste of the offer that continues in the basement. Finally, a space dedicated to cultural exhibitions, at the time of the visit displaying the collaboration between NK and Monsieur Dior, finished bridging the glorious past of the store to its future.

What was striking during the first minutes was truly the quality of execution: the store felt really spacious, airy, well-lit, and luxurious, thanks to the quality of the materials used, but also the attention to detail (the toilets are remarkable, for instance).

The basement is dedicated to the beauty lounge (including a hair and nail bar), the home and design offer as well as a café (very inviting and looking very artisanal), a restaurant, a pharmacy, a library, a candy shop, and a baker. From this section, customers can join a pharmacy and the subterranean network to the rest of the city. Here also, the execution is perfect, with one caveat related to its connections with the ground floor, as there are not many escalators and their locations can make them hard to find when visiting the store.

The first floor gives a good feeling of what Hufvudstaten has excelled at for the past 50 years, leasing, as the neat alignment of perfectly executed branded shop-in-shops is a reminiscence of the Asian luxury department stores operating according to the same leasing business model, such as Lotte in Korea. The only, but significant difference, is that all the retail units are displayed according to a very airy store plan, including around the atrium space, on which edges a café is being built, which gives more a feeling of a department store than a mall. The floor is dedicated to Women’s fashion and lingerie and dotted with very welcoming and smiling sales persons (the visit was done at the opening of the store). 3 zones popped up during the visit:

• The Seazona space, a partnership with a local online marketplace, is entirely dedicated to promoting, Swedish designers. A good way for NK to promote local creativity while limiting the stock risk,
• The second-hand space, which has been played according to a very different line when compared to Stockmann: here, no treasure hunt feel, and products are presented in a very exquisite way (mostly accessories) thanks to dedicated podiums and lights, making them stand out of the crowd and feel very special. The setup is perfect, and features an astute selection of luxury and affordable luxury items,
• The “NK stage”, a space dedicated to popups allowing also to generate a permanent animation on the floor (goods are purchased by NK).

Also, all across the store, dedicated zones, dubbed “NK designers”, “NK international fashion”, and “NK Wedding”… show a selection of brands that have been purchased by NK Retail and sold directly.

The second floor is dedicated to men’s RTW, accessories and shoes, as well as luggage, through a series of shop-in-shops. NK also displays its own multi-brand selections in the “NK Street” and “NK Design” points of sales, all equipped with specific cash desks, separate from the other retailers’ shop-in-shops’. This sales organisation is somehow complicated for anyone not familiar with the store, and also suggests complex systems behind the scenes to retrieve the sales data (we did not test a purchase within a third party shop in shop, but salespeople at NK spaces are systematically asking if customers are NK loyalty card holders).

The third floor, dedicated to sports and home, adds drama to execution and selection: aside from the sports brands shop-in-shops, the multi-brand spaces operated by NK for both categories are spectacular. The sports section is divided into the female, male and exhibition (called gallery) sections where all products are mixed: garments, equipment, and devices… giving a sense of freedom and space which is remarkable. The home section is extremely immersive and well set up. This floor is also, just like the others, dotted with many F&B spaces, many of which are around the atrium, which is treated as a sight to be seen in the store (a feature that is not achieved, for instance, by La Rinascente in Rome).

The fourth floor is dedicated to kids, books, restaurants and customer service (wardrobe, click & collect). Interestingly, it is at this moment of the visit that we realized that there are only two floors equipped with toilets, the basement and this one, while at Stockmann every floor is equipped.

What about the competition?

There is another major department store chain in Sweden, Ahlens, which was founded in 1899 first as a mail-order business. It ventured into the department store business in 1932, and the flagship store, Ahlens City, opened in the heart of Stockholm 500 metres away from NK in 1965. Today, the company manages 57 department stores and claims a total turnover of €450m, which makes it the biggest retailer in the country. It was rumoured in 2009 that Ahlens offered to purchase NK for a total value of €41m.

The feeling offered by Ahlens is radically different than at NK: in addition to being more mid-market, the model seems in its vast majority on a wholesale basis, leading to structural differences (lack of anti-theft systems from zone to zone, sections more intrinsically mixed together, navigation from one section to another less abrupt, less shop in shops) which impact the customer experience:

• Windows are not dedicated to one brand in particular, but mix different products, indicating where to find them in the store,
• The ground floor, dedicated to cosmetics, fragrances and accessories have a traditional setup with international brands shop in shops in the central zone and multi-brand spaces in the periphery. If the cosmetics offer is rather classical and repeats brands already on display at NK, the accessories section has a lower positioned offer: Furla, DKNY, Sandqvist… The space is delimited into sections through walls which are not so much of an issue for the sight thanks to the very high ceiling height. Coming as a strong difference from NK, customers have to queue to pay at central cash desks with are regrouped in specific sections of the ground floor.
• The first floor is dedicated to women’s fashion and lingerie. Here again, one can find corners with brand concepts, but only Malene Birger seems to be sold in a shop-in-shop. The central “Ahlens Studio” section displays cooler and younger brands such as Stine Goya and Jeanerica, but apart from this section, the feeling is less luxurious than NK,
• The second floor is not dedicated to men’s, but to kid’s, home decor and lights. Cash desks are visible from afar, and customers are also invited to wander through “Sally & Voltaire”, a restaurant which also sells the products used in its dishes,
• The third floor is dedicated to the whole men’s offer, including RTW, accessories, shoes, sportswear and services (barber). A personal shopping space and a dry cleaner are located behind the underwear and socks section (a surprising location choice) and a burger restaurant is located right in the middle of Lacoste and Ralph Lauren Polo, giving the location a distinctive smell.
• The fourth floor is leased and dedicated to Muji just like what Illum has done in Copenhagen. It is possible from there to access the rooftop restaurant which provides a great view of the city.

All in all, Ahlens presents a more classical approach when compared to NK, for anyone familiar with department stores across the world. The notion of “everything under one roof” is clearer there, even though the range of the offer does not approach luxury, contrary to NK where the message is clear. As a consequence, both department stores are really contrasted and it is highly probable that customers at Ahlens are much more looking for a bargain or a good deal, and less looking for an experience or the latest or most fashionable product.

What to remember from NK?

The transition from a purely real estate model to a hybrid one, which has been decided out of necessity but is extremely convincing on the sales floor, one year after its inception. This evolution perfectly follows the retailer’s vision of remaining a destination store for both the local customers looking for an international and luxurious offer, and tourists coming to Stockholm: it goes through curation, differentiation and a point of view, only achievable when the offer on display is managed one way or another.

The quality of execution and a perfect mix between retail and F&B makes NK a perfect place to hang out, and could be considered a good and relevant example by many other retail companies across the world. Visitors feel pampered and privileged when walking along the aisles and are encouraged to shop (it is extremely difficult not to feel in the shopping mood).

The capability to permanently create surprise and animation on all floors, not only by relying on brands’ own capabilities, but by mixing the business models: own operated popups, specific seasonal zones rented to brands, partnerships with a fashion marketplace, and own retail zones with superior execution such as the sports section.

Conclusion

*NK has long been seen from the brand point of view as a true luxury hub, only accessible to the most established companies able to deal with local retail operations, or to the ones with the adequate relationship with the relevant local agents able to operate on their behalf.

Now that NK has a retail arm, following a trajectory that has been taken by others already (see SKP for instance), this is going to be probably helpful to widen the distance with Ahlens and contribute to its international reputation. Already designed to be a place of leisure and discovery, NK is on the right way, at least in Stockholm, to become a regional standard and maintain its status of an unmissable destination when visiting Stockholm in the coming years.*

Credits: IADS (Selvane Mohandas du Ménil)

Check out the review of Stockmann in pictures here 

PRINTABLE VERSION HERE

Introduction

*The IADS had the occasion to travel to Finland, Sweden and Norway to visit Stockmann, NK and Steen & Strom respectively. All those three venerable companies, true institutions in their countries, have started a transformational post-pandemic journey in order to become destinations again in their respective cities.

At a moment when tourism is starting again and the three countries seem relatively immune to the difficulties created by the war in Ukraine, we review where they stand, their innovations worth noting and why their transformation is far more than just a revamp or a digital reset: for at least two of the three companies, they are challenging their own business model to the point of admittedly literally learning a new job.

Let’s embark north of the 60th parallel to see what is going on!

This first part is dedicated to Stockmann in Finland.*

Company history: a former real estate magnate turned tenant of its own previous properties

A former member of IADS (1950 – 2020), Stockmann was founded in 1862 in Helsinki by Georg Franz Stockmann and is credited for having introduced revolving doors, soda fountains and escalators in Finland. The company grew to the point of adding, aside from a significant store fleet in Finland, stores in Tallinn (Estonia), Riga (Latvia), and 4 stores in Moscow and one in St Petersburg at the peak of its history. However, business was challenging, and Stockmann separated its retail operations from real estate in 2014 and started selling under a lease-back scheme its assets in 2015. Divestment in Moscow was achieved in 2016 (operations started there in 1989) and in St Petersburg in 2019. Difficulties accelerated during the Covid-19 pandemic, forcing the company to apply for corporate restructuring in 2020, to sell off Tallinn and Riga properties in 2021, and the Helsinki flagship property in Q1 2022 for €400m.

Today, the company operates 5 stores in Finland in addition to Riga and Tallinn, all of them under a lease agreement in buildings that used to be the company’s properties. Stockmann conglomerate also owns and operates Lindex, a Swedish fashion chain representing 475 stores in 16 countries, which has fared so far much better than the department store division.

For the department store division, full-year sales in 2021 represented €291m (of which €226m was achieved in Finland, growing +3%, the rest being achieved in the Baltic states), with an operating result of €11.6m vs. a loss of €-48.2m in 2020 during the pandemic. Q1 2022 grew +27% vs. 2021 to €196m and operating profits to €9.8m from a loss of €-27.6m in the same period last year.

A new CEO, Mr Jari Latvanen, joined the company in August 2019 with the mission to help the company to exit the difficult situation at the time. After an all-time-low in 2020 leading to the near bankruptcy of the company, the sale of the property helped the company clear off debts in a record time and revert to a near-healthy situation, in spite of a new customer structure (in 2019, 20% of the business was done with Chinese and Russian customers, two groups which have both totally disappeared and replaced by locals).

Visiting the Helsinki flagship, the largest department store in the Nordic countries

The historical store spans over 50,000 sqm and 8 floors. Due to the fact that it is constituted of two different buildings, navigation can be somehow tricky as there are intermediary floors on the ground floor, and +1, +2 and +3 levels. As a consequence, for some categories such as women’s and men’s fashion, the offer is fragmented in different spaces, making product discovery difficult.

The basement is at the same time a service area, a recreational space and an event zone:

• A pharmacy is accessible from the parking space before entering the store,
• A deli, several restaurants and a bar are available. One of the restaurants is managed by a local chef offering set menus for lunch, helping business customers to come back into the store after having lost the habit during the pandemic (stores were never forced to close in Finland, Sweden or Norway, however the stay-at-home instructions and remote working were implemented),
• The event space, for instance used for Christmas, was used at the time of visit for “Stocklet”, a smart way to liquidate stocks while avoiding cluttering the regular selling areas. It is all about efficiency: products are gathered by size and customers are invited to hunt for a good deal (no inspirational trick here).

The ground floor is dedicated to cosmetics and accessories in addition to a small flower stand.

• For the cosmetics, the usual international suspects are all present, in the spectacular atrium (all brands have their own concept) and also includes related products (Dyson) and services (hair bar, nail bar). It is notable to remark that local brands are also present in abundance and a lot of space is dedicated to them.
• The women’s accessories zone is the most appealing one in the store (and most differentiated), as it has been refurbished very recently. All windows have been open and let natural light come in, with plants and trees giving a feeling of nature (they are changed according to the season), and low rise furniture giving full sight of the space. International brand names are cleverly mentioned on the floorplan, but this can be somehow deceptive as in reality, the products are simply put on small tables just like any other generic area, while one would have expected to find a shop in shop (the only shop-in-shop on this floor so far is Longchamp with its own cash desk, the rest is operated in wholesale. Overall, 5% of the business is made in concessions, with Dior Cosmétiques, Longchamp, Hugo Boss and the brands on the 6th floor).

The first floor is dedicated to men’s fashion on several sub-levels, including some kind of mezzanine. This is not helping to embrace the whole offer at once. According to the CEO himself, the men’s business has considerably evolved and it is now almost impossible to find a formal offer in the store, as Finns (known to be extremely formal) are not looking for these products anymore.

The second floor is dedicated to women’s fashion and is better lit, more engaging and spacious than the men’s section. All brands are displayed with their own concepts on murals, which makes them more outstanding. 3 elements were worth being noted:

• Fitting rooms are surprisingly uninviting. At the time of the visit (morning), a rack with unsold items was displayed in front of them, not precisely an encouragement to buy, in addition to the cabins themselves, which are rather disconnected from the overall feeling of the floor,
• Customers also have the occasion to shop in dedicated lounges, which have been recently opened along with the revamping of the private shopping activity. Such spaces are significantly more attractive.
• On the side, a “Relove” café has been open, astutely mixing racks of second-hand items with a café, giving a charming boudoir feeling to the space, which was crowded (unlike the rest of the floor) at the time of the visit.

The third floor is dedicated to contemporary fashion, sportswear and, curiously, lingerie, which is displayed just near men’s garments and women’s sportswear coats and shoes. Lingerie space execution is poor.

The fourth floor is dedicated to home accessories including the Casa Stockmann private label. Overall, private labels cover home and fashion RTW and accessories. For fashion, private labels (an activity which is made easier for Stockmann thanks to Lindex production capabilities) represent 15% of the business, including at the same time an inspirational offer and lines designed to complete missing prices and functions.

The fifth floor mixes Stockmann’s own operations with kids RTW, sneakers and toys (the space is supposed to be redesigned in the coming months), spaces leased to Halti, a Finnish outdoor brand, and Isku, a furniture brand. Transitions from space to space are abrupt. Recycling spaces (garments, electronics) are available on this floor only, which is not particularly handy.

The sixth and seventh floors are hybrid spaces:

• On the sixth floor, customers can find every service they might need: a bridal salon, a hairdresser, a perfume shop (not clear if operated by Stockmann or not), a medical and dental clinic, a dry cleaner, and a Solaris optical shop. This zone is not as appealing as the rest of the store and looks like a mall more than a part of the department store. Last but not least, a lounge is available, closed at the time of the visit and looking like an old-fashion gentlemen’s smoking lounge.
• The seventh floor is dedicated to services, but is not accessible from all lifts or staircases. There, customers can come to pick up products or have their purchases delivered through partners, but the overall feeling is that the zone is not inviting and a significant amount of space is empty. A champagne bar and a terrace complete the floor.

What to remember?

The store is getting ready for tourists to come back: it is clear that the Helsinki store is good at addressing tourists, information is provided in English (including promotional audio messages), in a clear way, and a strong push is set on local brands. However, the consequences of the Covid times were still felt at the time of the visit, with the tourist information desk on the ground floor only open from noon to 6 pm, and some specific cash desks curiously closed (such as the one near the flower stand). In addition, salespersons are still managing sales through central cash desks (no mobile payment) which, given the structure of the store, can be troublesome if someone has to go a few steps up or down to pay.

A smart approach to second-hand and outlet: the “Relove” café is a clever move: Stockmann teams up with local socialites and influencers to sell their wardrobe, creating a one-of-a-kind effect designed to attract a younger crowd to the store. It works, as there is a significantly different demographic in the Relove space compared to the rest of the Women’s fashion floor. Also, the way the outlet is presented, in the basement, helps to keep the display coherence and cleanliness in the rest of the store.

In spite of uninviting dedicated spaces, it is all about superior customer service: with the exception of the private shopping lounges, the customer service physical spaces are disappointing in the store (a feat that the CEO is aware of). However, Stockmann has implemented a new tool to cater for the needs of its Mystockmann loyal customers (1.3m out of a total of 5.5m Finnish citizens, with an active rate of 50%, generating 73% of the business) to replace the Net Promoter Score: the Emotional Value Index (EVI), which has been co-developed with a local Finnish start-up. This system gathers in real-time actual wordings from customers, evaluates their satisfaction, and gives the tools for the relevant teams to address their issues or receive their congratulations.

Conclusion

*Where is Stockmann going? Even though renting its store locations could be dangerous, this option allowed them to recuperate from a very difficult financial situation. The changes in the store feeling, customer approach and online services are truly perceptible and make a real difference from what the store used to be in the past (the accessories zone on the ground floor, now well-lit, is inviting and open on the outside, but was in the past used to sell rugs, for instance).

The IADS only visited the Helsinki store and it seems that it is getting more and more well-equipped and ready to welcome customers in large quantities, be them tourists (increasingly growing) or local customers, who have already increased their average shopping basket, just like in the rest of Northern Europe. We only wonder if operating a store fleet of 5 stores in Finland and 2 overseas is still relevant as it might not allow the company to fully focus on becoming a destination name in three capital cities, at a moment when competing companies from other countries in the same zone, such as NK and Steen&Strom, are also reconsidering their strategy and revamping their offer, taking a more luxurious and international fashion way than what Stockmann seems to be doing at the time.*

Credits: IADS (Selvane Mohandas du Ménil)

Check out the Retail Review in pictures here 

pRINTABLE LINK HERE

Introduction

*Taking the opportunity of the kick-off celebrations of Vanderveen’s 125th anniversary in Assen, the IADS visited three Dutch department stores at the end of April 2022: De Bijenkorf and Peek & Cloppenburg in Amsterdam, and Vanderveen in Assen.

In the Netherlands, the department store business is mainly led by De Bijenkorf, running seven locations throughout the country. Peek & Cloppenburg (accounting for approximately 75 stores in Germany and now owning Magasin du Nord), runs 4 stores in the Netherlands. Finally, Vanderveen has a single location in Assen and is still run by the Vanderveen founding family.

Differences are huge between these three businesses. Each targeting specific customer groups, they offer a particular take on department stores, from international luxury to mass-market and ultra-local purpose. A review in pictures is also available to the IADS members.*

De Bijenkorf, the international luxury department store

Founded in 1870 in Amsterdam, De Bijenkorf was once a member of the IADS. Since 2011 the department store is owned by the Selfridges Group. In 2013, De Bijenkorf launched its "premium experience" strategy, investing more than 200 million euros in five years: the goal was to transform the business to reach a higher international standard in terms of brands, services and shopping experience. Five stores were closed to only focus on those able to convey the premium message. De Bijenkorf now has stores in Amstelveen, Amsterdam, The Hague, Eindhoven, Maastricht, Rotterdam and Utrecht. The e-commerce branch opened in 2009 to serve The Netherlands and has developed in Europe with French, German, Austrian and Belgian websites, heavily communicating on social media to catch the local consumers’ attention.

Located on Dam Square, the Amsterdam flagship store takes cues from Selfridges. The ground floor is organized according to a common layout and product offer, gathering beauty on one side (including a beauty salon), and luxury accessories concessions on the other side. There was quite a lot of traffic at the time of the visit (weekday around 6 pm) and customers were queuing at Saint Laurent, Dior, and Louis Vuitton. In addition to its shop-in-shop, the latter currently has a RTW pop-up store at the very center of the floor. It didn’t seem to attract customers despite its perfect execution: it lacks the intimacy to try RTW on. Overall, with its white columns and marble, De Bijenkorf’s ground floor resembles a smaller version of Selfridges’ Oxford Street.

The upper floors are organized around a large air shaft acting as a well of light and spanning across the height of the building from the first floor to the fourth floor. The first floor is dedicated to men’s fashion, shoes, and underwear. A coffee shop complements the offer. The floor was quite busy thanks to the important surface dedicated to sneakers. The overall impression is good, and the circulation is easy.

The second floor is dedicated to women’s fashion. The section dedicated to luxury brands is airy and filled with natural light, but the offer seems scarce despite the appeal of big players such as Balenciaga and Gucci. Brand spaces are not personalized, they are more soft corners, using all the same fixtures. A Christian Louboutin shop-in-shop completes the luxury offer. The rest of the floor is dedicated to more affordable and classic fashion with a premium price point, and mixes with local brands: packed with merchandise, the look & feel is old.

The more you go up, the older the store looks, and the less traffic there is, hence the less one feels like shopping. The third floor is gathering women’s shoes, various accessories, lingerie, hosiery, and socks, along with bed and bath linens as well as tableware and kitchenware. Despite visible efforts, the shoe section is not very appealing. Once again, the look & feel is a bit old due to a beige floor, the harsh lighting, and large alleys lacking intimacy, reminding us of the 80’. As for the men’s shoe section, the space dedicated to sneakers is big.

The product offer on the fourth floor is gathering many categories: luggage (with not many products to be bought), home accessories, books, kids wear, toys and a quite important sportswear section. A small section is also dedicated to tech goods and looks brand new.

The fifth floor offers a terrace and a restaurant. It’s also the place to find the click & collect. When it comes to such a crucial service, the IADS advocates for appealing spaces located on the upper floors. Despite being on the top floor, it’s probably too high a trip considering the space is nothing more than a long counter with a small sitting area.

De Bijenkorf in Amsterdam is the company’s flagship store. The store is overall a bit disappointing besides the Selfridges look & feel on the ground floor, but minus the experiential feeling one can have in the Oxford Street location.

Peek & Cloppenburg, a high-street positioning

The first Peek & Cloppenburg store opened in 1901 in Dusseldorf. Since the 70s, the company expanded abroad, with its first two locations in Utrecht and Anvers. The expansion continued into the 90s until now with locations in Austria, Switzerland, Poland, Croatia, Slovakia, Slovenia, Hungary, Romania, Latvia, Lithuania and Bulgaria. In 2021, the company acquired Magasin du Nord. They also run four online stores: Germany, Netherlands, Austria, and Poland.

