What: Target Corporation is closing nine stores due to rising concerns over theft and safety.

Why it is important: Retailers are increasingly concerned about safety and are prioritizing efforts to address theft and crime.

The affected stores are located in Portland, the San Francisco area, Seattle, and New York City. The company stated that theft and organized retail crime have put the safety of their employees and customers at risk, as well as impacting their business performance.

Target operates nearly 2,000 stores and has been actively addressing retail crime issues. The retailer had previously warned that shrinkage, or missing inventory, would lead to a USD 500 million reduction in earnings this year. They have seen a 120% increase in thefts involving violence or threats of violence. Despite efforts to prevent theft, Target has concluded that operating these stores safely and successfully is no longer feasible. The company will continue to invest in store security and technology to combat theft and seeks collaborative solutions with the community, government, and industry.

Target is closing nine stores due to rise in organised theft 

What: Shein has opened a pop-up store in the Forum Schwanthaler Höhe in Munich for Oktoberfest.

Why it is important: The pop-up store will bring the brand even more visibility in Germany after its first temporary store in Berlin earlier this year.

The store will be open until October 1st and offers over 1,800 items of clothing and accessories for women, men and children including traditional Oktoberfest fashion such as dirndls and blouses. There will be exclusive discounts, surprise gifts and special student discounts to appeal to younger customers.

Additionally, after the pop-up shop, Shein plans to donate fall and winter clothing, shoes and accessories with a total value of EUR 90,021 euros to WeißerRabe GmbH.

Shein sets up Oktoberfest pop-up in Munich

What: After 10 years of operations, Ikea closes its innovation center which reached its goals.

Why it is important: this relates to how to deal with innovation in large companies, and how to create a favourable environment that impacts the rest of the company.

Ikea is closing its innovation platform, Space 10, located in Copenhagen, after achieving its goals. Space 10 was established in 2014 as a collaboration between Ikea and Danish design collective ArtRebels. It operated independently and focused on how Ikea could contribute to a better future. The lab worked on various projects, including the development of the Ikea Place virtual reality app and exploring city store concepts. With its objectives met, Space 10 is closing on a high note.

Ikea closes its Copenhagen-based innovation center after 10 years

What:  A testimony from Zalora CEO on how AI is transforming the business.

Why it is important: The article is down to earth and provides a set of examples on how department stores could address AI in their operations, if this is not yet the case.

Zalora, a leading e-commerce platform in Southeast Asia, has integrated advanced artificial intelligence (AI) capabilities from OpenAI into its proprietary platform, Titan. This move aims to redefine online shopping experiences, streamline business operations, and elevate industry efficiency standards.

Key insights from the integration:

1. Purpose of Titan: Developed by Zalora, Titan integrates OpenAI to address e-commerce challenges and bolster innovation. It automates production, refines search precision, minimizes manual work, and facilitates smarter, AI-driven customer service, according to Sumit Jain, Zalora's CTO.
2. AI in E-commerce: Jain perceives AI as transformative for e-commerce. It can reduce operational expenses, solve intricate business problems, and augment human roles. Examples include using AI for crafting product descriptions, refining search functionality, assisting customers post-purchase, and lowering production costs.
3. Search Enhancements: One practical outcome of Titan has been the "Did you mean?" suggestions for users, optimizing their product search. This has led to a 4-6% conversion rate uplift since the system's inception.
4. Operational Benefits: Titan improves operational efficiency, as demonstrated by a 30-50% increase in forecasting accuracy, enabling Zalora to scale effectively. Additionally, the system aids in enriching product descriptions and optimizing product imagery processes.
5. Automation: Generative AI is used for automatic attribute tagging (like color, style, and occasion) based on product images, leading to auto-generated SKUs and product descriptions. This streamlines search functionality, ensures quality, and reduces manual labor.
6. Business Intelligence: Zalora is leveraging AI for business intelligence chatbots, which mine stored data to provide quick and precise key findings. This expedites insight retrieval, enabling staff to focus on high-impact activities. Furthermore, AI-powered Slack chatbots have been employed for customer service and system troubleshooting.
7. Future Prospects: Beyond these applications, Zalora envisions using chatbots for other internal processes, such as handling expense claims. Jain emphasizes that the integration of OpenAI is just the beginning of their AI-focused evolution. One significant advantage of this technology is its cost-effective in-house innovation, striking a balance between developing internally and collaborating with third parties.

In conclusion, Zalora is harnessing the power of AI, through its Titan platform, to innovate its e-commerce operations, enhance customer experience, and set new industry standards.

AI in Retail: the use case of Zalora

What: Fitch Ratings has placed Falabella SA on a negative watch due to its deteriorating operating trends and limited visibility regarding debt reduction.

Why it is important: The negative rating highlights the company's operational and financial challenges, urging stakeholders to closely monitor its performance and debt reduction efforts.

The company's weak performance is attributed to a combination of internal and external factors, including high inflation, elevated operating costs, and sluggish consumer demand. While Fitch Ratings predicts that Falabella will have enough liquidity to manage its net leverage until 2025, it also anticipates improved operating results within the next 18 to 24 months as the operating environment stabilizes in Chile.

Fitch Ratings places Falabella one step below Cencosud, as Cencosud's retail formats are predominantly focused on the food and supermarket segments. Successful implementation of effective strategies and adaptability to changing market conditions will be crucial for Falabella to overcome its challenges, regain stability, and enhance its competitiveness in the retail industry.

Falabella receives a negative note from Fitch Ratings

What: Sainsbury’s has announced its plans to open branded fashion destination hubs in its stores.

Why it is important: The company aims to cater to the evolving needs of its customers by offering a broader range of fashion brands and styles.

These hubs will be alongside its Tu Clothing line and will feature third-party brand partners.In addition, Sainsbury's will provide exclusive product ranges and expand its clothing offering to include curve, maternity, lingerie, and tailoring. Customers will have access to a wider choice of fashion brands both in-store and online, with over 30 brand partners available on the Tu.co.uk website.

The first stores that will launch the fashion destination hubs will be Stanway in Colchester, Crayford in Dartford, Bybrook in Ashford, Longwater in Norwich, Calcot in Reading, Osmaston Park in Derby, Selly Oak in Birmingham, Sydenham in London, and London Colney in St Albans. The brands will arrive in store between September 24th and October 6th.

Sainsbury’s to open branded fashion destination hubs in at least 50 stores

What: In spite of a timid situation in tourism, leading to ailing duty free businesses, both Shinsegae and Hyundai posted encouraging results.

Why it is important: Just like in Europe, Chinese tourists might be the cherry on the cake once they return to a country very much in need of them.

Shares of major South Korean retailers Shinsegae Co. and Hyundai Department Store Co. are on the rise, with increasing optimism about their sales growth due to the return of Chinese group tours to Korea. Despite experiencing a drop in the second quarter earnings, both companies showed potential for recovery, with an improvement in operating margins. Notably, foreigner sales accounted for 