Also located on Dam Square and facing De Bijenkorf, the store spans four small floors, and only offers women’s fashion, men’s fashion, and a few accessories. The store was not busy at all at the time of the visit. The look & feel is closer to a C&A store than a true department store. The store is packed with merchandise. For women, the product offer is weirdly mixing sportswear and occasion wear, local and international brands. Overall, the store doesn’t offer any interesting features besides a more upbeat section located in the basement: gathering younger men and women’s products from brands such as Adidas, G-Star Raw, Tommy Jeans, and Champion, more efforts are shown when it comes to music, fixtures and visual merchandising.

Vanderveen, catering to the local community

Vanderveen was founded in Assen in 1897. From the very beginning, it was ambitioning to become a department store. Today, Vanderveen is still 100% owned and run by the founding family which is very much involved in sales, operations, and management. The store covers 17,500 sqm of sales floor space and is one of the top three largest department stores in the Netherlands.

The product offer, rather mass-market oriented, is amazingly broad. The ground floor gathers women’s fashion, men’s fashion, shoes, and leather goods (including large sneakers and denim shop-in-shops) as well as kids wear, cosmetics & beauty, jewelry, bed & bath linens, an impressive arts & crafts and stationery goods store, a souvenir shop, and a grocery section including a butcher stand and offering tables to eat or have coffee.

Across the other floors, customers can find literally everything, from a large music section completed by a stage hosting live music on a regular basis, baby apparel and equipment, toys, a gaming store, DIY & home improvement products, an Intersport store, pet supplies & small pets, an impressive bike & repair store, a computer & repair store, tableware, cookware & kitchenware departments, furniture, a hardwood floors store, made-to-order services for kitchen furniture and curtains, an art store (pieces to buy or to rent), a WWF store, a beauty salon, an art gallery, a salon hosting talks, a book store, a wellness center and two restaurants (one of opening on a large kids playground). Many shop-in-shops are local brands run under a concession model.

What makes Vanderveen unique compared to the usual department stores is twofold. Firstly, the endless product offer: seeing it, one understands that Assen people (the city accounts for 65,000 residents) don’t have many choices other than shopping there. Besides, the product diversity clearly addresses all generations: in a way, the product profusion is rooting back to the very origin of department stores. Secondly, Vanderveen doesn’t have an online store. Considering it only accounts for a single very local store, the need for e-commerce is small, and developing this channel would unlikely be profitable. The strategy is really to cater to local customers who are coming from roughly 100 km around. In that perspective, the store also appeals to German customers: open every Sunday, Vanderveen represents an opportunity to shop knowing that German department stores can only open their doors four Sundays per year.

Conclusion

When it comes to retail, the Netherlands is not a major scene. Still, some interesting points are worth keeping in mind. Despite efforts to reach international standards in terms of product offer, services, and experiences, De Bijenkorf kind of fails as the offer is not really bringing any differentiation while services and an experiential feeling are nowhere to be found. The Amsterdam Peek & Cloppenburg’s location doesn’t really feel like a department store, with a terrible look & feel. Vanderveen, an outsider considering its single location and absence of e-commerce, offers an interesting perspective on how to be an anchor and relevantly serve local communities.

Credits: IADS (Christine Montard)

PRINTABLE VERSION HERE

Introduction

*Lacoste (part of MF Brands Group, owner of Manor) has 1,100 stores in 98 countries but didn’t have any flagship stores until 19 May 2022 when they opened their first one on Paris’ Avenue des Champs-Elysées, which can seem surprising for a company which topped the €2bn sales as early as 2016.

Dubbed “Lacoste Arena”, the brand new 3-storey store displays on 1,600 sqm no less than 9,500 products, from footwear to ready-to-wear for men, women and kids. The store is all about showing and emphasizing the link between fashion and sport, by balancing experiential spaces, entertainment corners and sales areas, to address all types of shoppers: fashion and streetwear fans, sport addicts or consumers looking for sustainability.

The IADS had the opportunity to enjoy a private tour of the store. Besides the expected (and now necessary) experiential features, what are the key store highlights? Is this flagship a fair example of what the store of the future could be? How is CSR included? You can also dive in deep by having a look at the store review in pictures here.*

The Lacoste Paris Flagship Store in Photos

The Lacoste’s store portfolio includes with this store a new and unprecedented format

Paris’ Lacoste Arena is the first of a list of a new breed of stores in ‘flagship cities’: after Paris, London is set to open by the beginning of 2023, and more undisclosed locations will follow. For locations other than ‘flagship cities’ (‘key cities’ in the brand’s jargon), stores will be upgraded.

In addition, pop-up locations will open depending on market opportunities, specific collections, and seasonality, always with the ambition to blend in with the local atmosphere and culture. The Lacoste Country Club, which opened in May 2021 in Los Angeles’ Melrose, is a fair example of this strategy. This summer, a pop-up store will serve vacationers in Ibiza, and another one is planned to open in Berlin.

Visiting the Lacoste Arena: it’s all about mixing sport and fashion, and experience

First of all, the store has been fully designed by Lacoste’s in-house architectural team in Paris. Only some of the light wood furniture created by architectural practice Ciguë for Lacoste’s regular stores has been used, the rest is new and unprecedented, taking cue from tennis courts with the usage of concrete and white and green wire fence.

In line with Lacoste’s global strategy, this new format highlights the brand’s full product range (beyond the polo shirt) and increases the focus on women’s categories: although Lacoste is a men’s dominant business, one of the goals is to grow the women’s revenue.

*Ground Floor*

As for the store layout itself, the entrance features a large open window with concrete bleachers resembling tennis courts. Showing the brand’s ambition to blend fashion and sport, categories are mixed on the ground floor first area. It features both women’s and men’s most fashionable collections, capsules and product drops, as well as a large wall dedicated to footwear. A special capsule collection by artistic director Louise Trotter celebrating the Champs-Elysées and a small event area (for DJ sets and special sneakers personalization by artists) are completing this section.

The rest of the ground floor is dedicated to sports practice and more technical products with 3 rather small areas (tennis, golf and fitness/training).

Finally, a large cash desk is here to process sales, and a large service counter is dedicated to click & collect.

*First Floor*

A large staircase leads to the first floor which offers a ‘lifestyle’ feeling with women’s, men’s and kids ready-to-wear as well as handbags. The will to mix fashion and sports results in intertwined products (track suits and men’s suits for instance) with a result that can be sometimes a bit confusing.

The floor key areas are:

• A large space dedicated to both product customisation and ‘Durable Elegance’ (Lacoste’s sustainable claim),
• An impressive interactive carousel displaying polo shirts coming along with the usual polo shirt colour wall. Regular collaborations with influencers oriented toward the polo shirt will complete this offer: called Lacoste By, the first one is onboarding Lucas Omiri.

Overall, the store is quite packed with merchandise but feels airy and well lit. In addition to the large cash desk on the ground floor, mobile payment stations are available to ease the payment process for the best-selling products.

The store also features a basement, described below.

Customer experience: QR codes, crocodile fun and customization

The store clearly ambitions to renew the Lacoste customer journey through interactive and immersive experiences:

• Throughout the store, QR codes allow customers to access AR experiences staging crocodiles, Lacoste’s famous signature. At the store entrance, a QR code transforms a large wall (stating the sentence ‘crocodile spoken here’ in several languages) into a water pond with a crocodile inviting customers to visit the store. When entering the sports section on the first floor, another QR code allows customers to meet again with the Lacoste crocodile wandering the shop floor. Of course, images can be posted on Instagram, and it’s fun, well-done, but one can wonder what  the real added value of such a feature is. Customers are now expecting that kind of entertainment but what is the real ROI for the brand? Is there more to it than shoppers’ posts on Instagram?
• The tennis, golf and fitness sections display an immersive and interactive tennis court floor with balls bouncing under customers’ feet. A sound system also airs a tennis match atmosphere with referee comments such as “game, set, match”. No phone is needed here: one just has to walk to play with the tennis balls.
• Dressing rooms are worth mentioning as they also represent an experience: they look like stadium locker rooms and offer a fun infinity mirroring effect.

QR codes are also used to enhance the customer journey with a more efficient and business-driven digital-embedded shopping feature:

• In the sneakers area, the ’Scan and try me’ service allows customers to scan the product QR code, choose their colour and size (for up to 3 pairs), add the selected products to their try list, and hit the ‘bring them to me’ button. Sales associates will then swiftly get the products. It’s worth noting that all products are equipped with RFID technology to maximize inventory capabilities.
• Other QR codes are also available to register to the brand’s loyalty program, the ‘Club Lacoste’.

Some features are here to increase the fun and personalize the experience:

• The first floor has a photo booth where one can have their picture taken with the crocodile logo of their choice. The picture will be added to the ‘Croco Wall’ displayed at the floor entrance and illustrated as part of the Lacoste community and diversity.
• The customisation area is big, visible and allows customers to choose among a wide variety of Lacoste’s signatures and crocodiles to be sewn on polo shirts in addition to their initials. Sneakers and bags can also be personalized the same way all day, every day and in real-time.
• On the first floor, Lacoste’s hero product takes the lion’s share: in addition to the polo shirt wall (rather small for a flagship store), some of them are displayed on an interactive carousel showing the variety of the offer: customers can select their favourite shirt on a screen and the carousel will bring it in front of them. It’s a beautiful and fun installation which hopefully can translate in sales.

Finally, on the 200 sqm basement, Lacoste Arena offers what they call the Guestroom, a space that will be open to different types of guests and events. For the time being, and since the store occupies what was once an historical French movie theatre, the space highlights the history of its founder, mirrored with René Lacoste’s. The space also hosts historical pieces (such as René Lacoste’s jacket) and some of the most spectacular Lacoste pieces such as a polo shirt made of ceramics. In the future, the Guestroom will welcome artists or young entrepreneurs. Considering the square meter cost on Champs-Elysées, one can wonder how long it will take to Lacoste to transform the basement into a sales space…

The store is also a poster advertisement for Lacoste’s CSR efforts

As illustrated in the 2022 IADS Operation meeting dedicated to CSR, retailers know how hard it is to both decide on the best CSR strategy for the business and ultimately what to show to customers. Lacoste is no exception. The brand dedicates a large area to show its sustainability efforts on the first floor. The ‘Durable Elegance’ space features a very beautiful display exclusively made of cotton rubbish as well as their 3 more responsibly-made polo shirts.

In this space, customers can also bring back old Lacoste items, to be recycled into tote bags or hangers. The area is meant to evolve according to Lacoste’s sustainability progress. Although the space is large and beautiful, it doesn’t show a lot despite a strong intention.

In terms of inclusivity, the mannequins on the first floor have been designed by morphing some of the company’s employees’ faces and bodies. The result is kind of great as it shows more realistic body figures in a beautiful way. The Croco Wall is also meant to show the diversity of the brand community.

Conclusion

*With a polo shirt sold every 3 minutes since the opening, the store has seen 80,000 visitors in less than 3 weeks making its opening a success so far. It shows the brand renewed ambitions to appeal to both local and tourist shoppers, to both sports addicts and fashion enthusiasts. It will also serve as a place to experiment with new features and imagine how they could improve, evolve and maybe translate into other locations.

Also, although e-commerce has been very strong, the company’s investment in the store reflects its continued belief in physical retail. In addition, by mixing an extensive product offer, with experiences, entertainment and cultural exhibitions, Lacoste Arena offers its own version of what the store of the future could be, just like the 10,000 sqm new Dior flagship store which also recently opened avenue Montaigne. While the store intends to address all consumer groups, the brand also wants to make sure to reach out to the GenZ thanks to the streetwear products and AR fun crocodile features. In any case, this new store should be added to a refreshed list of new retail locations in Paris for any IADS member coming to France for a market visit.*

Lacoste Arena

50 avenue des Champs-Elysées

75008 Paris

Credits: IADS (Christine Montard)

PRINTABLE VERSION HERE

During the World Retail Congress in Rome in early April 2022, the IADS had the opportunity to be part of the panel interviewing retail veteran Ron Johnson. This IADS Exclusive issue is a transcript of the interview and fits perfectly into our Innovative Thinkers series, launched last September. Listening to Ron Johnson, his past experiences, questions and successes, casts a new light on some of the ideas that he pushed forward in some of his tenures, especially at JC Penney, at the light of what happened during the pandemic. Also, he shares an interesting retrospective vision of his own career and how he contributed to changing the way retail works, either through successful initiatives, but most often, in his own words, with “things that did not work”.

Introduction: who is Ron Johnson?

Ron Johnson, 64, joined Target after attending Stanford University, the Harvard Business School and after his initial experience at Mervyn’s. He spent 15 years at Target, being credited, among others, for having launched the Michael Grave private label as the Vice-President of Merchandising, which proved popular to the young and trendy crowd (contributing to transforming Target into the “Tar-Jay” destination store chain prized by fashionable and chic customers).

He then joined Apple in 2000 as the Senior Vice President for Retail, leading the development of a new breed of stores, first built as full-size mock-ups in a Cupertino warehouse and then rolled out across the US and beyond. According to the New York Times, he contributed to transforming the shopping experience “from the boring computer sales floor to a sleek playroom filled with gadgets”. He also achieved record growth, exceeding $1 bn sales within 2 years of the Apple Store’s existence, and opened 400 stores within 12 years.

Those two early and visible successes helped him secure the top job at JC Penney in 2011, where he led a total transformation of the company in order to radically reinvent it: a new brand identity, stop relying on heavy discounting and couponing and replace it with the “full but fair pricing”, reinvention of stores into shopping experiences with bazaar-like experience and cafés doting the shopping alleys, and reducing the focus on private labels (50% of the sales at the time) among others. This vision failed to convince customers and Ron Johnson was ousted 18 months after, with a -25% sales decrease (a $4.3 bn decrease in value) and a stock falling from $32 to $16.

Johnson then founded Enjoy, a retail start-up specialized in reinventing the shopping experience by focusing on the last mile, with the ambition of “bringing the store into the home” and mingling the convenience of online shopping with the confidence of buying from a trained salesperson.

Interestingly, his sting at JC Penny led (and still does after the pandemic) many experts and analysts to wonder if he wasn’t ahead of the curb with his vision of having stores as town-centre-like places of interaction and experience.

Question from Rob Hornby, MD EMEA, Alix Partners: How should retailers behave in a permanently disrupted world?

Ron Johnson: “History shows that there has always been someone ready to disrupt someone else. This time, the disruption becomes permanent because customers are inherently always looking for the next big thing and technology empowers them like never before. They have the control and can know everything before retailers!

As a consequence, the only challenge in retail, but a really big one, is to keep things rolling and figure out at the same time what is going to be the next big thing (ideally, before anyone else does). For instance, in the apparel industry, 50% of the product value goes into the last mile, which is the reason why I founded Enjoy in 2012.”

Question from Chip Berg, CEO, Levi’s: What were your biggest issues and top learning experiences at JC Penney?

R.J: “JC Penney has been retrospectively quite a demanding experience, and I learnt more from things that did not work, than from successful moves. At the time, we had a pretty compelling vision (reinvent the physical space, integrate new partners through a shop-in-shop approach, provide everyday value but not at a permanently discounted price, and find a way to interact with new customers). If you look at what is happening now, then you know that we were right at the time.

And yet… even though our strategy was right, you need as a CEO and a leader to take the time to onboard and motivate the teams, and make sure everyone embraces the change. I wanted them to change almost immediately and instinctively, which I know now is not possible without taking the appropriate steps. Also, I wanted to go fast, and bold, which was probably the biggest mistake. The total transformation and turnaround of a company founded in 1902 (and customers! and teams!) in 4 years was too ambitious. Everything takes time and each company has its own timeline that needs to be respected.

As an example, at Apple, in the beginning, nobody came into our stores. We did not give up because we believed in what we were doing, we had convictions, but this takes time. I should have remembered that at JC Penny rather than going fast and bold like that.”

Question from Walter Robb, former co-CEO, Whole Foods Market: How to promote as a leader the change in corporate culture?

R.J: “First, leaders need to have a clear purpose in mind. Second, this purpose needs to be communicated clearly with the teams, by making sure that everyone is working and exchanging together. And finally, you need to make sure that both you as a leader and the company itself are part of a community and are connected to the rest of the world.

I will never forget what Steve Jobs used to tell me: “if you can not communicate any idea in less than 4 words you have lost the audience”. Core values need to be expressed simply, in a memorable and compelling way, to make sure people are embarking on your adventure.”

Question from Selvane Mohandas du Ménil, MD, IADS: At JC Penney you were defending the physical store. At Enjoy, you tell us that stores are places of learning about products, not selling them.

What’s in this vision for department stores and how can they make a decent margin out of it?

R.J: “When a customer orders something online, the value lies in the last mile, which is why I founded Enjoy. I truly believe that there is a great outcome for premium products with an improved delivery process. This could be the best retail experience ever, and all this, from your home, which I see as the final frontier.

Department stores are big stores, the biggest ones in physical retail. But big stores do not make sense anymore if you rely only on selling products, when you can order something by the piece and be delivered at home (with hopefully great experience).

I still believe in experience, and for stores it means all about being a destination per se. Look at Apple stores, Selfridges, La Samaritaine: it is all about the place, people and experience, and not so much about products.

For me, we will always have stores, but only good ones: gone are the days of mediocre retail. In the future, retail will be offering only 2 types of experiences:

• Super fast and convenient (online),
• Great experience (offline).

There will be no middle ground.

Question from Kimberly Carney, CEO, Fashwire: as a successful retailer, what are the lessons you learnt in life that you can share with us?

R.J: “I am not successful! Years when things were going great can be counted on one hand! During most years of my career, I have been busy building, trying to get back on track, or transforming something.

At Target, we were having trouble and in the end, I only had had 2 great years out of 15! At Apple, we were not great at the beginning: stores were not big enough, not attractive, not making money…  JC Penney was not a great experience, as we all know. The company was bleeding money.

The idea that you are successful is dangerous, as it leads to complacency. Of course, we all want to be successful but this takes time! As far as I am concerned, I have learnt more from adversity than not.

I’d rather answer your question with 2 statements:

• Nothing works as well as you hope the first time,
• Even if this is the case, stick to your idea. Success is a lot of hard work.

Question from Marie Driscoll, MD, Coresight Research: what is your vision for 2030 in terms of the relationship between brands and customers?

R.J: “Ha! In 10 years things can change a lot. In the US, we will probably have fewer stores, as many malls will close. But it does not mean that the quality will decrease, on the contrary: fewer shops, but better. All stores will be placing a great deal of attention on presentation, product curation, and improved experience, always based on the reinvention of the relationship with employees.

On the customer side, we will probably own fewer products, but better ones. We will care more for the fewer things we will own.

As I said, I do not believe there will be a middle ground for mediocre or average retail. We will be choosing on an everyday basis between pure convenience and great experiences. But not mixing both options together.”

Credits: IADS (Selvane Mohandas du Ménil)

PRINATBALE VERSION HERE

Introduction

In Europe alone, subscription models and paid memberships account for EUR 350 billion, dominated by information and technology (think Microsoft or Adobe software), as well as media and content (Netflix obviously). Consumer goods ‘only’ represent 15% of the total business.

According to a McKinsey study, consumers attached to paid membership programmes are 60% more likely to spend, compared with only 30% for free loyalty programs. Purchases are said to be more frequent and average baskets bigger, transforming paying members to extremely valuable customers. While the footprint of paid loyalty programmes still remains small, it has expanded with Covid. Why? Firstly, with stores closed, subscription services offered a convenient way to keep needed products on hand. But that’s not the only reason as offering the usual discounts and free delivery through a basic 3-level (bronze, silver, gold) free membership feels somehow basic to the consumers who find other ways to access such table-stake perks anyway.

With the war in Ukraine and Covid locking down a part of China, inflation is skyrocketing. As a result, consumers are forced to lower their discretionary spending, and they tend to discontinue their subscriptions whether it’s for Netflix or goods.

But still, brands and retailers need to pimp their loyalty programmes, and paid membership remains an option to consider for funding more interesting and exclusive perks that customers agree to pay for as soon as programmes match their expectations. Firstly, customers want high benefits that balances out or exceeds the fee amounts. Secondly, they want benefits that can be used immediately and as frequently as possible. Finally, with everything else in retail right now, they want experiences. Illustrating such expectations and following up with last year’s Exclusive about subscription retail, the IADS gathered the latest initiatives in paid membership.

Higher benefits

Pret A Manger has a subscription service and it’s not new: customers pay a EUR 20 fee per month and can benefit from up to 5 beverages per day. Whereas it’s unlikely that all subscribers will extensively use their 5 beverages every day, the perks of the programme are way higher than the fees. It shows that attracting new members comes with strong benefits clearly outweighing fees. In fact, consumers expect to receive at least a 150% return in perks when compared to the subscription fee. As a result, brands and retailers considering a paid program must make their value extremely visible.

In US pharmacy retail, the CVS CarePass programme charges a USD 5 monthly fee and offers its members 20% off on all CVS Health brand products in addition to services like free shipping and a 24/7 pharmacy helpline. Knowing the high price point of drugs in the US, the discount rate is really appealing compared to the reasonable monthly fee.

Some recent initiatives like renting fashion are a great push to the subscription business. In the luxury department store area, the Japanese group owning Daimaru-Matsuzakaya launched in March 2021 a new subscription-based rental service to try to escape the traditional inventory-based business model. The new service allows customers to rent up to 3 high-end women’s clothing items from brands such as Marni or See by Chloé, for a monthly fee of approximately USD 103. Fees are rather low when compared to the cost of 3 items from premium or luxury brands. While acquiring more loyal customers, the department store hopes to achieve a USD 55 million turnover by 2026 thanks to a projected 30,000 customer base.

Whereas it’s too soon to know if such a business can be profitable in itself, it will be interesting to check if the Financial Times is right: in an article from September 2021, they argue that the subscription model works best for higher priced-items. Anyway, it seems like a win-win deal: for the department store, it’s about increasing customer loyalty while reducing inventory. On the customer’s side, it represents a new access to luxury products, and an answer to sustainability concerns.

Now and always

Customers want to use their membership perks immediately upon sign-up, and very frequently: 50% of cancellations occur within the first year of membership. In that case, the main reason is that they are not using the benefits enough to justify the membership fees.

Walmart launched a membership programme in September 2020 primarily designed to compete with Amazon, the ultimate champion when it comes to immediacy and recurrent usage. Walmart+ members pay a USD 98 annual fee and are offered perks like an app allowing them to skip the checkout line, unlimited free deliveries with no minimum, member-only game console releases, up to 85% off on prescription drugs, discounts on gas, and special promotions and events. Also, at a time when customers were afraid of potential product shortages, they have enjoyed a true competitive advantage: early access to the 2021 Black Friday deals. Now accounting for 32 million members, Walmart+ can boast about amazing statistics: Cowen analysts estimate 12 million US households have a Walmart+ membership and 69.6% use it at least once a week. Members currently account for about 13% to 14% of the total Walmart.com business.

On the brand side, On Running sports shoes released a running shoe monthly subscription in April 2021. Dedicated to serious and frequent runners, they pay GBP 25 per month to subscribe (rent) their pair. When the shoes are worn-out, the customer can stop the subscription or request a new pair. Once it arrives, customer can send their old shoes back to On Running, who takes care of recycling, an additional perk answering customers’ environmental concerns.

In fashion, Ralph Lauren launched a rental subscription service in March 2021, a first for a luxury brand. The service aims to be a new channel for customers to engage with the brand. Starting at USD 125 per month, subscribers can access a constantly renewed range of clothing. Members curate their own online closet before receiving their shipment. Once they are done with the clothes, they can choose to either send them back and have them replaced by new styles or purchase them at exclusive member prices. On top of creating loyalty, the ‘Lauren Look’ is also a great opportunity to generate direct customer feedback and gain a better understanding of their expectations. As for On Running, the initiative also answers the growing consumer concerns about overconsumption.

Still, offering discounts remains a mandatory perk. In that perspective, Vasquiat is an interesting alternative free membership model when it comes to immediate discounts. Founded by Spanish influencer Blanca Miro, Vasquiat is defining itself as “the marketplace for discovering the most exciting emerging brands in the world.” What’s more important is that they “disrupt the traditional model by creating a new category: the discounted pre-order.” Vasquiat’s members can pre-order styles from the next season's collections at up to 40% off. The sooner they buy, the less they pay, reversing the usual end-of-season discount model. Then, the closer the collections are to their official release date, the smaller the discount is, until eventually reaching the full retail price.

Experience and emotion

Even though they remain table-stake perks, free delivery and discounts are not enough to lure and retain customers for paid membership programmes. Consumers are looking for differentiation. In that sense, they are expecting exclusive offerings, personalized and more emotional experiences, or member-only content.

In that perspective, Volvo launched a new car dealership concept inspired by clubhouses in 2021. Opening first in Amsterdam (now available in 6 other cities across Northern Europe), Lynk & Co is more than just a car dealership. The club house is the promotional face for a hybrid SUV that members can rent starting at EUR 500 per month (including insurance and maintenance service). The brand's strategy is simple: focus on car sharing through a subscription system (which is especially relevant in a city like Amsterdam where people don’t need a car on a full-time basis), and attract new customers through the services offered by the clubhouse. It includes a lounge area with a bar to host DJ sets, exhibitions, as well as workshops, film screenings, etc… These events are of course reserved to members who feel nurtured with the emotion of being part of an exclusive club.

In an attempt to compete with Amazon, Best Buy launched a USD 199.99 membership programme in April 2021, designed to basically offer great customer service. Among various perks (such as free 2-day deliveries, up to 24 months of product protection, dedicated phone teams, extended 60-day return and exchange window), the 24/7/365 tech support and product installation in particular offer a security sentiment and a safe product experience to members. The membership, called ‘Totaltech’, also includes ‘My Best Buy’ programme perks (including reward points and exclusive deals).

Food is highly about experience and emotion. Shinsegae department store in Korea came up with an interesting initiative: a fresh fruit subscription service which has proved very popular since its inception in April 2021. As part of the “VIP Gold” loyalty program, customers can subscribe to the service for a monthly fee of approximately USD 194 and they have a selection of seasonal fruits delivered to their door on a weekly basis. Tips on how to store and eat the fruits are also included as part of the package. This new service follows up the launch of a bread subscription service: subscribers can pick up bread in store every day for a monthly fee of approximately USD 42. Shinsegae’s goal is obvious and clear: “attract people to the store, which could lead to the purchase of other products.”

When it comes to paid memberships, the wholesale club model in groceries is also a true lever to loyalty. But it can do more: it can help create a sense of belonging, which will give customers more reasons to visit and push them to significantly increase their purchases. It’s the case with Store X supermarkets (a division of Alibaba in China). With its USD 40 yearly membership, Store X targets a group of young, affluent, digitally savvy shoppers expecting to be treated differently, and willing to spend more for better services and shopping experiences. The first Store X opened in Shanghai at the end of 2020 and became profitable within two months.

Conclusion

So far department stores are sticking to free membership through their loyalty programmes, but they have been revamping them for a few years now. A few months ago, Harvey Nichols in the UK did so with a 5-level ‘classic’ programme where money spent equals reward points. Depending on the level customers will reach, points are converted into benefits revolving around discounts and (more interesting than in other programmes) experiences appealing to many different customer groups: 10% off food & wine, bars & restaurants and beauty & grooming, 15% off fashion vouchers, double points booster, free drink in store, ‘kids eat free’, pamper hamper, birthday gift, dining or beauty school experience, wine or crafty beer box.

While it would be very costly for department stores to design perks and experiences worth a paid membership, the model needs to be considered anyway (and despite the recent subscription model setbacks), especially if focusing on big spenders that are not really impacted by inflation and who are always expecting additional reasons to visit stores. In that sense, the Soho House business is a model to look at as experiences are part of the equation: at Bloomingdale’s, the Loyalist programme has been redesigned to include a new shopper segment, the ones spending more than USD 15,000 per year. Representing less than 1% of the customer base and mostly women in their forties, these ‘Top Of The List Unlocked’ status members receive elevated benefits such as a 2-star Michelin cooking class at the Baccarat hotel, and even have a private Instagram account to reserve the latest designer styles.

Credits: IADS (Christine Montard)

PRINTABLE VERSION HERE

*Best Buy is one of the most recognized examples of successful company turnarounds in the past decades. In 2012, the company was ailing, sales were declining (although the company was not yet in the red) and a sense of common purpose was missing within the teams. The turnaround was not executed via a purely financial approach, cutting costs and increasing profitability, but took another standpoint, betting on the human side of each and every employee to reinject meaning and will to achieve something bigger than them, together.

The ongoing digitization of department store companies involves integrating new and very different teams, reinventing the jobs of the existing ones, and finding a common motivating purpose for all of them. In that sense, there are some similarities between what Best Buy went through and what IADS members are currently trying to achieve. This is the reason why we invited Mr Hubert Joly, CEO of Best Buy from 2012 to 2019, to share with us his experience and retrospective understanding of what he achieved during his tenure.*

Introduction

Hubert Joly, a graduate of HEC Paris (business school) and Sciences Po (political sciences school), is a senior lecturer at the Harvard Business School and the former Chairman and Chief Executive Officer of Best Buy from 2012 to 2019. Before this experience, he has held various CEO positions at Vivendi and Carlson Companies, after having been partner at McKinsey for 13 years. Under his leadership at Best Buy, the share value rose from $20 to $70, the company had 5 uninterrupted years of growth and the online share of the business doubled, reaching 17% of the total sales for a turnover of $6.5bn (post-pandemic, online sales  have tripled, and represent 40% of the business). He was also instrumental in redesigning the management team structure, by helping the Board of Directors increase the proportion of female leaders. He has been ranked as one of the top 100 CEOs in the world by the Harvard Business Review, top 30 CEOs in the world by Barron’s, and top 10 CEOs in the US by Glassdoor. Hubert Joly released his book, “The Heart of Business – Leadership Principles for the Next Era of Capitalism”  in 2021, which was sent to IADS members prior to the exchange.

Interview

IADS - When you took over Best Buy, things looked bleak – tell us what it was like and why you accepted this position?

HJ – In 2012, everyone thought Best Buy was going to die in a context where brick & mortar retailers were considered dinosaurs. In addition, I did not have any background in retail at the time. However, after making my due diligence, interviewing Best Buy alumni and employees, and making my own mystery shopping visits, I understood two things:

• Customers needed Best Buy: they wanted to touch, feel, see, and experience the products,
• Vendors needed BB, as it was a great way for them to showcase their R&D investments.

I also realized that all of Best Buy’s problems were self-inflicted: incoherent pricing, poor customer experience, and deteriorating infrastructures (stores). This meant that it was possible to have a grip on these problems, and fix them.

IADS – You have turned around the company in a few years. What do you think was key to this success while so many others in the retail industry tried and failed?

HJ – There were actually two phases to turn around the company and generate growth.

The first phase, “Renew Blue”, was all about the turnaround itself. We are not talking about strategy or vision here, but pure execution: we were fixing what was broken. We pinpointed all the issues and addressed them one by one: matching Amazon prices, investing in customer experience, offering better shipping experience including next-day delivery, investing in stores or partnering with vendors…

This is what we did. The “how” part is more interesting though! The usual recipe involves cutting costs, especially reducing the headcount. In our case, this would have meant closing stores, when a lot of them were profitable. We preferred to have a human-centric approach. This meant two things:

• Listen to the frontliners and see what was wrong. I spent the first week on the job visiting stores and talking to teams, to understand what was going on. All I had to do was to listen and make sure they had the right answers and tools from the leading teams.
• Create positive energy within teams by showing them that they are placed at the centre and listened to.

For me, headcount reduction was really the last resort, I preferred to focus on reducing non-salary expenses (for instance, finding ways to reduce the rate of TVs being broken during handling!),

The second phase, “Building the New Blue”, was launched once we knew the foundations of the company were solid again. We reflected together and defined what company we wanted to be, and how to accelerate our growth. This can only be done by pursuing a noble purpose and putting people at the centre. That’s my idea of leadership.

IADS – To what extent the turnaround was a 100% human adventure, or a human adventure supported by systems? How did you manage this transition from an infrastructural point of view?

HJ – In electronic consumer goods, 90% of the shopping decisions involve a digital touchpoint at some stage, or even start digitally, so of course, emphasising digital solutions was the long-run approach. Every meeting I led always started by discussing e-commerce and digital, and we increased investments in the website. But systems are human-powered, and decisions must be made by someone, so we also invested in employee tools to adopt agile ways of working and spread a digital mindset within the company. That was a true asset for Best Buy during Covid-19 and allowed us to easily transition to contactless pickups and other solutions when stores were closed.

IADS – How did you prioritise the adoption of solutions and make decisions on investments?

HJ – The two phases were different.

The first phase was about eliminating pain points, understanding what was not working and fixing it. For us, that was the search engine, which we redesigned. Then, we worked down the list of remaining pain points and prioritised them by how important they are to the customer journey and business impacts.

In the second phase, the lens was different. We had defined our purpose: enrich people’s lives through technology, and that meant that we were not anymore only addressing tech fans, but also people who needed help with tech. That meant pivoting on several angles: from B to B, to B to C, from being a retailer to something else. Partnering with vendors was key, as they understood that it could be beneficial for them too, and that helped co-fund the needed investments in stores and systems.

IADS – You diversified your leadership team, the board – why did you feel it was important and how did you do it?

HJ – Simply put: I do not think we could have done anything without diversifying the teams. How do you want to address the world if your teams do not reflect its diversity, from a gender, ethnic, background or education perspective? Leaders need to create an environment where they can leverage diverse team members. For example, in Chicago, if your sales team doesn't speak Polish then you might not sell much. Same thing in Orlando for Portuguese, to address Brazilian customers.

For me, diversity is a business imperative. As leaders, we know how to sell business problems: how to attract, develop, and retain customers. These same methods need to be applied to employee retention and attraction. If there is not enough diversity represented within the organisation, you need to understand why it is not drawing these types of profiles, because that is putting you at risk.

IADS – How did you trickle down the changes until the base of the pyramid? How did you share, in a concrete manner, your Noble Purpose with frontliners?

HJ – It did not trickle down. Many companies have worked on defining a purpose.  But let’s be honest: a company’s purpose is corporate speech that doesn’t mean much to frontline workers. Frontline workers need motivation, not corporate speeches. And motivation comes from within, it is intrinsic.

This is what I call the “human magic”. I give you an example: in 2018 a young boy came in with a broken dinosaur toy. He didn't want a new one, he wanted a cure for his dinosaur. Two employees understood what was happening and they started a ‘surgical procedure’ to make the dinosaur feel better. In reality the toy was swapped with a new one, but the boy believed that it was still his original toy and was happy to have it repaired. To be honest, I can’t teach employees how to “cure” a dinosaur, and I do not know about KPIs measuring the number of cured dinosaurs per quarter. So, these employees did that just out of pure motivation. They wanted to make customers happy.

Once again, the “how” is key: how do you make sure that all your employees share the same approach? Not by having a top-down Power Point presentation. Our strategy was to be an inspiring friend to customers, but also to ourselves. So, one day, we closed all our stores on a Saturday morning, and broke the teams into small groups, asking each employee to share their own story and a story of an inspiring friend. Everyone understood, independently of their hierarchical level, that the others were more than employees or co-workers: they were human beings with their complexity. They realised that they needed to treat each other and the customers as human beings and as inspiring friends, rather than walking wallets.

Also: training is important, but it does not work if you return to a poisonous environment. Top-down scientific management approaches don’t work. Bottom-up and inside-out approaches should be prioritised. Here are the ingredients that worked for us:

• Allow every employee to connect to what drives them and connects them to their work,
• Create an environment where there are genuine human connections and where people feel seen.
• Allow for autonomous work.
• Offer a learning environment with individualised weekly coaching.
• Provide psychological safety.

We need to move away from the model where the leader is seen as the superhero who knows everything. Today’s leaders should show signs of authenticity, vulnerability, empathy, humility, and humanity!

Conclusion

**IADS – What is your view on retail after the pandemic? Where are we?

HJ –** 10 years ago, the debate was all about the dichotomy between online and brick-and-mortar. That is not the case anymore. For me, the dichotomy is now between great and mediocre retailers, and their purpose.

Purpose is an intersection of what the world needs, what you are uniquely good at, what you are passionate about, and how you can make money. The crucial question retailers should have to ask themselves to be successful is to know if they would be missed, and why, if they did not exist. Retail is being completely reinvented around purpose, people, and great execution.

To conclude, I remember my conversation with Tim Cook in 2012 about the bad press Best Buy had then. He told me to focus on doing my things and being successful, without minding the press. Department stores are in the same situation today. Keeping the focus is key.

I would also add that I believe that we, as business leaders, have a huge role to play in the society. We cannot predict the business environment or the future, but we can decide what kind of leader we want to be and how we want to contribute to the world. I have 3 guiding ideas:

• Having a purpose,
• Being clear on my principles - key ideas we have about how we want to lead and drive the business,
• Doing our best- we control what we do and how we lead our teams

Credits: IADS (Selvane Mohandas du Ménil)

PRINTABLE VERSION HERE

Nordstrom announced on the 1st of March the launch of their own Retail Media Network (RMN) with the “Nordstrom Media Network” initiative. Trade marketing and side advertising revenues from brands are not new to retailers. So why is this piece of news interesting for department store companies? Let’s look at the US grocery market to draw some learnings.

What are we talking about?

Retail Media Network (RMN) is a vehicle for retailers to market to brands with individualized advertisements to customers at a chosen point of interaction with the retailer’s ecosystem. The concept is not new: “traditional” retail media, which includes product sampling, in-store displays and featured placements in catalogues, initially focused on increasing shopper engagement and sales for the benefit of the retailer, which was often asking brands to pay to have their products shown at or near the point of sales, to increase the likelihood of a sale.

However, the concept significantly evolved in 2021 with the digital acceleration as an answer to some of the challenges created by the Covid-19 pandemic, for the following reasons:

• Brands, when going direct due to the pandemic, realised that their marketing initiatives could lead to a waste of investments: with no option to sell their products (both their wholesale and retail networks were closed) brands had to digitize fast, and quickly realized that they could create a direct relationship with customers without having to rely on retailers. However, they also realized that the advertising and marketing investments needed for such a strategy, especially online, were quite heavy and also posed questions in terms of ROI offered by the existing providers.
• Retailers were in need of compensating the Covid-19-induced margin loss:  they found themselves with traffic-building brands going direct to customers and leaving their premises, while also witnessing their margins shrinking, due to several factors, either structural (cost of free shipping, price-related competition from massive online pure players, investments in sustainability as requested by customers or regulation) or contextual (inflation, rising logistics and raw material costs due to the 2021 supply chain bottleneck, worsened by the 2022 Ukrainian-Russian war). As a consequence, they were eager to create new streams of revenue.
• A natural opportunity arose from this context: Retailers also digitized (or increased their digital competencies) and realized that, with the knowledge of their own customers they were able to amass (shopping habits, buying patterns, all collected from both online and offline points of contact), they could create such new stream by monetizing this first-party data to brands, who in turn saw an opportunity to improve the ROI of their marketing and communication investments.

Why did it start in the US grocery market?

Pre-pandemic, Food & Beverage and Consumer Pre-packaged Goods brands were struggling to grow in a saturated market (grocery brands’ average growth in the US in 2018 was +1.9% and average profit growth was +3.2% p.a. over the last 10 years). In terms of advertising, they were also lacking both connection and understanding of their customers (Dunhumbby evaluates that the top 10 brands spent $800m on advertising in 2021, with a cumulated customer database 90% smaller than their retailers’ ones) leading to a low ROI on advertising and communication investments.

The future was also looking bleak, as Google plans to remove cookies in 2023, which will prevent advertisers to implement audience targeting on 99% of Chrome users (2/3 of worldwide internet users). In a world where it is expected that post-Covid, the shifts in terms of grocery spending might stay, especially in terms of online buying (9% of the total UK grocery market in 2020, +54% in growth in the US the same year), that means that they would have to spend more, for the same result than before.

Benefits for all

In parallel, retailers, looking at the precedent set by Amazon (77% of the US-based CPG brands work advertise on Amazon, generating a total revenue for Amazon of $21.33 bn in 2020 and $31 bn in 2021), saw an 80%-like margin offered by retail media a welcome lifebuoy as their margins, structurally slim, were even weaker due to the massive increase of online sales during the pandemic (coming on top of the pandemic related costs themselves, in terms of payroll, benefits, incentives…).

This was a match! Brands saw in this new proposal the possibility to create highly-specific and objective-based campaigns around real shoppers and not personae, using a variety of touchpoints, and being able to measure the contribution to sales of the marketing investment made. Retailers recognized a possibility at the same time to create a new source of revenue but also a way to improve and reinforce relationships with key brands.

Benefits of Retail Media (Emarketer, Coresight)

![Coresight exclusive

![coresight exclusive 2

The Retail Media Network market value is estimated by Emarketer at $31.49 bn in the US only, and forecasted at $41.37bn in 2022, $50bn in 2025 (20% of the total digital ad spend). The worldwide market is estimated for 2022 at $50bn by Forrester and $100bn by Boston Consulting Group.

Now, most of the major US grocers (but not only) have or are venturing into Retail Media Networks activities: Albertsons, Best Buy, Carrefour, Dollar Tree, Gopuff, Lowe’s, Kroger, Sainsbury, Target, Tesco, Walgreens or Walmart. They all use the size of their loyalty program membership to push forward opportunities sold to interested advertising brands.

This trend is extending to the department stores world, as Macy’s and Nordstrom now also operate in this field (respectively from 2020 and 2022).

A use case example: Mondelez and Carrefour

Mondelez realized that, while pre-pandemic they were focusing on children and teenager biscuit brands, representing 68% of their online sales, the Covid-19 crisis favored the online emergence of a new category of customers, aged over 55 and sensitive to other products. These new customers represented half of the 2.8bn new households using Carrefour’s drive-thru offering in 2020 (quite an opportunity!).

Mondelez teamed up with Criteo (a Carrefour partner) to ensure the campaign visibility throughout the whole buying process: promotions on e-shelves and dedicated locations, targeting by keywords or context of the aisle visited by the relevant e-shopper (for instance, having their products visible when customers were using ‘coffee’ or ‘hot drinks’ as keywords).

As a result, they had a Return on Ad Spent exceeding 3 (1€ spent led to 3€ earnt in sales), with a 30 to 40% higher visibility when compared to the former target, and a conversion rate 14% higher than for customers who were not exposed to the campaign.

Is that the perfect opportunity for department stores?

When looking at the numbers published by the various players (additional revenue of $1.55b in 2021 for Walmart and $105m for Macy’s) one could conclude that this new business is a silver bullet for department stores looking to generate new streams of revenue.

However, McKinsey identifies 3 main risks with the implementation of a retail media network:

• Brand’s allocations to retail media networks can cannibalize the funds that they would normally allocate to trade marketing, which would in the end go exactly in a reverse direction in terms of the retailer-brand relationship than where a good retail media relationship strategy is supposed to lead./nbsp]
• A shift in the business relationship: retailers become clients to brands, which also would have serious consequences in terms of retailers’ organisation and their team’s self-perception (including the loss of a sense of purpose),
• Lack of core capabilities to properly meet CPG brands’ needs and maximize their spending.

Should all department store companies follow the lead of Nordstrom and launch their own retail media network initiative? While such a venture might be helpful and full of promises, CEOs need to remember that, while many of their companies are already major advertisers, retail media network initiatives require a completely different set of tools and skills to excel at it:

• Ability to provide advertisers access with a clean customer database (size does not matter, but its quality, and the number of active customers do),
• Closed-loop measurement and the ability to fine-tune the offer in real time according to the ever-evolving data privacy regulations are also key for the long-term,
• The behind-the-scene tech is also, of course, crucial, both in terms of reach (operations on multiple locations and channels) and scalability.

In reality, RMNs are a very interesting perk which could contribute to improving companies’ profitability, but such an implementation is neither easy nor painless: just like the topics of digital transformation and sustainability, we are witnessing here an additional layer of (optional) disruption which will require new teams, new systems and additional investments (see Dr Christopher Knee’s comments on how to respond to disruption here) at a moment when CEOs have many other options when it comes to put their organisations’ focus and allocate resources.

Credits: IADS (Selvane Mohandas du Ménil)

Check out the retail review in pictures here

PRINTABLE VERSION HERE

*The IADS visited Rome for the World Retail Congress early in May and took the occasion to visit La Rinascente and Coin Excelsior, among others, for a store review and an innovation spotting session.

To what extent has the Covid-19 pandemic forced local department stores to evolve, in the same way that Paris, Madrid, London or Milan had to follow suit? Has Rome, which is usually lagging behind the economical capital of the country, managed to take that opportunity to upgrade its department store scene?*

La Rinascente

La Rinascente, a former IADS member from 1959 to 2008, takes its origins as early as 1865 with the Bocconi brothers opening a clothing store in Milan, soon followed by branches in Rome, Genoa, Trieste, Palermo and Turin, under the name Alle Città d’Italia. When purchased in 1917, the new owner, Senator Borletti, asked the Italian poet Gabriele D’Annunzio to find a new name, and he came up with La Rinascente, reflecting its rebirth and new approach: a “democratic” approach to luxury appealing to high and middle-income classes./nbsp]

The company teamed up with UPIM in 1928 (as well as Jelmoli in Switzerland which remained a business partner until 1965) and increased its retail footprint across Italy in terms of store numbers (5 La Rinascente, 150 UPIM stores, and 105 supermarkets at its heyday in 1970) and partnerships or acquisition (JC Penney Italia, Auchan..) until it split in 2005. La Rinascente s.p.a. was then created and later purchased by Central Retail Corporation in 2011.

The group now operates 9 stores in Italy, including 2 in Rome (of which the Via del Tritone store opened in 2017), the Turin location opened in 2019 and the Florence location opened in 2020, each different and designed to be destinations by themselves. The latest public information about its total turnover is €800m in 2019, and the 2020 performance is estimated at -30 to -40% of that number. E-commerce has also been launched in the wake of the pandemic in 2020.

The IADS visited the Via del Tritone store in Rome. It opened in 2017 after 11 years and a total investment of €200 mn. It spans over 8 floors including a 2-floors terrace at the top, with an unusual floor plan:

• Exhibition area in the basement,
• Luxury accessories at the entrance on the ground floor,
• Cosmetics on +1,
• Women’s and Men’s fashion on +2 and +3,
• Shoes and contemporary accessories on +4,
• Home goods and food on +5 and access to the terrace.

Initially planned to open in 2012, the delays were due to the findings of major archeologic treasures, that are now on display in the basement of the store: the remains of a Roman aqueduct. This is the reason why La Rinascente decided to take advantage of that to set up its exhibition area there (usually used for commercial popups rather than cultural shows). At the time of the visit, an immersive and very well-executed pop-up dedicated to vintage design was on display.

What is striking in the building structure (apart from the fact that it also incorporates the remains of the Palazetto, a building from the early ‘900s) is the cavedio (a courtyard) which acts as a well of light and spans across the whole height of the building from the ground floor to the top floor. As a consequence, even though this is an invitation to go from one floor to another, circulation can feel somehow a bit cramped as each floor is organized with this empty volume in its middle. It also allows to embrace almost the totality of the department in one glance, but this can also be a drawback too, as there is almost no possibility to surprise customers with the pleasure of discovering something that was not seen when arriving on the floor. As a consequence, visibility is key for brands, and they are all rivaling to make sure they can be spotted from the escalators or the floors, leading sometimes to an overwhelming feeling.

The execution of the food floor and the access to the terrace is extremely well done: all products are presented in a manner which makes them very attractive, and one must say that the terrace is among one of the best available in the city (and advertised as such in Roman hotels to tourists).

For anyone with the habit of larger and probably more traditionally-structure department stores, the feeling left after the visit is the one of a well-executed store, with a very good array of brands, but somehow with a difficult circulation and an offer which is hard to read. This is mainly because of the dual structure: a ground floor and an underground which are easy to navigate and quite clear, while the top floors, which are all organised around the light well, propose an entirely different experience, navigation and product offer reading.

Coin Excelsior

Coin was founded in 1916 in the Venice region and evolved into various formats until becoming a department store per se in 1957 in Trieste, in a former Ohler department store location. It then expanded across the country and now operates 39 stores of various formats, including the Coin Excelsior one which is more upmarket than the traditional Coin stores (mixing the Coin brand name with Excelsior, a concept store owned by the group and specialized in high-end fashion). The group also owns OVS (midmarket apparel department stores) and UPIM, which was bought following its split with La Rinascente in 2010.

The IADS visited the Coin Excelsior located in via Cola di Rienzo, a “contemporary department store” which opened in 2014 with an investment of €8mn and spans over 3 floors and 4.300 square meters.

Although during the visit it was clear that the store reflected its age (on this positioning, 8 years seem a lot), one must say that the way it is structured and merchandised is quite surprising, with a few interesting innovations.

First of all, this is, like El Corte Inglés and other IADS members, a department store which includes a supermarket in its basement, even though it is quite small. What was striking however was the use of technology in a simple way and with clear incentives for the customers:

• Cash desks are fully automated, with a steward navigating to help customers. Payment points are very visible and designed in a way that they come naturally as a conclusion to the shopping journey (allowing to clearly define a navigation direction, which is quite useful in the Covid-19 context).
• An app, heavily advertised on-site, also allows an evaluation of the savings made by proposing to compare the prices.

Even though the supermarket zone is small, it allows to draw a certain type of customer in the store and connect it to the neighboring populations.

Rather surprisingly, upon exiting the supermarket, customers have to cross a food zone where they have the option to either eat on site or pick up their meal. They have no other possibility than crossing it to go to the rest of the basement, which mixes Home & Decor, kids’ fashion, lingerie and toys. For each category, the set up is well executed (end even very immersive in the case of the Home & Decor offer, sold under the Coin Case private label name), but the transition between them is quite abrupt and even disorientating.

Similarly to the basement, the ground floor mixes different categories:

• Cosmetics and perfume with the usual suspect brands, all displayed with their own branding in light shop in shop structures,
• Jewellery, including a Tiffany’s store which has a separate entrance on the street in addition to the in-store connection,
• Lifestyle, with Nespresso and Dyson, both of them with significant spaces and which are, according to Coin, quite successful both in terms of driving traffic and sales. Coin is increasingly entering partnerships (similarly to Manor and others) to expand its offer and access new customer bases,
• Jewellery and leather goods, with low and mid-market brands,
• A “Lifestyle hub” which includes tech, gadgets and even electrical cars. The name of this zone is not properly displayed and can be somehow confusing, which is all the more surprising that Coin advertises it as its new experiential showroom / concept store / space of discovery designed to attract a younger clientele (this new space has been launched in nationwide Coin Excelsior stores as a new concept in 2021).

The overall impression left on the ground floor is a profusion of brands expressing themselves on dedicated spaces, with an interesting (and surprising) curation and juxtaposition, but, just like this is the case in the basement, transitions between unrelated categories give the feeling that this spatial organization was made out of necessity rather than with a specific store planning vision in mind.

The first floor is dedicated to Women’s and Men’s Fashion, displayed both in shop-in-shops (including an impressive All Saints space) and in corners, and mainly in the mid-market segment. The Men’s section is displayed with floating furniture suggesting that the offer constantly evolves, while the Women’s one is structured with fixed fixtures. Also, the space and mezzanine allow giving a great view of the concept store part of the ground floor, as well as the Art Deco architecture of the building.

When leaving the building, the impression that is left is somehow confusing: there are many great ideas and brands or categories juxtapositions in the store, but ultimately it is difficult to identify who is the actual target customer or even the positioning of the store: while the Coin Casa, bakery on the basement or the fashion offer suggest that this is a store addressing a classical and middle-market customer, the Tiffany’s store at the entrance or the co-operated Dyson and Nespresso stores give the impression that Coin Excelsior is trying to stretch itself to the luxury category, and therefore trying to address all customers with one bait.

*Is Rome a Dolce Vita for department stores? While it has been an obviously historical touristic hotspot, when it comes to retail, Rome is more famous for its local and family-owned stores, rather than its department stores.

La Rinascente Via del Tritone, the second flagship of the company after the Milan store, addresses international luxury customers according to a robust playbook, but, due to the structural efforts it had to make to adapt to the city’s specificities (especially the archaeological treasures hidden in its soil), the result is somehow disappointing when compared to other players located in other cities, including Milan.

Coin Excelsior, on its side, displays many innovative concepts and initiatives, however, the store organization and difficulty to understand its positioning makes it a store that is difficult to understand.

It seems that, unlike in other European cities which took the opportunity of Covid-19 to work on their offer, positioning or brand perception, there is still some way to go for players in Rome in that perspective.*

Credits: IADS (Selvane Mohandas du Ménil)

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IADS recently held a meeting all about the cosmetics & beauty sector. Based on market research, the IADS team presented the most innovative brands from different segments of the cosmetics & beauty brand industry: skincare, makeup, haircare, fragrances, and everything in between! Check out a selection of these brands!

Skincare

Peach & Lily

The top destination for the very best curation of Korean Beauty productsand innovations from cult-favorite Korean Beauty brands. Spa-grade,toxin‑free, delightful, and accessible, K Beauty-inspired skincare with noharsh chemicals, dyes, alcohol, parabens, or sulfates.

Check out the Peach & Lily website here

Peach & Lily Instagram

Laboté

Laboté cosmetic treatments are made from medicinal plants andpharmaceutical ingredients selected for your skin through diagnosis.Treatments are certified vegan and cruelty-free. Take your skin diagnosisonline to discover your tailor-made treatment protocol.

Check out the Laboté website here

Laboté Instagram

Horace

Skincare line of natural products co-created with customers for men. Whena need is expressed, we formulate a treatment. Horace products areeffective, easy to use, good for all skin types, skin tones and hair.

Check out the Horace Website here

Horace Instagram

OUATE

Skincare line for little ones because children love to learn while having funand feel that joy that overwhelms them as they walk on the path toautonomy, OUATE transmits them the essential care gestures to take careof their fragile skin.

Check out the Ouate Website Here 

OUATE Instagram

Youth to the People

Consciously-sourced, nutrient-dense premium superfood blends and pairthem with clinical, pro-grade vegan actives, all made in California for thebenefit of skin’s health. All initiatives support non-profits and activistsworking to amplify diverse voices and increase inclusivity, build a more justworld, and save the planet.

check out the youth to the people website here 

Youth to the People Instagram

Makeup

Claropsyche

A makeup brand that seeks to saturate, liberate and inspire creatives. No Rules. Art supply inspired makeup products.

Check out the claropsyche website here

claropsyche Instagram

Dries Van Noten

Dries Van Noten clashes couture with streetwear. Refillable lipsticks, withmix-match cases in clashing top and bottom prints inspired by fashion collections.

Check out the Dries Van Noten website here 

Dries Van Noten Instagram

War Paint

A makeup line helping men feel confident in themselves using cruelty-free,vegan ingredients. Light & comfortable to wear looks natural & incrediblyeasy to apply.

Check out the War Paint website here 

War Paint Instagram

Pat McGrath Labs

The world’s most influential and in-demand makeup artist formulated andperfected her must-have collection of high-performance cosmetics,culminating in the launch of her eponymous brand.

Check out the Pat McGrath website here

Pat Mcgrath Instagram

Haircare

Pattern

Pattern - Meet your hair where it is & empower your curl pattern bynourishing your hair with affordable and effective products & safe ingredients.

Check out the Pattern website here

Pattern Instagram

Gisou

A haircare line that’s key ingredients are sustainably sourced from theMirsalehi Bee Garden by founder Negin Mirsalehi and her father. Honeyis the key to healthy, shiny, nourished hair. Rich in vitamins, minerals,amino acids and antioxidants, honey deeply nourishes and moisturizes torepair and restore dry, damaged locks.

Check out the Gisou website here 

Gisou instagram

SACHAJUAN

Haircare inspired by Scandinavian philosophies and powered by OceanSilk Technology. Simplify haircare by reducing superfluous products,ingredients, and routines.

Check out the Sachajuan website here

Sachajuan Instagram

Fragrances

Vilhelm

A fragrance line where each perfume is the culmination of a broad,creative and collaborative process, a blend of vintage and new that sparks recognition but not familiarity. It brings together around twenty fragrances conceived as olfactory stories.

Check out the Vilhelm website here

Vilhelm Instagram

D'Orsay

Fragrance line where the scents are inspired by exploring the state oflove through to carnal desire, speaking of feelings and intimacy.

Check out the D'Orsay website here

D'Orsay Instagram

Other Categories

D+ For Care

Natural, scientific, and French, designed by women for women. D+ forcare is the well-being brand for women that provides dietarysupplements for beauty, well-being, stress, sleep, slimming, menopause,menstruation, hangovers, and more.

Check out the D+ for Care website here

D+ For Care Instagram

Lightinderm

A unique deep skin regeneration system, usable at home, combining aphotobiomodulation device and capsules of serums concentrated inphoto-active ingredients. A triple stimulation: light, serum & massage toact effectively. 1 device 5 targeted programs: wrinkles and firmness,imperfections, redness, and radiance.

Check out the lightenderm here

lightinderm Instagram

Holidermie

Holidermie created products and tools to accompany active women ona daily basis so that they remain beautiful and radiant for longer, bypreserving and beautifying their skin from the inside out, bycontributing to their physical and mental well-being and by allowingthem to take care of their style even in the bathroom.

Check out the Holidermie website here 

Holidermie Instagram

Solaris Labs

Inspired by massage techniques and modalities that have been aroundfor hundreds to thousands of years they created tools that are holistic,modernized or high tech to optimize your routine and skin health.

Check out the Solaris Labs website here

Solaris Labs INSTAGRAM

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*Teaming up and buying together in order to reach scale economies seems like a natural step for international department stores, since the goal of these large retail organisations has always been to reach optimization in terms of procurement to maximize margins. In addition, since they are usually operating on national markets, an international collaboration seems logical.

This is the reason why international retail associations, such as the IADS, have explored the subject for years, trying to articulate a working solution for their members, be it at the material level for private labels, at the product or label level for national brands, or even by suggesting to team up to buy or create from scratch shared brands which could be seen as private labels for a group of stores.

We are reviewing in this paper a series of options drafted by the IADS dating back to 2001, in order to draw some conclusions and put them in comparison with what we know today.*

What are we talking about and why is it important in 2022?

Department stores are increasingly under the pressure of specialty retailers that have been developing internationally. Already back in 2001, as retail was becoming global, department stores' relative purchasing power was declining. The question of boosting their buying power was arising through international M&A activity, the development of synergistic formats or alliances, and through harnessing the strength of collective buying with several department stores. Post-Covid, the pressure is even stronger as brands are increasingly going directly to customers, as shown by luxury groups (LVMH, Kering) or large sports brands (Nike), to increase their margins at the expense of the retailers.

This overall situation is even more critical as competition is becoming much more aggressive, especially with the growth of e-commerce which challenges the margins that can be reached by retailers: while retail prices remain the same, customers now expect some services that were not generalized pre-Covid (such as the free delivery) which are putting pressure on the core business model. As a solution to recuperate some points of margin, department stores can work on their logistics (a notoriously difficult topic in 2021 and 2022), on their overall organization (size of the workforce, working methods and systems), adjust their business model (by monetizing their stores and digital platforms), but also by lowering their overall product and material acquisition costs.

But collaborative procurement is not just about "purchasing power". Even at a time when raw material prices are skyrocketing, most department shops compete on differentiation, style, and fashion rather than pricing. As a consequence, collaborative procurement is, first and foremost, a strategy to improve the attractiveness of the selection by elevating the status of department store-exclusive brands or collections.

To dig into the topic in a rational way, different aspects and constraints are to be taken into consideration:

• assess the issues with cultural differences and various consumer attitudes,
• review the different forms of collaborative procurement,
• review the framework and operational concerns for such a project.

Can collaborative procurement and cultural differences be reconciled?

There are 2 opposite ways to see cultural differences.

On one hand, customers are often considered too diverse to make international procurement successful and effective as tastes, styles, and sizes are too different. It is not difficult to figure out that ladies in Stuttgart will not be attracted to the same products as in Berlin, New York, or Paris. They can also have a different perception of brand names. Furthermore, customers’ rationale might also significantly differ: in one country, the price may be the most important element, whereas, in another, style is more significant. The lack of success or failure of some international retailers (Gap, Marks & Spencer or Muji for instance), when they trade outside their home country, highlights the challenge of dealing with the same concept in several countries. As a consequence, from this perspective, beyond all the operational challenges of joint procurement (quotas, price structures, import duties, sizes, etc…), the customer, who is the ultimate decision maker, does not buy in the same way, the same products, or in the same places. As a result, there might be no use in seeking collaborative buying.

On the other hand, customers are increasingly attracted to the same international brands, whether it’s Louis Vuitton, Ralph Lauren or H&M, Zara and now Shein. Such successes, especially vertical specialty retailers who hurt department stores most, prove that the same clothes can be sold all over the world. While brands are even more globalized in 2022 than in 2001, they are now succeeding in almost all countries, with harmonized image and communication channels making the brand’s perception equivalent everywhere.

Is there a way to reconcile both points of view? While cultural differences are unavoidable, many of the same products are sold at department stores (cosmetics, lingerie, hosiery, accessories, luggage...). An analyst stated: "The killer of department stores is going to be that they all think they're distinctive, while Mango feels it can sell anyplace." Although it may be simpler to organize common procurement in a single country, the retail environment shows that customers often respond to the same brands.

In 2022 though, department stores desperately need to differentiate if they want to survive against the competition, suggesting that department store-specific products might be worth considering, even at the international level between a handful of players sharing those exclusive items.

How can collaborative procurement be achieved?

As suggested in the introduction, there are many ways to consider joint procurement, at several different levels:

• Buying private labels from one another,
• Developing brands together,
• Subcontracting together special ranges,
• Harnessing buying power by teaming up,
• Acquiring a brand and operating it collectively.

When looking at each option in detail, there are pros and cons in each of them.

Buying from one another. Private label ranges are available at most department stores and may be of some interest to others. Differentiation has to be made between umbrella brands (Manor’s or Magasin du Nord’s store) for which often even the smaller stores can reach the minimum quantities required to make the labels work, and private brands which are me-too or exclusive life-style brands (The Mash Up at Breuninger or Chester & Peck at El Palacio de Hierro for instance) generating a higher mark-up and sales per square meter, but are at the same time much more expensive to develop and market.

Among the IADS department stores’ private brands, there are a few that others could pick up. A team could be given the task of putting together a catalogue of the main private brands as some of these might have the potential if several stores were interested to become successful international brands. One challenge would be to agree on an acceptable price structure making it possible to sell profitably, as well as to overcome internal opposition, as experiences in the past showed that the various buying teams could feel threatened by such a cooperation and therefore not really willing to work together.

Developing brands together. In this model, several stores get together in a structure that develops one or several brands. In the past, the initiative called EBO (European Brands Organization) was a joint venture between five department stores with equal ownership and entirely responsible for the collection's development (this structure does not seem active anymore nowadays). The first key learning from this venture is that it worked because stake-holding department stores had a similar size and positioning. The second one is that the venture must operate independently from its shareholders and have the latitude to sell to third parties as long as they do not compete with the shareholders. But building a lifestyle fashion brand is a long process and requires a long-term commitment from all parties involved. It may be easier to create brands for less glamorous non-apparel categories.

Joint subcontracting of special ranges. This model is all about commissioning existing well or less well-known manufacturers to develop exclusive ranges for a group of department stores, possibly with a separate brand name (the “Armani for Department Stores”, for instance). Nowadays, unique collaborations with brands could be seen as the modern variant of this model as any other variant does not seem valid anymore.

Harnessing buying power. An obvious option is to pool department store purchasing power on common items which could be easily listed. This would imply the creation of a purchasing organization that would act on behalf of the department stores when negotiating. In 2022, this option might be less relevant as some brands are questioning their very presence in department stores and are increasingly trying to go direct-to-consumer, meaning that such an option would relate to smaller, and somewhat less attractive brands, questioning the economic viability of this approach. With the supply chain disruptions and the high costs relating to digital, the department stores’ focus is put on margins as they are increasingly hard to maintain. Under such circumstances, harnessing the buying power on raw materials (cashmere, cotton threads, etc…) could represent an additional option.

Brand acquisition in collaboration. The ability to jointly acquire an existing or emerging brand is also a possibility for a group of department stores, although there is no modern example of such a venture. Other retailers do proceed to brand acquisitions, such as Farfetch with the acquisition of the New Guards Group (Heron Preston, Opening Ceremony…) or the cosmetic brand Violet Grey.

Anticipating the issues in order to move forward

In 2001, the attitude of buyers regarding collaborative procurement was not the most positive: their culture and training were focused on individual achievements, and in the past, they did not collaborate easily. Twenty years later, even though mindsets and working methods have evolved, it is likely that, to be successful, the human aspect and the international articulation and roles will be a critical point to be considered.

An alternative is to develop a separate organization. Creativity would be required when it comes to quotas and custom duties impacting price structure and quantities. Ordering procedures, logistics, and impacts on manufacturing quantities should not upset the position of the initial seller of the brand. Price structures should be reasonable as both the buyer and the seller should see some benefits. However, the key question remains to know whether retailers, who currently are steering their digital transformation and looking at all the CSR-induced changes they need to consider, would have enough resources and willpower to team up on a project managed with other companies, leaving them with a limited degree of control while requiring full involvement from their end.

We believe that there are some possibilities of collaboration between department stores. After all, they individually spend huge amounts of money in product development. As a consequence, it should be possible to tap into private labels and take a few of these brands global. Processes could be designed to facilitate collaborative action, especially if developed early on. However, a key element would be that all companies teaming up together are of the same size in order to avoid any lack of balance, or they should only focus on a specific aspect of the collaboration, and not its entirety.

Credits: IADS (Dr. Christopher Knee, modern reading by Justine Fanget)

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Click here for a look into Blocher Partners 

Blocher Partners (bp) was founded 30 years ago in Germany by Jutta and Dieter Blocher. From the very beginning, their approach was transdisciplinary. Along with their client needs, they added new competencies to their practice: interior design, product design, but also marketing and communication solutions. Thanks to their recognized know-how in the development of retail spaces, they were soon labelled as retail architects. They could offer clients holistic concepts, always putting the customer in the centre of actions and the thinking process. For getting in touch with their clients in an early stage and really understanding their needs, Blocher Partners lately expanded their business by the field design strategy: early in 2022 ‘Blocher Partners sens’ was established. Erik Schimkat who leads the new entity, is an interior designer who has specialized in co-creative design research methods. These are of great importance when it comes to unveiling unseen potential and pushing ideas towards new boundaries. For this interview we had the chance to talk to both Jutta and Erik about innovation and transformation in the retail business.

Innovation and transformation

IADS - What is your understanding of innovation for retail in general? How do you translate that into architecture? Do you sense any kind of acceleration or a sense of emergency, especially with Covid?

bp Jutta - Innovation should be broken down a bit. Working for the retail industry, but also for the hospitality business or even when creating offices, we can see what companies have in common: they have to deal with uncertainty when it comes to bringing a new project to life. Innovation really lies in dealing with this permanent uncertainty, and in the ability to turn it into a suitable experience. Sustainability and digitalization are also big forces being part of the process.When it comes to innovation, we need to be brave enough to try unprecedented things. They might work for one company and not for the other: this is exactly the context in which we can provide efficient methods and offer viable solutions.

bp Erik - Companies often ask us to help them be more relevant. They are aware that it will take bravery and boldness for them to be successful in the future, but the more we move on together, the shyer they become. That's really the biggest challenge for us. Forcing us to take a step back, Covid touched on a raw nerve and critically highlighted what was not working. It allowed us to really think about spaces and usage. But we wouldn't say we felt a sense of emergency as questions were already there, Covid was acting more like a booster even accelerating the process. Finding the right solutions is just becoming increasingly complicated.

IADS - What are the limitations of architectures, if any, for modern retail? What can it do, or can’t do, to fix the issues?

bp Erik - As everything is becoming digital, architecture is not the first step of a project anymore. Since consumers can now shop online wherever, whenever they want, architecture is the possibility for a brand to ultimately be able to convey a strong brand identity. Architecture gives retailers the power to really decide where they want to be visible.

IADS - How did the sustainability concerns change your practice, especially in retail?

bp Jutta - As a company, sustainability is in our minds for many years. For instance, our HQ built 12 years ago received the DGNB certification, which was something pretty unique at that time. Since then, our design approach has always been very sustainable. It’s also been part of our clients’ mindset for many years, and even more with Covid and the overall climate situation worsening.

Does the store of the future exist?

IADS - What is your personal view of the store of the future (if such a ‘concept’ makes sense to you)? Do you want to mention any ongoing project that would relate to that vision?

bp Erik - Actually such a concept doesn't really make sense to us. Although it is especially important for us to develop visions, it would be far too specific to have a single solution for a store of the future. There are certain guidelines and trends that have to be considered when developing a retail project, but in the end, our efforts are put into finding the specific solution for a specific client and its specific target group. As a company, we try not to use the word future as it can put us immediately in the past somehow. That said, we understand why there is this need for such a notion as it would represent an easy and global answer to many questions.

IADS - Architecture and online: how do you articulate both to cope with the customer omnichannel journey?

bp Jutta - We developed a digital unit within the company over the past years, consisting of a network of experts from the digital field. The purpose of such a unit is to both provide a seamless experience to our clients, and of course to help them deliver a seamless experience to their own customer base. Once again, we work on tailored solutions which will be very different from one retailer to another. For instance, Breuninger is very much advanced when it comes to online shopping, and they have a very good digital unit we closely collaborate with. The situation might be very different with another retailer.

IADS - Retail is about people - customers -, but also and equally importantly sales teams. How do you take them into account in your projects? And in the future now that staff retention and quality of work environment are crucial to retaining talents?

bp Erik - Our methods include having all experts and stakeholders at the table when kicking off a new project. The question of the sales teams comes usually late in the process, but we consider it crucial to include them from the early stage of a project, like any other stakeholder. They have a very valuable impact on the design process because of their unique position on the shop floor, providing products and experience to the customers.  It might also be counterproductive to impose a new store design they will have to work with for years without involving them. Finally, because they feel seen and listened to, they often become ambassadors for the project

IADS - How do you manage creativity within your organisation? How are ideas generated and with what process?

bp Jutta - Our transdisciplinary approach is of some help in that matter, especially considering we need to make people work from our different locations, in Stuttgart, Mannheim, Berlin and India. We also have specific formats to develop exchange and creativity: we host something called ‘creative exchange’ where we invite external speakers on trends or innovation. We also have in-house talks bringing the whole company together. In addition, we're working on white papers, and we research ideas that we think are worth exploring. In the end, creativity works when we combine all expertise, and not only the design people as all people need to have a full understanding of what's going on.

IADS - Could you please tell us more about ‘Blocher Partners Sens’ new division? How are workshops and methods like LSP (Lego Serious Play) unique to understanding the client’s needs and developing an adequate project?

bp Erik - Blocher Partners Sens comes in at a very early stage of a project to work in a co-creative process with the client. Using different perspectives and methods, we are trying to find the best solution for the client. Everyone involved in the process is on the same page and the overall method ensures that everyone is taken into account. For example, the Lego Serious Play method allows everyone to have a voice, no one is louder or quieter. Everyone can come up with something creative (even when people are not part of the creative field) enabling them to have a valuable impact on the project. It starts with a perfect briefing in the early stage to really know what we have to work on, and the problems to be solved to reach a successful outcome.

We also use more creative methods allowing us to keep an eye on the overall project and make sure we are still on the right track compared to what was decided in the beginning. Blocher Partners Sens is also about communicating with all the project’s stakeholders, and about conveying the message of change. An evaluation is made after the project to assess what was good and what can be improved. It’s increasingly important in retail considering spaces are not set for years anymore.

Department stores and retailers

IADS - What is the role of a department store in 2022? How do you see its articulation with the city? In your view, is the European department store part of the 1% of public buildings (like a church, a city hall, a landmark...) or something else?

bp Jutta - It’s both, and something else! Department stores are city marketplaces where people can go without having a specific goal. Knowing that something is happening there is a good enough reason to go. The new KaDeWe flagship store in Berlin embodies this vision. The idea of public buildings fits with the idea of the department store: like a church or a landmark, it's a place where people find experiences.

In regard to this idea, Breuninger’s champagne bar is a very good example, as people don’t go there having shopping in mind, but for the experience. The EmiLu hotel we worked on in Stuttgart is another great example. The breakfast room, empty hence spooky most of the time, is open for everybody to have brunch until 4 pm. The place has been crowded since then. It shows that with more creativity, the hotel had a bigger chance to be in part of the city and become the “talk of the town”. This initiative also has a strong impact on the appeal of the hotel itself, as a place to stay.

IADS - How do we make sure that department stores will continue to be part of people’s lives? How is an architecture practice of some help?

bp Jutta - Whereas some became only ‘product portfolio’ over the years, department stores should go back to being places for experiences and discovery, their essence from the very beginning. Thanks to their size, locations and product offer, they have a true competitive advantage for experiences and discovery and a bigger chance to succeed when compared to other retailers. The challenge is more to make them understand the potential they have here.

Department stores can benefit from their great architecture (for some of them), from their restaurant offer making them a great place to meet friends. They offer a physical experience, and we are all craving for experiences.

IADS - Looking back: what did Blocher Partners learn with the various projects you ran with department stores? How working with department stores is different from other projects?

bp Erik - Department stores are very different as a lot of stakeholders are involved, adding complexity to uncertainty. On the other hand, they have more expertise, hence much more possibilities when it comes to what can be achieved. In the end, it might be more intense than working with smaller companies, but the results are often much more holistic experiences.

Contact:

Annette Willige

Head of Business Development

Tel: +49 711 224 82-452

Mobile: +49 152 54511169

Annette.Willige@blocherpartners.com

Credits: IADS (Christine Montard)

Check out the retail review in pictures here

PRINTABALE LINK HERE

*The IADS visited Dubai in early March for a joint meeting with the International University of Monaco and the American University in Dubai, who will be collaborating with the Association on Private Labels-related research topics. The IADS took the occasion to visit the Dubai Mall and the Mall of the Emirates to review the department store scene in Dubai, we have included pictures for your review.

Most of the department stores available in Dubai are operated through franchised agreements. Is there anything new in their approach, has any decoupling taken place, or, on the contrary, did the Covid-19 episode tighten the links with the mother companies? And to what extent does their service offering reflect the evolution of the market? We have tried to draw some conclusions from our visit in addition to the pictures that are available separately.*

Introduction: overview of the visited malls

The Dubai Mall, which opened in 2008, is the second-largest mall in the world, with half a million square meters surface spread over 4 floors and 1,200+ stores. Its many attractions (an aquarium and underwater zoo, a VR Park, cinemas and children’s activities, Bloomingdale’s, Debenhams and Galeries Lafayette department stores) made the mall a Dubai touristic attraction. It is operated by Emaar Properties, a public joint-stock company whose logo is ubiquitous on Dubai towers. Emaar Properties is primarily a real estate building company, involved in the building of the Burj Khalifa and the Dubai Fountain in Dubai, but also in other projects in Egypt, India, KSA, Syria, Turkey and Pakistan. It initiated mall management operations after completing the Dubai Mall.

The Mall of the Emirates, opened in 2005, is smaller, with 223.000 commercial square meters dedicated to 630+ boutiques, including Harvey Nichols, Debenhams and Level Shoes department stores or equivalents. It made the headlines upon completion with the opening of the world’s largest indoor ski slope and is owned by the Majid Al Futtaim Group, which specialises in mall management, retail, leisure, entertainment and hospitality.

When asked about the two malls, it is common to hear long-term Dubai residents mentioning that the Dubai Mall is great for a weekend excursion, but they usually do not see it as a staple destination for everyday purchases (due to the traffic and dimensions of the space). As a consequence, the Mall of the Emirates stands more as an option for a human-sized everyday shopping destination, even though it is probably suffering more than the Dubai Mall of the competition created by the new malls opened in other parts of the city since then. The Mall of the Emirates, which can not compete with Dubai Mall in terms of the number of attractions, also tries to provide a sense of luxury to local customers in terms of communication, overall feeling and atmosphere.

However, at the time of visit, the sentiment was that the Mall of the Emirates was feeling worn out when compared to the Dubai Mall, where everything, public premises, service spaces, and even mall attendants’ level of knowledge, felt in better shape and more looked after. This was exactly the contrary when entering stores, as levels of attention provided by retail staff in the Mall of Emirates was incomparable with the ones in Dubai Mall where no attention was given to visitors, reinforcing local customers’ opinion.

Debenhams (franchise operated by Alshaya Group) – Dubai Mall and Mall of the Emirates

Debenhams, the British department store chain founded in 1778, went into liquidation in December 2020 and closed down all 101 stores in the United Kingdom within June 2021. The brand was acquired by Boohoo in January 2021.

However, this did not impact Debenhams’ partner in the Middle East, Kuwaiti group Alshaya, which started the partnership as early as 1997. Alshaya has since the bankruptcy announcement made a deal to retain the franchise rights with Boohoo, and operates a total of 23 in-mall stores in Kuwait, KSA, UAE, Bahrain, Egypt, Oman and Qatar, in various formats. In Dubai, there are 6 locations: 3 department stores (Mall of the Emirates, Dubai Mall, City Centre) and 3 Debenhams cosmetics stores.

IADS visited the two Dubai Mall and Mall of the Emirates locations. The feeling was rather different from one location to another, and paradoxically, the Dubai Mall location felt more worn than the Mall of the Emirates One, probably because of its smaller dimensions.

Debenhams Dubai Mall 

The store extends on one floor with very few windows and a rather classical store planning: cosmetic space at the entrance (a black generic concept with logos), then RTW (M, W, kids) and other categories.

In-store fixtures include brands-separating walls in the central section of the RTW area, giving a somehow suffocating feeling, reinforced by the very dense visual merchandising, with overcrowded racks. As a consequence, it gave a ‘bazaar’ feeling, reinforced by ubiquitous price reduction signs. At the time of visit, the location was empty with staff busy unboxing products and not paying attention to visitors.

Debenhams Mall of the Emirates

The store spans over 3 floors and gives a much more positive feeling than the Dubai Mall location, at least on the ground floor (cosmetics with brand concept corners, lingerie and accessories). Staff is omnipresent, welcoming and eager to help visitors. Lighting and the feeling of space are refreshing and give a very positive impression.

The 2 other floors are dedicated to fashion: Women’s on the 1F and Mens, Kids and Home on the 2F. Women’s fashion was overloaded with products and dense VM, however, this did not seem to deter customers from buying (Debenhams is popular in Dubai for middle-income families looking for bargains and low prices). On the upper floor, the feeling, especially in the home section, was clear and nice. In both 1F and 2F, staff was non-existent or not interested in helping or even saluting customers.

No specific services were mentioned or advertised at cash desks in both locations. The Debenhams website for the Middle East, announced by Alshaya for early 2022, is still not active at the time of writing.

Galeries Lafayette (franchise operated by Admic) – Dubai Mall

Galeries Lafayette and BHV department stores in the Middle East are managed by Admic, a Lebanese company founded in 1996. Galeries Lafayette in Dubai Mall, spanning over 21,500 square metres and 3 floors, opened in 2009 and is easy to find thanks to the mall’s public signs as a significant anchor.

The store is also extremely visible from afar, especially because of the ubiquitous branding visible from the atrium. It also emphasizes that the store’s main logos are not updated, clashing with the current “Time the time to smile” campaign on the windows with the new Galeries Lafayette logo introduced in 2017. This can be confusing for customers, especially the ones already familiar with the French locations or website, and who might be surprised to see an old-school logo on the building (shopping bags display the new logo).

The ground floor is dedicated to luxury accessories and international brands (LV, Gucci, Dior, Marc Jacobs, Valentino…) in peripheral sections, and low-rise corners with brands’ concepts dedicated to cosmetics in the centre, giving overall visibility, and a feeling of luxury and space.

On the first floor, dedicated to fashion (M, W) with flexible walls which can be moved to change brands or sections, there is a mix of local and international brands’ shop in shops fitted with their own concepts (Missoni, Ba&h…). It is therefore really possible to have 2 different feelings, one being that local brands are overrepresented, and the other one being that GL displays its savoir-faire in terms of fashion merchandising. The dressy space (an important market in the Middle East) is represented by Etoile La Boutique, a retailer specialized in evening gowns, and an extremely good-looking and inviting wedding dresses space at the entrance. The shoe space on the same floor is somehow less efficient as it is difficult to see the products. The Men’s section is also equipped in a flexible generic concept, with the exception of a few brands (Pal Zileri, Hugo Boss, Hackett, Polo Ralph Lauren).

The second floor is dedicated to kids, home and gourmet. The whole floor is in low rise concept, independently of the category, to make the gourmet space visible and accessible, which further emphasizes the logo mix-up (pre-2017, post-2017) in the Gourmet section.

Cash desks are all located in peripheral locations, forcing sales associates to ask customers to follow them to finalize sales, which seems surprising to ask of demanding Middle Eastern customers. At cash desks, no specific services are mentioned or advertised.

Bloomingdale’s (Dubai Mall) and Harvey Nichols (Mall of Emirates) (franchises operated by Al Tayer)

Al Tayer is a UAE-based conglomerate founded in 1979, operating in automotive, retail, hospitality, services and entertainment in the Middle East. It opened the largest Harvey Nichols store outside of the UK in 2006 in Mall of the Emirates, and the first Bloomingdale’s store outside of the US in 2010 in Dubai Mall.

Bloomingdale’s in Dubai Mall

Bloomingdale’s Dubai extends into 2 sections: a 3 floor department store dedicated to fashion, over 14,600 square metres, and a home store on the lower ground over 5,400 square metres (not visited). Like Galeries Lafayette, located in the opposite side of the Dubai Mall, it is extremely visible and accessible through an appropriate signage.

The ground floor is dedicated to cosmetics in the central section, and luxury accessories and shoes (but also a Gucci store with all categories) in a “drum”, with direct access to the valet parking. The size, level of attention and energy in the Cosmetics section suggests that this is where the turnover is made. Sunglasses and custom jewellery are also presented in this section but are hardly visible and not really appealing. In the “drum”, all brands are displayed in their own concept, with the exception of a generic space in the central Accessories and Shoes section where some brands are repeated (Saint Laurent, Valentino, Balenciaga).

On the first floor dedicated to Women’s fashion, only Gucci, Moncler and Keepsake have their own concepts, the rest of the brands are presented in generic sections on specific racks (which are different from the Men’s section ones). The dressy and luxury section is not specifically outstanding in terms of visual differentiation when compared to the rest of the floor, and the personal shopper’s entrance is not appealing. What is striking is a combination of smart initiatives (the Chanel fragrance chariot in a strategic location near the escalators) and the lack of services, including seating areas.

The second floor dedicated to Men’s and Kid’s is visually different, and most brands have their own concept. The personal section is appealing, with a barber, a fragrance section, and many seating spaces where to spend time. Men’s shoes are presented in a generic section and there is also a contemporary space, poorly accessible and not engaging due to the way the space is structured. The Kids section is experiential and festive, with a specific ambience and non-brand-dedicated staff.

At no point during the visit were services or Covid-related instructions mentioned. Also, the Visual Merchandising was somehow confusing and did not help to make products visible. This is all the more curious that the VM at Harvey Nichols is extremely efficient, and an executive at Al Tayer explained to us that both stores were managed by separate teams.

Harvey Nichols Mall of the Emirates

Harvey Nichols extends on 3 levels at a corner of the Luxury avenue. Signage in the mall and overall visibility is probably less efficient than for Bloomingdale’s in Dubai Mall.

The ground floor is dedicated to Accessories, Shoes and Beauty and all brands are displayed in their own concept. Visual Merchandising is extremely efficient and the space is one of the best seen during the visit.

The first floor, dedicated to Women’s fashion, is clear, welcoming and spacious. The play on colour in the atrium is similar to what Saks Fifth Avenue has done in New York, and the multi-brand space is commercially efficient. Visual Merchandising is exemplary.

The second floor, dedicated to Men’s and Kids, displays shop in shops in peripheral and central sections, with a very good display of shoes. Some questions are raised by the brand zoning (e.g. Gucci kids near Kenzo adults).

Harvey Nichols was one of the most appealing locations visited during this trip. It is (justifiably) seen as a reference by brands when trying to enter the Dubai market.

Level Shoes (original concept from Chalhoub Group) – Dubai Mall

Chalhoub Group, founded in 1955 and specialized in fashion and luxury retail operations in the Middle East, has launched Level Shoes in 2012 in the Dubai Mall over 9,600 square metres. It is not really a department store nor a shoe shop, but a “shoes & accessories district” and Chalhoub Group refurbished it in early 2020 in a spectacular fashion.

All international brands are presented either in their own-concept shop in shops in peripheral sections or in luxurious generic areas in the centre. The overall feeling is not far from a large and luxurious department store, with many welcoming seating areas, popup zones, and dedicated salespersons (attached to each brand).

Level Shoes is the only space visited where Click & Collect is advertised and proposed with appropriate signage. When IADS discussed this Click & Collect topic (or its lack of in most of the visited locations) with the Dubai Mall General Manager, he mentioned that this was the kind of service that the Dubai Mall was willing to develop at its own level, and a new section is currently being developed to welcome and accommodate customers coming to retrieve their click & collect purchases in a Dubai Mall premise, and not in each shop.

*Is Dubai still worth a retail trip? Yes, to see to what extent the need for services and retailer brand differentiation is not the same from one region to another. The most striking point during the visit was the fact that many brands were over-represented due to the multiplication of points of sales: in Dubai Mall only, Saint Laurent is represented in the Bloomingdales Accessories section (shop in shop + generic), in the Bloomingdales WRTW section (racks + double shoes/accessories exposure), in the Bloomingdales MRTW section (racks + additional shoe section), in the Level Shoes area (shop in shop) in addition to the brand’s own retail store, leading to a total of 7 locations for this mall only. Is it enough for local retailers to stand out with an international offer that can be available somewhere else?

Our conversation with the Dubai Mall General Manager suggests that they anticipate that the need for services and additional care, that is spreading in the rest of the world, is growing and that they might be looking to be part of the solution. Department Stores might want to follow what they do when it comes to Click & Collect and, above all, how they articulate it in terms of business model with brands, as this might come as an inspiration.*

Credits: IADS (Selvane Mohandas du Ménil)

To view our photos of the Printemps revamp click here

Printable version here

Introduction

*Paris has gone through significant retail upgrades in the past 2 years, with the opening of La Samaritaine in June 2021 and the general stores and branding overhaul at Galeries Lafayette in September 2021.

In the meantime, the global events that have been unfolding one after another are blurring the visibility when it comes to getting back to normal touristic flows, a situation that has forced all major players in Paris to rethink their approach almost in real-time.

Apart from launching “7ème Ciel”, which is a second-hand and circular fashion initiative (quite different both in terms of spirit and business model when compared to Re-Store from Galeries Lafayette), Printemps has remained silent since the arrival of Jean-Marc Bellaïche, the new CEO, in March 2021 and the subsequent store closure plan in French regions that was announced.

This is the reason why the relaunch of Printemps is significant, both in terms of brand identity, customer approach and new services offered. We have visited the new Haussmann stores and reviewed the novelties for you, drawing some comments from our visit in addition to the pictures that are available separately.*

The Printemps situation in a nutshell

Printemps, founded in 1865, currently operates 29 stores, 20 with the Printemps brand (16 in direct and 4 in Franchise) and 9 with the Citadium brand, after having closed respectively 4 Printemps stores and 3 Citadium stores in 2020-2021. The group achieved a turnover of €1.5 bn in 2021, a far cry from the estimated €1.7 bn turnover from 2019 but increasing +38% compared to 2020. The CEO mentions that the 2021 turnover is -12% on comparable days (i.e. on the days when Printemps was opened in 2021) compared with 2019, which gives an idea of the tourists’ absence impact. In 2019 70m customers visited the Printemps stores, 20m of them in Haussmann only.

The goal of the Printemps brand, offer and services revamp is to regain local customers (2/3 of the customer base, with locals already growing in 2021 +10% vs. 2019 overall and +15% in Haussmann) and attract US, Middle East and European customers, through new customer journeys, starting with “less retail, more F&B and entertainment”.

The revamp took place on the 19th of March, the Spring day, with a “Tout commence au Printemps” catchphrase, playing on the meaning of Printemps (Spring in French, which means that the slogan is akin to “Everything starts at Printemps”). This allows the company to play on the concept of renewal, which is quite catchy these days when customers are tired of the Covid-19 related restrictions and are also looking to escape the gloomy news of the war in Ukraine. It is also an efficient way to emphasize all the “first times”, both in terms of advertising messages (my first emotion, my first shopping spree…) but also present Printemps as an innovative company which led the way in many aspects of modern retail (for memory, Printemps was a founding member of the IADS in 1928). In a nutshell, Printemps presented their new initiative as a moult, to complete the springy message.

A new in-store experience

The company has decided to review its logo (a stylized P which also evokes a heart), colour code (green, white and gold) as well as its tagline (everything starts at Printemps). The new advertising campaign is quite dynamic and transmits a lot of positive energy.

The in-store execution is quite effective, both in terms of signage and the use of the green colour, vivid and visible from afar, which is dotted across the floors, be it via the in-store displays, elements of décor, but also the products developed in collaboration with brands. At the entrance of the store, the information desk has been decluttered and is quite welcoming. The staff has been well briefed, 100% of them saying hello to all customers and showing enthusiasm even 1 week after the re-opening, which suggests that sales and traffic were extremely sluggish prior to this welcome rebranding and upgrade.

10 new permanent concepts have been introduced across the 3 buildings (Women’s, Men’s, Kids and Home) mixing retail, experience, leisure and F&B, also making the most of the building specificities:

• In the Women’s store: La Coupole (6F), a spectacular animation area mixing a 6-months long pop-up zone with a restaurant, Ready Up (4F), an area dedicated to promising students in fashion and design, Hors Saison (3F), a space where clothing from former seasons are sold at a discounted price, and L’Endroit (2F), a comfy designers’ multi-brand space replacing the former Maria Luisa concept store,
• In the Men’s store: a new “Café vert” area (GF), mixing coffee and plants, and an experiential shop-in-shop operated by Au Vieux Campeur (-1F), an iconic Parisian outdoor retailer,
• In the Kids and Home store, L’Appartement de Made in Design (2F), a co-op space selling design items in a home-like environment, and a new retail concept on the Beauty lower floor.

What’s new in the Women’s Store

La Coupole Plage on the 6th floor: this place makes the most of the Art Deco cupola, which housed a brasserie in the past and its name makes a reference to “Paris Plage”, the townhall yearly initiative which transforms the Seine riverbank into beaches.

The F&B area has been quite reduced and pushed on the edges, which also allows emphasis on the presence of terraces (4 terraces which can each accommodate 6 customers) while providing a sense of exclusivity and luxury. The restaurant is managed by a Chef, who co-develops with a food personality a new menu every 6 months. For the first iteration, a food critic who recently published a recipe book has been invited.

The freed space has been dedicated to an experiential retail zone, which is supposed to change every 6 months. For now, the whole area is dedicated to swimwear in a very immersive environment which is quite well executed.

Also, the whole area easily communicates with “7ème Ciel” on the 7th floor, the second-hand space that was opened in September 2021. This zone also opens on the rooftop of the store, with a food truck-like F&B offer, giving a feeling of lightness and joy that was catalysed by the sunny weather. Even though La Coupole takes time to be reached, either via escalators or lifts, it is well indicated across the store, and impossible to miss. It might be more effective in terms of traffic generation than the brasserie, at least in terms of traffic spreading across the day.

Ready-up! On the 4th floor and directly in front of an escalator, this space is the result of a partnership with Campus Mode (a structure federating fashion schools in Paris) and is dedicated to fashion students. There, they have the possibility to take part in conferences, explain their work, expose their pieces and sell them with 3-months long popups. 19 talents will be promoted for a period of 3 months, with 3 to 4 participants per session lasting 15 days.

During the visit on a Sunday, the space was not especially welcoming to customers, as students gathered to congratulate themselves, creating de facto a world where it was difficult to enter if not invited. Also, the very interest of the products can be questioned, as well as the business efficiency of such an initiative.

Hors Saison: this clever initiative on the 3rd floor aims at selling former seasons stocks on 200 sqm in a beautiful space, and singing the tune of social responsibility and care for the environment, instead of appealing to customers with low prices. Brands represented there range from APC to Victoria Beckham, and prices can go as low as -60%.

The space is beautiful and appealing, however, its location and structure make it less inviting than other initiatives. During the visit, there were no customers and sales staff were clearly desperate to have anyone coming in.

L’Endroit on the 2nd floor: replacing the former fashion multi-brand store Maria Luisa, this space emphasizes a selection of edgy designers in an apartment-like setup, where photographers are invited to display their works.

Salespersons are extremely well trained and efficient, as several sales were concluded during the visit. They know the products and brands (which is not the case in other parts of the store) and also mentioned that they were extremely happy since the rebranding of the store, as this immediately translated into an increase in terms of customer flow and purchases. Printemps CEO mentioned that traffic jumped +20% during the week of the reopening.

In the women’s building, the ground floor also displays a new selection of gifts and “easy” products, called Le Joli Cadeau, but which is not referenced as a new concept per se. This space was formerly dedicated to a multi-brand premium leather goods area.

What’s new in the Men’s Store

Le Café Vert on the ground floor, open as early as 8 am (before the store opens), aims to become a rendezvous point with a healthy and qualitative offer, enhanced by plants dotted all across the space, appealing to the need for nature that everyone experienced during the various lockdowns.

The café is operated by Brûlerie Belleville, a local Parisian coffee roaster, but the space will be also offering an aperitivo time at the end of the day, and the décor is set up with Kaki (a hydroculture plant specialist), knowing that all plants on display can be purchased by customers.

Au Vieux Campeur on the lower floor is truly a premiere, as this is the first time that this iconic Rive Gauche retailer makes a partnership and expands outside of its own stores. Au Vieux Campeur has been founded in 1941 and is known by every Parisian who had to purchase anything related to outdoor activities in the past (think a high-end Decathlon staffed by proud specialists). The store is 400 sqm wide, highly immersive and is organised by the universe: climbing (with a 6 meters high climbing wall, very visible from the ground floor, that can be used by customers), trekking, sailing and a library. Testing surfaces for shoes are also available. Dedicated Au Vieux Campeur salespersons also allow customers who might not find what they are looking for in the store, to the entire Au Vieux Campeur catalogue via a marketplace system.

What’s new in the Kids and Home Store

Many new beauty initiatives are available on the lower ground floor:

• Beauty food: a holistic cosmetics zone part of L’Officine (a space dedicated to dermo-cosmetics) where food complements are sold in addition to cosmetic routines by specialized (and exclusive) brands such as Agapem (period alleviating treatment), Apnee (collagen in powder), So Much (emotions regulating coffee) or Dijo (infusions with intestinal ingredients).
• Partnership with Kisskissbankbank (a crowdfunding initiative), which enables Printemps to contribute to the development of new brands, through a contest with an independent jury selecting 3 new brands which will be promoted by being introduced to the “Green market” area in Le Printemps.
• Large areas dedicated to manicure, pedicure, brows, as well as a large space gathering hair products and salon: such services were already available before the revamp but were not gathered in a single place. This organisation makes the offer powerful and efficient.
• Face 2 Une: a spa developed with the Face 2 Une beauty tech brand, proposing no gender services through manual massages and machines.

L’appartement with Made in Design on the second floor: Made in Design (owned by Printemps) is an online design retailer, often curating a selection of brands but also developing its own products. L’Appartement is an initiative where selected designers are invited to make a selection in the Made in Design catalogue and create a physical and immersive point of sales for Made in Design, while also bringing a new experience to Printemps.

And the Metaverse?

Printemps has also developed a phygital initiative, with an immersive virtual store accessible from their website showing a selection of products as well as exclusive collaborations (overall, the e-commerce store has increased its offer by +31% vs. 2019). In the event of the purchase of an exclusive product, customers will enter a contest to earn an NFT, which will, in turn, give access to another contest where the winner (1 out of 30 NFT winners) will receive the original piece of art from the artist who has designed the atrium and the 7ème Ciel art tunnel in the Haussmann store.

Interestingly, there is also an initiative with DressX in the form of a pop-up on the ground floor, which allows customers to buy virtual dresses for their Instagram or other social media pictures. However, after checking in person the offer, the pop-up does not offer anything more than what can be purchased online directly.

For customers who are not into such subtleties, 500 exclusive pieces have been developed with brands ranging from Loewe and Sandro to Logan and Lacoste, displayed in a spectacularly redesigned Atrium at the centre of the Women’s floor. However, during the visit, sales staff were not really inviting and busier making comments about customers who had left the space than taking care of those present.

What to think about this revamp? Execution is excellent and the feeling of renewal across the 3 stores is clearly there. Printemps is upping its game and getting back into the Parisian fight for local customers, after a period when it was lagging behind. They have based their whole campaign on the promise of permanent non-retail animations (conferences, workshops, DJ sets, etc…) which could translate into an effective traffic-driving strategy if properly conducted. The main question is therefore to know if Printemps will be able to maintain the momentum on the long-range and keep teams mobilized?

Credits: IADS (Selvane Mohandas du Ménil)

PRINTABLE VERSION HERE

Introduction

The IADS interviewed Scot Case, the Vice President of Corporate Social Responsibility and Sustainability at the National Retail Federation (NRF), who has been in the sustainability space since the mid-1990s. From his experience, sustainability is the intersection of three key aspects: business, environmental, and social issues.

Early on in our conversation, Scot shared that the sustainability space is constantly evolving. While in the 90s, the main focus regarding sustainability topics was around recycling, today the focus has shifted towards human rights and climate change issues. Nevertheless, it is worth noting that all of these topics are related in some way, it just depends on what is seen as important and to which player. It is much like an iceberg, only a piece of the issue is unveiled, the part that is being centred on by businesses or consumers, but not the much larger contributing factors that remain unseen or below the surface. A retailer, an individual, or a consumer will focus on one aspect of sustainability and not realise that all issues are intertwined and connected to a challenge that is much bigger than meets the eye.

Retail at the centre of sustainability

IADS - You made it clear at the 2022 Retail’s Big Show in New York that the word ‘sustainability’ is diluted. How do you personally define sustainability when applied to a retail business?

Scot Case - When we started this initiative at the National Retail Federation, the first key issue was to decide what an industry-wide definition looks like. After lots of conversations with retailers, we boiled it down to a simplified definition. Sustainability is creating net positive environmental, social, and community benefits. This net positive concept is similar to how one measures whether a business is profitable or not.  At the end of the year, some parts of your business are making money, some parts are kind of breaking even, and some parts are losing a little bit of money. That's what sustainability looks like as well. Some aspects of the business are clearly generating all sorts of benefits and profitability. Other times there will be some costs from an environmental or social impact. But overall profitability is necessary to be able to fund the sustainability projects and initiatives that contribute to making the world a better place.

When companies start to consider sustainability as part of their business, they might only see it as a cost, but rather they should consider it as an investment. At one time retailers probably saw cash registers as a cost, but in the end, such initiatives are contributing to the longevity of the business and sustainability should be seen as the same. Retailers that consider sustainability as an investment are the ones that are prospering. The challenge is that this is a long-term investment, but some of the most significant players in the sustainability space started their journey 15 to 20 years ago, and now the rest of the industry is struggling to catch up.

IADS - You once said that “retail is at the centre of sustainability”. Can you elaborate on this opportunity and influence that retailers have in this space?

SC - Retail is not just the centre of sustainability, retail is the centre of the universe. Sustainability is just embedded in the space. A retailer's ultimate job is to find the best products to meet the needs of the consumer. Consumers want more sustainable products now that they understand that every single purchase has hidden human health, environmental and social impacts. Retailers are best positioned to understand where the best products are, what the hidden human health, environmental, and social impacts are, and then share that information with the consumer. Retailers have access to all the information and ultimately that's what retail is all about. Sustainability is just an additional layer of the story and an additional layer of information.

Advice to retailers: beginners to advanced

IADS - For retailers that have just started investing in sustainability initiatives, what do you believe is the most important area for them to focus on first?

SC- Albert Einstein suggested that you spend 90% of your time defining the challenge. You can achieve this by asking the right questions to figure out what information your consumers are seeking so that you as the retailer are asking the right questions of your suppliers. The reality is that not everyone has the answers yet, and that's okay! The main thing is to be honest and transparent. It is okay to include consumers in the sustainability journey by sharing that the business is attempting to trace the entire carbon footprint of everything sold or trying to trace the origins of all the cotton used, and the challenges that the company is facing to reveal such information. It is important to show that you are committed to making this kind of information available so consumers can make better and more informed decisions. That is an honest story that consumers tend to respond to. Don’t let perfection get in the way of getting started, no retailer started perfectly out of the gate. The history of retail is a history of failing, learning, and doing it again.

IADS - For retailers that have been working hard on their sustainability journey for years and feel like they are no longer playing defence when it comes to CSR topics, where can they go next to be leaders in the space?

SC - I think that even the largest players have realised there are limits to what they can accomplish on their own and that's why, at the National Retail Federation and at IADS, retailers are learning that maybe they should be collaborating on some of these things. Some of these issues pop up in pre-competitive spaces, so there are opportunities for the industry to be sending clear signals deep into supply chains, to consumers, and to regulators to understand what can be accomplished currently, what areas need attention, and where working together is necessary. I think the largest players have learned to collaborate to make sure we have the best sustainability metrics and standards for sustainable fashion, sustainable electronics, or sustainable luxury products. Collaboration is the fastest way to solve problems in the space.

Sustainable department stores

IADS - In your opinion, what does the sustainable department store of the future look like to you? How does it operate? Will it sell ‘new’ products or only offer circularly produced products? How will it achieve profitability?

SC - I think when you design sustainable retail and the department store of the future, you start immediately with your own operations. The focus is on creating a maximum benefit meaning reducing your energy use, going to a hundred percent carbon-free energy and carbon-free logistics. It is important to make sure it's embedded at the core of the business and what you directly control. The next phase is having very effective programs to work with suppliers so that suppliers clearly understand your definitions of sustainability, the metrics that you're using, how you're evaluating their products and their sustainability performance, not just how they're making those products.

Another piece is communicating really effectively with the consumer. Consumers have multiple definitions of sustainability. So it is the retailer's job to understand that and to be able to match what they have available for sale to influence consumer decisions towards sustainability. Retailers are exploring business models, such as rental, that reduce all of the environmental and social impacts of making a garment, while allowing the retailer to sell the same product multiple times.

The future of sustainability in retail

IADS - What are some trends or technologies that could empower sustainable retailers? What companies or solutions should retailers be looking to invest in? (RFID, connected garments, product passports, resale marketplaces, …)

SC - I think you've just named a couple of them. So a lot of these are blockchain-based. The ability to track with blockchain where the cotton from a shirt came from, where the factory was, what kind of dyes were used, who sold it, or when the item was returned or recycled is the key to success in sustainability. Any of these technologies that are collecting, validating, verifying, aggregating sustainability data are going to be really important for moving into the future.

We are also looking at the redesign of supply chains to meet the needs of those consumers, fascinated with the circular economy. Therefore reverse logistics gets very fascinating because it is no longer only about how to make sure these products that the consumer bought and no longer wants and needs doesn't end up in a landfill or in some foreign country being burned. It is about the ability to track, measure, quantify, aggregate and then make good use of that information.

Is there anything else that you would like to share with our members about projects that you are working on, advice you can offer, or opportunities in the space that we have not covered yet?

SC - I actually have a request for retailers all around the world to be sharing their sustainability stories with the rest of the industry. These really are, in many ways, pre-competitive concepts. So I encourage IADS members to share their sustainability opportunities, challenges, risks, headaches, and solutions. We're asking the same of our members so that we can build a global solution for the retail sector. As retail is the centre of commerce, I think there's a real opportunity for retailers to redefine what a sustainable future looks like.

Credits: IADS (Mary Jane Shea)

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Keeping markets under close watch, IADS collected noteworthy beauty concepts from retailers around the world.

Check out how retailers are drawing customers into physical stores through new enticing design concepts, innovative experiences, expanded product offer, technology and fun.

Clinique Laboratories, China

The new retail concept from the skincare brand aims to personalize each customer visit. Customers have their skin analyzed before they enter the store thanks to a diagnosis made through a facial scanning system. The rest of the store experience is then determined by the result of the diagnosis: presentation of specific products and services, close to consulting, that will be unique for each customer.

MORE ON Clinique Laboratories, China

B+ Tube, Changsha

The shopping experience, organized throughout the 218 sqm store, allows teens to create social media as they shop, something which helps facilitate online to offline consumption. Sections are organized around the three basics of cosmetics: cleansing, foundation, and make-up. Each area hosts an education centre for customers to learn and experiment with the products through tutorials and videos.

MORE ON B+ TUBE, CHANGSHA

Glossier, UK

Glossier, a ‘community-driven beauty discovery hub’, opened its first permanent location outside of the US. The design is playfully balanced between old and other modern materials and finishes, like perforated paneling and sculptural marble in Glossier’s identifiable millennial-pink hue. The heart of the store is the product testing area. Mirrors are inscribed with ‘You Look Good’ – Glossier’s confidence-boosting catchphrase. Meanwhile, a ‘Wet Bar’ encourages sampling of skincare and makeup.

More on Glossier, UK

H Beauty, UK

H Beauty stores by Harrods has price points suiting a vast array of consumers. “Magic Mirrors” leveraging augmented reality technology permit customers to virtually try on products and have images of their experimentation sent directly to their phones. Dedicated spaces labelled “Play” allow customers to have fun with hairstyling, product demos and makeup consultations.

More on H BEAUTY, UK 

Harmay, China

Once an online retailer, Harmay stores shake up the high-end cosmetics segment. Targeting savvy young consumers and fast developing in Chinese first-tier cities, Harmay has a solid reputation as an influential incubator of consumer trends. Harmay gained a reputation for creating design-led retail spaces, aiming to boost the shopping experience. The displays encourage self-serving shopping which captures the mindset of shoppers.

more on Harmay, China

Joyce Beauty, Shanghai

Joyce Beauty at Lane Crawford, offering a serene refuge from the department store hustle and bustle, is dedicated exclusively to niche high-end cosmetics and fragrances. These brands (Dr. Barbara Sturm, Perricone MD, Augustinus Bader, RéVive, Floraïku and 111SKIN among others) show the growing appeal for prestige beauty.

more on JOYCE BEAUTY, Shanghai

MDC Next Door, Berlin

MDC cosmetics is pushing the beauty limits by offering luxury cosmetics, fine objects, small furnishings, ceramics, and jewelry. MDC cosmetic is a curated specialist shop for cosmetics and cosmetic treatments. You can find brands including Aesop, Image skincare, Susanne Kaufmann, malin+goetz, Santa Maria Novella, Frederic Malle, Escentric molecules, Emma S and many more.

MORE ON MDC NEXT DOOR, BERLIN

Retterspitz, Nuremberg

One of Germany’s oldest pharmacy brands, offering a wide range of cosmetics and medical cosmetics that combine traditional healing expertise with modern standards and the latest scientific research. Retterspitz offers an immersive brand experience and personal customer service, while serving as a marketing tool to discover clientele’s preferences and shopping patterns.

MORE ON RETTERSPITZ , Nuremberg

The New Sanctuaries, Mexico City

Founded by Mexican designer, pharmacist and alchemist Tatiana Torrealba, The New Sanctuaries provides clean cosmetics for skin care, products that have a high energy frequency and coexist in harmony with nature. The brand is taking information from ancestral knowledge, clean beauty principles, transparency, nature and technology.

MORE ON THE NEW SANCTUARIES, MEXICO CITY

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Introduction

In December 2021, the European Union announced plans to use digital product passports to boost the circular economy and to gain a better view on the full lifecycle of various products, including textiles. The overall goal would be to prevent these items from ending up in landfills and to keep them in circulation, either as broken down raw materials to be reused or to be repurposed. Nowadays, it is expected that products should last longer, be repairable, and be recyclable. The major problem is that the information revolving around product components and recyclability is easily lost, but the EU believes that these digital product IDs can be the change that industries need to better promote circularity.

Digital product passports: what is it and what for?

Digital product passports (DPPs) provide a way to digitally capture key information about an item and create a centralised bank where this information can be stored. Basically, it is a virtual tag that captures all information surrounding the product to bring transparency about materials used and overall impact to customers and manufacturers. According to Business of Fashion’s The State of Fashion 2022 report, product passports can be used to boost authentication, transparency, and sustainability by acting as a method to store and share information easily so that either customers or businesses interacting with the product can understand how it was made and what it is made of. According to the report, this technology should not be overlooked because approximately 2 out of 5 fashion executives plan to adopt product passports in 2022 or have already done so.

Communication stemming from these product passports will need to be two fold: addressing customer-facing needs and informing recycling or repair entities with technical information about the item's components or how to extend its life. Digital product passports tackle a few key issues around product information:

• Increased transparency: easily accessible product material information will facilitate the proper recycling and reparation of items.
• Improved life cycle sustainability: availability of detailed supply chain information from material grade, carbon footprint, repair instructions and components.
• Centralised bank of information: provides all necessary information needed by stakeholders such as governments, manufacturers, customers, and for those involved with the second-life of the product.

How can product passports be helpful to retailers?

As seen with NFTs and RFID, technology that enables brands to add a unique identity to each product is increasing in value and importance. These identification technologies are unlocking a lot of potential business cases that retail players find worth investing in. Interestingly, retailers that have already invested in RFID (radio-frequency identification), blockchain technology like NFTs (Non-fungible tokens), QR codes, and NFC (near-field communication can extend their use with product passports. Already this technology has allowed businesses to get a handle on counterfeiting as well as create better transparency across the supply chain, which addressed two major pain points for retailers.

Product passports can also extend the relationship between retailers and their products. Retailers are at a time where they are saying goodbye to the short-lived relationship between brands and products where brands and customers part ways completely following a sale. Customer-brand relationships have advanced, and harnessing the power of product passports gives brands the ability to continuously identify and monetize apparel products through circular business models such as rental, repair, resale, and recycle. This extension of their product’s life not only increases their potential for margins, but also unlocks access to new types of customers, such as Gen Z, who value affordable and sustainable products.

Examples of notable players powering product passports

A major player that is helping power connected products across fashion, apparel, and retail is Eon Group with their Internet of Things (IoT) platform which brings together partners to gather and share data. CircularIDs allow brands to have instant access to connected product data that is crucial for recycling and re-commerce. A mobile app allows users to scan products using RFID, NFC, or QR codes to access details ranging from the original sales price to the material content, with the ability to capture the resale channel as well. This database of information opens garments up to become more circular overall.

Eon Group’s service also increases the amount of communication surrounding garments between brands and consumers. Once a connected product is scanned, customers can access styling tips, instructions for resale, sustainability credentials, services for rental, among other things. The group has basically created a common language and formats for brands to communicate across the lifecycle of fashion products. Eon has already partnered with retail players such as the Yoox Net-A-Porter Group, H&M, and Pangaia

There have been additional efforts in connectivity for the retail industry. In 2020, Avery Dennison partnered with Certilogo, a digital authentication platform, to integrate the solution with Avery Dennison’s apparel labelling products so customers can verify product authenticity via their smartphones through a series of questions. Also, start-up Wiliot offers bluetooth-enabled microchips the size of a stamp that have the ability to sense, compute and communicate. These chips have the ability to report every condition and interaction they face to the cloud in real-time, and are even self-powered using radio frequency!

The limits: standardisation needs to be achieved, one way or another

Although technology is catching up, creating product passports for every item will not be an easy task, especially as supply chains are already an area needing great improvement. Even though information will be easier to capture at each stage of the process, there still seems to be some questions around the overall accuracy of this data. But as product passports can be connected through blockchain technology, there is an additional layer of trust and security that can be achieved. Unfortunately, even blockchain technologies are still in the process of defining governance and standardisation, putting this kind of technology at the cusp of its potential.

But, in order to have a standardised system, businesses and governments will need to come together to agree upon common standards to be able to scale such a project. New data standards, technological innovations, and supportive policies may be able to bring definition to the global waste crisis, putting fashion players under the microscope. With the continued progress and adoption of solutions such as what Eon Group is offering, the future of fully connected products is not so far out of sight.

What’s in it: circularity!

In the past decade, items that are being sold have not been created with the intent of being durable, repaired, or recycled. This is a major problem as consumers become more conscious about their buying habits, but unfortunately, circular products are not always easy to find. There have even been some activists that want to push the European Union to impose a mandatory European standard for durability and repairability among sold items to ensure that sustainable products are the norm. Although such strict regulation has not proven to be easily enforced, such implications could seriously impact the fashion industry if imposed. Therefore, eco-conscious retailers that want to be ahead of the game should understand how digitalising information through product passports could be a tool for implementing and scaling the circular economy.

The fashion industry is a key piece in the achievement of the circular economy, but without transparency, standardisation, and data sharing, overall progress will be stalled. Digital product passports that can be the holder of all information pertaining to the creation and vitality of goods could unlock a more sustainable economy for all.

Credits: IADS (Mary Jane Shea)

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IADS recently held a meeting about on the home and decor sector. Based on market research, the IADS team and NellyRodi presented the most innovative brands from different segments of home and decor: furniture, home appliances, home accessories and electronics. Check out a selection of these brands!

Furniture

Vetsak

Produced locally and sustainably with an innovative design from South Africa. One-of-a-kind, modular, quality, practical furniture, that brings life a little extra comfort.

Check out the Vetsak website here

Vetsak Instagram

Lapalma

Balancing craftsmanship, industrial techniques, efficient production, and a focus on details, Lapalma produces and sells its quality design aimed at creating innovative solutions that interact with each other. Lounge, Light Office, Outdoor, Cafè and Home, all customised environments, by extending the range of finishes.

Check out the Lapalma website here

Lapalma Instagram

Home Accessories

Ago

Korean design studio specialized in lighting, that searches for a balance between beauty & function with light. With the line between residential and commercial space becoming increasingly blurred, Ago values simple, honest and refined aesthetics.

Check out the AGO website here

AGO Instagram

Helle Mardahl

Helle Mardahl is an artist and designer with an eccentric and contemporary aesthetic. Playing with forms and materials, she playfully combines strength and fragility, crafting pieces that bring life to  spaces. Creating a dreamy universe of richly coloured quirky glass designs.

Check out the Helle mardahl website here 

Helle Mardahl Instagram

Cookut

Cookut is a brand of kitchen utensils, which also offers accessories for storing and transporting food, as well as hygiene and care products. Their goal is to reduce plastic and daily waste, reduce CO2 emissions while using natural raw materials, promote eco-design and produce responsibly and transparently.

Check out the Cookut website here 

Cookut Instagram

The Citizenry

Citizenry believes homes deserve designs with a soul, a story, and a purpose. Country by country, they partner with master artisans, blending modern style with different cultural time-tested techniques.  The products reflect a collective of individuals from different cultures and backgrounds who rally together to create something beautiful.

Check out the Citizenry website here

The Citizenry Instagram

Boy Smells

Highly spirited scented candles, fine fragrance, and intimate wear for all or neither gender. Boy Smells wrap traditionally masculine scents in a prettier bouquet, made with natural oils, all-natural coconut wax, and beeswax blend and are hand-poured in a reusable glass vessel and hand-labeled.

Check out the Boy Smells website here

Boy Smells Instagram

KJP

Colourful homewares, cheerful print & pattern-focused textiles and lifestyle goods that spark joy.

Check out the KJP website here 

Kjp instagram

Lucas du Tertre

Creating a bridge between India and France and between tradition and modernity. Colourful and printed collections created in the Parisian workshops and printed or woven in India according to ancestral know-how.

Check out the Lucas du Tertre website here

Lucas du Tertre Instagram

Dusen Dusen

Bold, original prints on versatile, textile and home goods products that includes bedding, throws, pillows, and towels.

Check out the Dusen Dusen website here

Dusen Dusen Instagram

Electronics

Mirror

A mirror that is also the ultimate home gym with the most workout variety that actually looks good in your home. 10,000+ classes on demand, 50+ genres, and new live classes daily.

Check out the Mirror website here

Mirror Instagram

Yoto

Carefully connected speakers that puts kids in control of their listening, learning and play. Packed with features for day and night and without any cameras, microphones, or ads.

Check out the Yoto website here

Yoto Instagram

Gomi

Wireless mag chargers, portable chargers and speakers, made out of non-recyclable plastic bags, and powered by 100% repurposed e-bike batteries.

Check out the Gomi Website here

Gomi Instagram

Home Appliances

Netatmo

Aesthetic smart home devices with a variety of products including various security cameras, personal weather sensors, and an internet-connected smoke detector.

Check out the Netatmo website here 

Netatmo Instagram

Daan Tech

Customisable dish washer with 24 colors to choose from that washes daily dishes for one or two people in just 20 minutes. Bob the dishwasher is the world’s most advanced autonomous and eco-friendly dishwasher thanks to its integrated water tank.

Check out the Daan tech website here

DAAN TECH INSTAGRAM

Lema

Lema Air Cleaning System uses nanotechnology and a special UV lamp to generate a photochemical reaction within the wardrobe that naturally destroys viruses, bacteria, odours and mould, improving the customers’ well-being, reducing allergies and respiratory problems. The wardrobe is entirely sanitised, including internally and at the back, without air resistance.

Check out the Lema website here 

Lema Instagram

Somnox

Somnox Sleep Robot is a soft-robotic that enhances the quality of sleep and uses breathing regulation and audio to help fall asleep faster, get deeper sleep, and wake up at the optimal time through a smart alarm.

Check out the Somnox website here

Somnox Instagram

PRINTABLE VERSION HERE

In early 2021, the IADS Academy participants were set the task by their CEOs of suggesting ways to develop a truly omnichannel P&L and related KPIs relevant to department stores. Their proposals covered several areas including KPIs and data sharing (see Presentation to CEOs at IADS General Assembly, 28 October 2021; and IADS Academy 2021 report). One of the proposals called for the development of “omni-clusters” of customers. The IADS has attempted to develop this idea.

Imitate or innovate?

In the early days, many omnichannel department stores in effect created a separate and competing business within their companies: e-commerce, which started as an “add-on”, often an experiment, was operated on the same principles as the traditional stores, with the differences that selling took place on a website rather than in physical stores, and that customers were delivered at home instead of carrying their purchases away with them.

As e-commerce began to include more merchandise categories, department stores saw the format as competition, just as they had seen big-box and discount retailers, then fast-fashion companies enter their market and address their customers. It was supposed that by getting involved in e-commerce, the danger could be fended off and those customers tempted by pure online retailers could be brought back to the fold. However, online retail proved to be bigger than expected, customers integrated it quickly into their retail habits and department stores found themselves running to keep up with the trend. Today, it is more of a scramble to adapt to the pandemic new normal. The puzzle of profitability of e-commerce was not solved, even by the pure players.

Integration into the traditional business has been unfortunately very expensive. The original business was not adapted and e-commerce was generally loss-making. Department store companies have had to operate simultaneously two business models: one in which the main cost centres have been real estate and people, as well as the new one requiring significant investment in systems, fulfilment and marketing. In spite of efforts to the contrary, the traditional department stores found themselves competing not only against new online companies but also being cannibalised by their own creation, at first a modest separate pilot but which soon grew into a Frankenstein monster. The admittedly complex model of the traditional department store was clearly inadequate for the job of operating online, and a fortiori inappropriate for an omnichannel retail operation. One consequence is that, under pressure from activist shareholder groups, some US companies have already or are considering spinning off the high growth dot.com part of the business to increase market valuation such as Saks Fifth Avenue and Hudson’s Bay, and also illustrated by the speculations on Macy’s, even if this approach sparks controversies. This suggests that they believe there is no answer to the omnichannel conundrum.

Struggling with channel conflict

Part of the problem has been, of course a shift in customer behaviour and expectations. It is clear that any business model which does not start from the customer is doomed to failure in what has been called “the age of the customer” (from say 2010). Starting from the belief that online customers were different from store customers, department stores operated two separate channels and only slowly came to the realisation that there was such a thing as an “omnichannel customer” (with higher spending than the single channel customer they had been dealing with).

But then the challenge of merging two business models with very different cost structures became apparent. Against the traditional conversion ratios of 40% plus, the online part of the business was confronted with rates as low as 1%-2%; against sales per square metre, online invoked profit per transaction; against shareholder expectations of bottom-line profit, online was operating as a start-up expecting no profit for at least 5 years but demanding rapid growth during that time; against B2B logistics based on store deliveries, online required quick and efficient B2C fulfilment.

As long as the online part of the business represented 5% or less of the total, then it was monitored separately in order to determine its profitability, return on investment and its longer-term future. As time passed, it became clear not only that online was here to stay, but also that it was contributing to store-based business (and vice versa) in a complex and organic way making it almost impossible to isolate online P&L from store-based P&L. (See for example how Macy’s is claiming to “scale omnichannel thinking across the entire customer journey”.)

The question then becomes how to determine the profitability of various parts of the business, how to attribute costs and sales. Furthermore, it has become clear also that the “best” customers are “omnichannel” customers, making full use of all the opportunities available to them across channels to search, gather information, purchase, pay, get delivered and return merchandise. However, it remains unclear to what extent they are the most profitable, as they “consume” expensive services which are implemented through expensive platforms.

Omnichannel means integration

And yet… many department stores are locked into the double P&L model and struggling to determine how to attribute sales and costs. Partly because so many employees are assessed on a series of inappropriate KPIs which actually discourage an omnichannel approach. And partly because data is unavailable to track customers, inventory, fulfilment, returns etc. in sufficiently granular form to allow appropriate attributions.

Integration of channels means first and foremost the integration of data allowing all channels to be under the same control and distribution system. For example, all data on any particular customer must be available in one accessible place whether it concerns purchases or returns in all channels, preferences, hard data as well as unstructured data.

Similarly, inventory data should be updated in real time, any priorities for particular channels need to be clearly set out in order that channel conflict does not develop from limited inventory.

At the same time, traditional KPIs which have been focussed on transactional records are no longer able to evaluate the sometimes complex drivers of customer decisions. It has been suggested that omnichannel KPIs should fall into four main categories: awareness, engagement, conversion, and loyalty. Thus, such KPIs might cover traffic and visits, recommendations and conversion rates, cross-channel conversion and baskets, and advocacy, lifetime customer value, revisit rate and frequency, for example. (See KPI suggestions.)

A new idea: “omni-cluster”

Since the customer journey has become omnichannel, it has arguably become necessary to use management tools and financial statements which reflect this development rather than struggling to attribute revenues and costs to different channels. The notion of “omnicluster” is a proposal in this direction.

Clustering in itself is not a new idea for department stores. Different clusters as applied to department stores include clustering by store capacity (space for example); by attribute (traffic, location, income profiles…); by sales (revenue, inventory turn…); productivity (revenue or gross margin per square metre); price (price profile, elasticity); multi-dimensional clustering; and more.

In the same way, customer clustering is also common. Using algorithms and AI it is generally defined as an improvement on rule-based segmentation since it allows clustering over many more dimensions; allows only small variance within each group; and can be made dynamic and reflecting the current state of data.

The proposal made by the IADS Academy was to bring the two ideas together to create customer clusters who shopped at stores, online, or both. This would potentially avoid the difficulty of separate or overlapping P&Ls for stores and online. The only rule is that any customer can belong to only one omni-cluster even if they occasionally shop, return, or collect in several physical stores. All revenues, returns and costs associated with a customer would belong to that omni-cluster.

It has been often remarked that not only does online bring customers to stores (and vice versa), but most online customers are more dense around an existing store (while this was a surprising discovery in the early days of omnichannel, it is now fairly obvious since most customers now shop online and stores are situated in the most important markets). In this case, it is clear that an omni-cluster may consist of one or more stores and the online customers residing around that store. This is the simple omni-cluster model as favoured by Magasin du Nord for example.

If, however, a number of online or omni customers have a preference for direct contact with a distant store (say a flagship store, or a store closer to their office rather than their residence), then one mixed omni-cluster might include a store, its geographically close online customers as well as online customers geographically closer to a different store. This may happen also if the stores are clustered by size as they are at Manor, for example.

If store customers are very mixed (tourists and locals, for example), then one can imagine an omni-cluster made up of local store customers plus online, and another partial omni-cluster made up of tourists and the much smaller online tourist customers. A business which involves franchised stores might include its own stores and all online customers in its omni-clusters but not include the franchised stores. These cases may be more appropriate at, say, Galeries Lafayette.

A series of ecosystems

As these examples show, the criteria for omni-cluster membership may obviously vary from one company to another according to its history, its organisation, its market etc. It is a flexible model. The definition criteria of omni-cluster will be a function of the particular circumstances of each company and its history as well as of the omnichannel strategy pursued by a company (aggressive online growth, new store openings or potential store closures etc.).

The aim is primarily to group revenues and costs into a number of omnichannel P&Ls which cover total operations of a cluster which can serve to manage operations (through the related KPIs), and which can be consolidated into a total business P&L. While the different omni-clusters can be compared, it is clear that none will be exactly comparable to any other. For example, geographical location or the number of stores in a cluster may have an impact on fulfilment costs.

However, the advantage of this model is that it highlights the profitability of the customers in any one cluster (for example how much they spend in all channels, frequency, rates of return, margin per customer etc.). Clearly the costs of store personnel also do not relate only to store customers, which distorts store-only P&Ls. Potentially it also allows the evaluation of the true loss of revenue through a store closure.

The kind of integration referred to above moves closer to an “ecosystem” perspective of the retail business. Indeed, a degree of “unbundling” will be necessary to evaluate the costs attributable to an omni-cluster. When that exercise is pursued, then it becomes possible to find potentially more appropriate, more efficient or more effective solutions before rebundling these into an omni-cluster ecosystem.

Warnings, dangers and the way forward

However, such a move would make it quasi-impossible to spin off the dot.com part of the business as has been done recently by HBC with Saks Fifth Avenue and Saks.com. There are currently some reports of Macy’s considering a similar move. It is clear, however, that these examples are financially motivated and a result of pressure from activist shareholders. They are also more appropriate to larger companies. A smaller omnichannel department store following the integrated omnichannel route will be capitalising on its unique status as what Bain has called a “regional gem”. Once established, an ecosystem can no longer be dismantled and split up into its original component parts. It competes as a whole, not as a multi-channel entity. However, this commitment is no more risky than the spin-off of the dot.com part of the business may turn out to be for larger companies which choose this way.

The omnichannel route might also imply considerable reorganisation of the traditional bricks and mortar assets as illustrated by the John Lewis case which is closing and shrinking so many of the stores it (perhaps unwisely) opened while it was expanding its online business (now around 60% of total revenue). It also sold its Ocado stake in 2010 for £250m which would be worth nearly £2bn today. Rather than spin off the online business, it is reshaping the total business under a new team, focusing on own brands, convenience, high productivity, sustainability, and the integration of formats.

John Lewis raises the question of how to implement the shift towards real omnichannel in today’s retail landscape. Clustering, new KPIs and rejigged P&Ls cannot be put in place in a day. The question therefore is: What would a transition phase towards omni-cluster P&L look like? Who should guide the transition, and how can investors be won over to support this longer-term shift?

Credits: IADS (Dr. Christopher Knee)

Watch the full interview here

PRINTABLE VERSION HERE

*2020-2021 has been more than a period of pandemic and crisis: by its magnitude and lack of precedence, it has literally changed the world, especially the retail world, by changing habits: digitalisation and new purchasing habits, work from home and the question of commuting, notion of essential vs. non-essential goods.

The IADS launched a series of interviews with innovative thinkers to understand their views on how to deal with such changes. All organisations have proved their resilience and ability to cope with the emergency of the situation, however, it is a very human thing to tend to come back to habits whenever possible. What happened? How can we make the most of what we learnt and how can we make sure our organisations and thinking processes are durably impacted?*

Introduction: Chafik Gasmi, founder of Chafik Studio

For this session, we welcomed Chafik Gasmi, based in Paris and founder of architectural company Chafik Studio.

Chafik Gasmi, 59, launched his first designer’s furniture line in 1990, just after graduating from the Ecole d’Achitecture de Paris. This line was awarded the Grand Prix at the Paris Salon du Meuble in 1992. Following this initial success, his projects were selected by the French State to furnish the Prime Minister offices.

In 1996, the founder of Sephora, Dominique Mandonnaud, asked Chafik Gasmi to design the Sephora flagship boutique in Champs Elysées, to help him bring his vision alive. This was Chafik Gasmi’s first venture in cosmetics, and ended up in a mix of architecture, design, cosmetics, with a true customer-oriented vision. Then, after LVMH acquired Sephora in 1997, Gasmi was appointed as the artistic director for Sephora and personal advisor of Mr Arnault for several brands on branding and retail experience, including Kenzo, Guerlain or Dior. After a stint as Artistic Director at Baccarat, he created Chafik Studio in 2004. In 2010, he initiated a long-term relationship with Lancôme as well as with Fendi Casa.

Nowadays, Chafik Studio is a multidisciplinary structure, with competencies ranging from architecture, interior design, product design, retail design and artistic direction. The company is involved in hotels, department stores, retail spaces, furniture and objects, and is able to work with both corporate companies and family businesses.

Part 1 – Dealing with innovation

*IADS - Chafik, your studio is renowned for its groundbreaking approach, yet always keeping in mind the needs of customers, which explains why you have developed so many retail concepts with the biggest brands. How do you foster this creativity on a daily basis?*

Chafik Gasmi - First of all, the most important, and this is common to both family businesses and corporate companies, I always deal with the person who ultimately pays for the project, not intermediaries, even if they hold top positions. Innovation is always very difficult and can generate anxiety. For me, it is easier to talk about changing rules with the guy who pays, rather than how to deal with the rules with the guy who executes.

When it comes to my method, I always look at things in a very fresh, almost childlike way. In other words, we force ourselves to be naïve, curious, and ask questions, to make sure we see things differently, challenge the status quo, and get excited in the way. The idea is not to be different for the sake of it, but to generate a tension based on trust, within a reassuring framework.

Innovation can generate anxiety and trust is key to taming the feeling of danger.

*IADS - How do you manage creativity within your organisation? How are ideas generated and with what process? Also, how do you onboard newcomers in your organisation and make sure they fit with your mindset?*

CG - First of all, I avoid creating a silo between my team and my customers. We design the brief together, because the answer is often in the question. If you do not take part in the question elaboration, you will miss something in the answer.

Then, once the brief is done, we do the first meeting with our clients in our studio. During this “project session”, we work together on rewording the brief and gathering the ideas. Everyone sketches their ideas, which at the end I personally synthesise. The goal is to reach a very strong, clear and simple idea, coming from a series of interactions between everyone, including words, sketches, feelings.

Once the idea is here and we are ready to launch the project, we gather all the people who will be involved at one stage or another (contractors, third parties, middle management…) in a room to explain the project. During that moment, we identify in advance all the blocking elements and kill negative thinking. It is all about resolving all opposition at the launch instead of fine-tuning along the development phase, to keep the project strong and fresh. Any other approach invariably ends in concessions and compromises, which always dilutes ideas.

Given the level of interaction with which we work, I must say that Covid-19 has been a difficult period as we lost a lot of the intuitions we usually get from interactions. Video conferencing helps in the thinking process, but not on the perception of feelings. This is why we took a step aside and seized the opportunity to think about our own processes, organisation… to be ready for better days in terms of operations. Covid-19 has been quite difficult for creativity itself I must admit.

Part 2– Retail

*IADS – Coming back on your statement that “answers are usually in the question”, what was the answer in the 1996 Sephora store question, and are these answers still valid for 2022? What would you change if you had to do this project again?*

CG- The challenge at the time was to create a brand, Sephora, where “everything about beauty could be found”. The founder wanted to mix the ease of use from supermarkets, and the feeling of luxury, without being gimmicky. The question was therefore to combine the best of both worlds. In addition, he wanted to create a fascinating and impactful space, like a Versailles-meets-Disneyland idea.

This combination of ideas was a fantastic vision! I related this project to the idea of a religious place, like a “temple of beauty”. I wanted to come back to fundamental symbols that are universally understood. In the end we came up with a black and white store, where you do not see furniture, only products and brands. The original building had some columns for structural reasons, and we created new fake ones to create a rhythm and give the feeling of a temple.

From the merchandising point of view, we created gondolas which allowed us to give visibility and perspective. There was no signage, the zoning was defined by colours and lighting, in a very organic manner.

Today, Sephora is a fantastic selling machine but the point of sales itself may have lost some of its soul. I feel that a part of the magic has been lost, even though the store is extremely efficient from a business perspective. Efficiency is needed but should be completed by an unexpected details, an intention, to really touch the customer. For instance, in the store, in 1996, we wrote poems on the columns that could be visible only if you were extremely close to them.

*IADS- You have collaborated with Lancôme for almost a decade now and accompanied them in the evolution of their retail concept. It is the same thing with Kenzo showroom. What where the key learnings for you when it comes to organising retail (or wholesale)?*

CG – I left Sephora and LVMH because I really wanted to do my job and be an architect. I designed hotels, museums… but I then realized how much I had learnt from retail. Nothing is more sophisticated than retail when it comes to building a space. When I built the Modern Art Museum in Algiers, I recalled my learnings from Sephora when considering the traffic flow within the building. It had truly been a virtuous circle.

When Lancôme reached out in 2012, I wanted to challenge them, and go beyond the architecture of their stores, to work on the architecture of the brand itself. Why? The store is the place where all aspects of the brand are conveyed, but in the case of Lancôme, the brand itself was fragmented and not fully coherent.

At the time, the brand was led by Sue Nabi and she was ready and able to change the rules, which is why she took the chance. Then the adventure continued with her successor Françoise Lehmann. For more than 10 years we were able to bring together the brand to another level. It was all about generating change by asking the right questions, pointing out the incoherences. It is not about doing the work of people, but helping them to grow.

Interestingly, what I realized is that when you are successful, you not only attract the attention of your clients, prospective ones, competitors, but also talents. These 10 years at Lancôme helped my agency to attract great individuals and allow us to grow, expand and look at new projects.

Part 3 - Department Stores

*IADS – You once mentioned that, for you, Department Stores are “decathletes”, do you want to explain your vision behind this phrase? What does a department store stand for you and to what extent do you consider it special (or not)?*

CG – Department stores were challenged twenty years ago by specialty chains such as Sephora, especially from the point of view of their location.

While specialty stores (and later, brands) have the possibility to choose their location, often going for the top ones, department stores have, by essence, to make arbitration and choices about the location they give to brands within their own spaces. Multiply this by the number of locations, possibilities and floors, and you have a handicap for department stores when it comes to the attractivity of their offer seen as a whole, compared to the easiness of access and appeal of specialty stores (not even talking about logistics, service or product range depth).

However, today, after the pandemic, now that digital is part of our lives, size matters. Convenience stores are being swamped by e-commerce. The only way to create a difference is to be big and to have many things, create excitement, events, make people feel they are part of a bigger community. The best in that race are obviously department stores!

However, they still have difficulties to behave as a unified place, rather than an addition of floors or a “vertical street”. The issue is not how to give the same feeling on each floor, but how to make sure that the idea behind the very concept of the department store is felt and palpable as one experience, at the entire building level. For instance, the concept of Galeries Lafayette at the beginning was to be an architectural destination, as the most beautiful place in the city, a monument. You started to shop after having seen the cupola at the Haussmann store. Because the department store was a monument, it became inevitable.

A department store is not a juxtaposition of clearly separated activities which is currently the case at La Samaritaine with a hotel clearly cut from the store itself. It should be a fusion, a mingling of activities under one name, one destination, one experience. For me, the future of department stores is the hotel activity. A hotel where you can shop whatever you want, whenever you want and however you want, is way more exciting than a store where you can stay.

*IADS – Who or what would you consider as exciting when it comes to retail?*

CG – In terms of brands, probably Apple, thanks to the level of service. But you do not sleep in an Apple store. I dream of a store that is accessible 24/7, where you can live. In other words, a hotel turned into a department store. It is all about living an experience, or renting a usage, rather than simply buying something. Alternatively, the metaverse opens unlimited possibilities in terms of architecture, usage, consumption, business…

*IADS – What is the future of retail?*

CG – Hotels!

Credits: IADS (Selvane Mohandas)

PRINTABLE VERSION HERE

Gen Z customers, the new Holy Grail

Today, Gen Z favoured brands are highly addictive and successful due to their interesting offer, convenience, affordability, and seamlessness. But as these players focus in on finding a service that sets them apart, it makes it difficult for more traditional retail formats, like department stores, to stay relevant in the eyes of young shoppers. In fact, retailers can no longer only focus on an interesting offer, they must now offer perfect logistics, seem sustainable, and provide a unique experience. How should retailers respond to these incumbent brands as they change the DNA of the retail business? What exactly does it take to generate an interesting offer and experience for this next generation of shoppers?

A look into hot Gen Z brands: not everything is perfect, despite generational claims

It is important to have a look at three popular Gen Z brands and how they are appealing and winning over young shoppers. As sustainability has been noted as an important factor that impacts Gen Z’s decision making, it is worth noting that some brands are successful despite their level of sustainability. Taking into account how sustainable they are, we can label these brands as the good (Deciem), the bad (H&M), and the ugly (Shein).

The good: Deciem

First, it is worth looking at a popular retailer among Gen Z shoppers, the Canadian beauty brand, Deciem, which has gained a cult following on TikTok for their skincare line, The Ordinary. The reason that it has become such a hit is because it is affordable and offers tried and true ingredients. Deciem has taken the approach of taking basic ingredients and offering them at a fair price, in a space that is typically overpriced with mark-ups.

On top of their successful products, the skincare retailer has also challenged shopping trends that promote overconsumption, such as Black Friday. In 2020 they shut down their stores and websites during the entire Black Friday weekend. And in 2021 they allowed stores to remain open, but did not offer any products to be available to encourage connections over transactions. This year, they even offered a sales event online called “SLOWvember” for the entire month of November, rather than a flash sale, to allow customers the necessary time to think before they buy. This is exactly the rebel stance that Gen Z shoppers are looking for in a company.

The bad: H&M 

Then we have H&M, a prime example of a fast-fashion player that is seriously playing to Gen Z’s accelerated sustainability awareness. Shockingly, H&M was named the most transparent brand in the 2020 Fashion Transparency Index, but how can this be? H&M’s business model is known to be the epitome of fast fashion, using materials that don’t last and that are not recyclable, thus contributing loads of textile waste to landfills each day. In this context, transparency simply means that H&M has disclosed credible and comparable data about their supply chains, business practices, and the impacts these practices have on their workers, communities, and the environment. However, being transparent does not make H&M sustainable in the least bit. They are still a fast fashion brand that is exploiting cheap labour leading to the fast turnover of merchandise with large profit margins.

Nevertheless, H&M has been making efforts to be more sustainable, or so it seems. As sustainability is trending among younger shoppers, H&M has made ‘circularity’ the centre of their recent ad campaign, introducing their new collection that is made with ‘cutting-edge recycled and recyclable materials.’ The retailer also set up a recycling program within its stores and launched a resale site. H&M claims that they hope to use only recycled and sustainably sourced materials by 2030, but they have a long road ahead. H&M’s production rate is only second to Zara’s, selling roughly three billion garments a year! H&M is a major GenZ retailer because they can check off the “sustainable” box while at the same time delivering affordable fashion trends to help young shoppers achieve their unique “look.”

The ugly: Shein

The global pandemic led to the emergence and acceleration of purely digital players such as the Chinese fast-fashion retailer, Shein. Shein has revolutionised the fast-fashion world. In fact, we are no longer speaking of fast fashion, but of ultra-fast fashion. It has changed the retail landscape by offering Gen-Z shoppers infinite amounts of items that are all exceedingly cheap and can be delivered within 6-8 working days. In order to satisfy young shoppers' desires to have a wide range of choices and to stay trendy, Shein launches 30,000 new products per week and knows how to identify market trends faster than any of its competitors. Shein has grown in success through social media accounts such as TikTok which encourages a constant stream of marketing efforts to be able to influence shoppers. In fact, Shein offers major discounts on the most sought-after pieces discovered through influencers. The Shein obsession is causing issues for other retailers, almost as Amazon has done, by offering a fully digital service, and providing very cheap fashion articles with super rapid fulfilment.

According to Benedict Evan’s end of year presentation, Shein is now the largest US fast-fashion retailer. Other retailers, not only fast-fashion brands, are unable to compete with such services while being able to conduct a profitable business. Shein is taking over Gen Z shoppers as they offer affordable trendy styles, advertise to them through everyday social apps, while offering speedy delivery. But with Shein, the sustainability piece is definitely missing.

What are the “dinosaurs” (department stores) doing on their side to attract Gen Z?

Department stores are not staying idle in front of this new competition. They are working on offering Gen Z a wider range of sustainable fashion brands that are affordable at the same time. Galeries Lafayette and Printemps have both taken a firm step forward in the sustainability space. Printemps has showcased a circular fashion floor, including a vintage department where customers can sell secondhand items in exchange for store credit. Galeries Lafayette unveiled an entire (RE)STORE floor with both responsible and affordable brands, exploring recycling and upcycling offers, mainly intended to appeal to all of Gen Z’s desires. The space also features a second-hand corner, as well as a vintage department where customers can resell items, showcasing the different facets of implementing sustainability.

Organising such floors and services brings in these young shoppers to explore an area that feels more familiar to them, versus the overwhelmingly pricey offerings on other floors. Gen Z is no stranger to thrifting their clothes and taking the time to dig out a treasure. As much as they like instant gratification, they are also willing to take the time to search for something unique. Thrifting is in fact an affordable and sustainable alternative to fast-fashion and fits the expectations of Gen Z’s price point very well. As trends have a tendency to go full circle, thrifting is an interesting way for Gen Z to obtain a new look, checking both boxes of affordable and sustainable. Creating dedicated spaces for young shoppers with curated products and services is the perfect way to appeal to the experiences that Gen Z shoppers value when visiting a store.

As Gen Z shoppers are interested in achieving certain luxury looks for a lower cost, another innovative concept is the upcoming launch of Nordstrom’s “See You Tomorrow” shop, a luxury brand resale service. Nordstrom’s approach will be novel in the fact that they will be using lightly used and returned inventory that can’t be sold as new any longer. The items will be cleaned and repaired if needed before being added to the new shop. This service is a natural fit for Nordstrom as they have a very relaxed return policy, therefore this new offer will allow the retailer to reduce their overstock as well as achieve better margins on unsold or returned items. It will also allow Nordstrom to attract a new type of customer, probably younger, as the price points will be more affordable for luxury goods. Similarly, we noticed the same trend at Tech for Retail with re-commerce solutions that can help retailers set up plug-and-play resale shops that will attract new shoppers while giving the retailer a piece of the second-hand margin and maintaining control of branding in the resale market.

An upgraded offer is not enough: to be competitive, department stores must re-engineer several fields of operations

For a more behind the scenes example that is virtuous, yet could entice Gen Z’s luxury appeal at the same time, Farfetch recently launched a pre-order service that partners with brands to allow customers to order looks four weeks in advance which will then be produced based on the number of orders. This initiative will reduce the amount of inventory and waste created by the industry by cutting out any excess products, which is appealing to retailers as the management of inventory is streamlined and brands can get insights on which products might be the best sellers to prepare for re-orders sooner than usual.

Let’s not forget that all these examples are only possible if you have a great supply chain. If retailers want to compete with ‘the ugly’ players such as Shein or Amazon, they will need to be able to have complete control of their logistics arm. El Corte Inglés understood this threat and has already diversified their business through the creation of a logistics subsidiary that will compete against DHL and FedEx and allows them complete autonomy in this area and will be one of the major axes of growth for the retailer in the coming years. Young shoppers want to be served quickly with free delivery and returns as a prerequisite. In order to compete nowadays, the logistics side of the business needs to be efficient.

In order to stay relevant with Gen Z shoppers, department stores need to learn from Gen Z favoured brands such as Deciem, H&M, and Shein as they each give something more than just an interesting offer. Essentially, department stores will need to rethink their working model with add ons such as seamless logistics, a focus on incorporating sustainability at the core of the business through offers such as resale, and creating a space for young shoppers to feel ‘at home’, curated specifically to their wants and needs.

These operational add ons that work behind the scenes will create the environment and experience that Gen Z shoppers demand. Without such changes, department stores will be easily left in the dust by young consumers, especially as new and trending brands start to offer and specialise these kinds of services and experiences. It is important for retailers to understand that there will be a necessary evolution to the basics of the business if there will be any hope of keeping fickle Gen Z shoppers interested in their brand and products.

It is clear that department stores are having to tackle trends that Gen Z players have imposed. Gen Z themselves are having to find a balance between affordability and sustainability while trying to obtain luxury items to achieve a certain look. In order to offer such a balance, retailers will need to think outside the box for new initiatives that could potentially lead to new margin opportunities, attracting different and new types of customers, while fighting against industry issues such as overconsumption at the same time.

Credits: IADS (Mary Jane Shea)

PRINTABLE VERSION HERE

At a time when travel is continuously restricted for many of our members, the reopening of the US borders before Christmas, as well as the NRF event in January, to which the IADS attended, felt like the perfect occasion to prepare a special retail review to give you a glimpse of what’s happening in New York retail, including comments and pictures for your review.

Are brands still innovating in New York, the city once seen as the retail mecca? What are the most interesting stores to visit? While Covid has had a major effect on retail everywhere, what are the impacts of the pandemic in New York?

Great and immersive experiences

Fashion and beauty

Gucci in Soho, is an immersive and impressive store that comes off as ultra-luxe and ultra-cool at the same time. On the second-hand side of luxury, TheRealReal Soho store is also impressive, thanks to staff competence, product curation, and a feeling of being in a “real” luxury multi-brand store with perfect presentation. It seems the concept is a success as it was one of the most crowded locations, with people buying and not just browsing. Interestingly, the store staff focuses on inviting customers to sell their belongings more so than to return for another purchase. LVMH recently invested in Aimé Leon Dore, the new cool kids brand. The store, perfectly located in Nolita, includes a café and a terrace outside. The store is usually crowded, giving off a great impression, and looks like a mix between Ralph Lauren and rap lifestyle. On the beauty side, Ulta in the Upper East Side feels very bright compared to Sephora thanks to the all-white atmosphere. More importantly, the perception is more immersive than Sephora, as Ulta provides a full beauty appliances section and a beauty salon.

Sports goods 

Nike stores are all about experience. Nike studio was closed however, both Nike midtown House of Innovation and Flatiron locations were extremely crowded with waiting lines filled with local shoppers willing to buy full price goods. Overall, the staff was welcoming, polite and competent. At the REI store in Soho, although the impression is quite messy due to click & collect, the immersion feeling is very strong.

Tech and home goods

The Google store in Chelsea is also immersive and almost better than Apple in terms of experience and comfort. The organisation of their cabins to experience products is effective. Bed Bath & Beyond offers another kind of immersion, with a great revamping in the home goods area, including large and clear sections and alleys, easy circulation, a huge space allocated to cash registers and click & collect areas. It is great but one can wonder if the trimming process was a bit too radical as it seems there was less inventory and choice than before.

Kids

Camp store near Union Square is impressive with a playground located in a hidden location behind the counter. This store is also an inspiration in terms of VM in the kids’ sections. The “kid’s shopping” initiative where kids are given fictitious money to make purchases (with a set limit by parents, charged at the end) is very intelligent.

Other concepts

Because of its size, Neighborhood Goods in Chelsea is more of a concept store than a “department store”. The curation of local brands and price point is very effective, attracting the right customers and a nice coffee shop completes the offer. Shopify store in Soho is an interesting marketing space for the brand. The welcome and service are great however, retail is a real job: which includes maintaining stores in perfect condition, and this is not Shopify’s top competence.

Retail disappointments

Fashion

Kith store in Nolita is well merchandised and even though visitors were buying high price tags, the women’s selection is quite disappointing and overall the store is not impressive. In Soho, Galeria Melissa‘s immersive environment and window set up are impressive but the store was either closed or empty, with sales associates looking at her phones and standing in the middle of the entrance… The Webster was impossible to visit as it was partially closed most of the time. The surroundings look terrible and the building itself is under renovation.

Sports goods

On Running store in Nolita is attempting artificial “coolness” by asking customers to line up and wait for the next available sales associate… who are just chatting together in the back of the store. Once in the store, there are good display ideas (shoe storage drawers) and the number of people on the street wearing On Running shoes was quite impressive. Although greeted with a warm good welcome at the Allbirds store in Nolita, there was no real follow up once inside. Customer education on sustainability was visible, although nothing compared to what Green Pea in Torino does for instance.

Tech

B8ta “Retail as a service” store in Hudson Yards is a showroom demonstrating and selling tech and lifestyle brands. It may have an interesting business model and help people find novel items however, people in the store are more looking than buying, which questions the efficiency of such a concept./nbsp]

Another concept

Even with an interesting brand curation, Showfields was an odd experience. The store does not really reflect the missions the concept intends to represent (vegan, sustainable, women-led…), the sales associates were too pushy, the store was empty, the Magic Wand feature did not work and overall, the store lacks cleanliness.

What about department stores?

New Nordstrom Men’s and Women’s stores near Columbus Circle were by far the most impressive out of all of the visits. Their flexible format and fixtures allow them to change layouts throughout floors without taking a toll on brands’ presentation and desirability (though, sometimes a bit odd with luxury brands). During Christmas, there was a great gifting assortment and wrapping services. Overall, the product presentation was good during sales. In the Men’s store, the “floating” cash registers (right in the middle and designed more as stations, not booths) are interesting, as well as the way click /amp] collect is nicely displayed and even used as a feature visible from the outside. In the Women’s store, the ground floor is energetic, airy, and combines a great cosmetic section with the feeling of a concept store. The ground floor area dedicated to home products offers great product curation, which contributes to the concept store impression.

Nordstrom Local is conveniently located, well attended and had many customers at the time of the visit. The way the services are displayed and visible (as proof of competence) is interesting. The store also sells a very limited number of items (snacks, small items & accessories) though not enough to sustain the store itself. The staff was great and competent.

Saks Fifth Avenue’s ground floor is great and impressive, with the escalators going down to the fine jewellery section and overall, spacious, modern and bright. The rather simple idea of colourful escalator “wrapping” really inspires customers to visit the upper floors. Traffic was slow and SaksWorks on the last floor was closed. The Barney’s floor is a gimmick with no added value.

As usual, Bergdorf Goodman had great Christmas windows and displays, but the impression was not so positive. During Christmas they offered “presales”: customers were charged at the time and were to receive the product at a discounted price later. The 7th floor which used to feature stationery is now dedicated to BG merchandised products. The traffic is low, apart from the shoe floor.

Bloomingdales in the Upper East Side feels a bit old. Still, the store offered a gift-wrapping service with customised-printed gifting paper in partnership with Klarna. The new Men’s shoe floor is not revolutionary but nice, with brand corners and multi-brand areas organised by style/functions (sport and sneakers, casual and weekend, classic and work shoes). Service counters are emphasized.

Macy’s in Herald Square feels old and not well maintained (floor maps are not all correct), however it was overall busy. The home floor has been redesigned with a lifestyle approach. On the ground floor, there is an interesting mix of cosmetics, tech (including Apple) and light travel goods.

Is New York still worth a retail trip? While there are always interesting stores to visit, the city didn’t feel the same as before due to the lack of traffic and energy, even if it was a bit busier during the holidays. The impact of Covid on retail was felt in all areas. It was particularly visible on Broadway around Macy’s, with closed flagships (Victoria’s Secret and empty >500 sqm locations) and even more so in Soho, in the Mercer St. / Greene St. area where there are many “available” retail locations advertised. The slow traffic is both due to the heavy travel restrictions and to the local affluent consumers relocating in their secondary residences. For instance, it led Bergdorf Goodman to achieve a fair share of business by sending trucks every day with goods to the Hamptons and other locations in 2021.

Another common feeling from two separate visits was the impact of staff shortage (Macy’s advertises for recruitment on zones and screens normally dedicated to products) leading to a feeling of poor maintenance (Visual Merchandising, product visibility, overall maintenance and attention to details, even cleanliness) and poor customer service (among department stores only Nordstrom sales staff gave a sense of welcome and product-related competence). During Christmas week, there was a striking contrast between stores that were either fully closed (Mejuri in Nolita, Melissa Galeria in Soho), partially closed (The Webster, On Running) and the ones that were inaccessible due to long queues at the entrance (Louis Vuitton, Prada, Chanel, Nike…).

Credits: IADS (Christine Montard)

Check out the retail review in pictures here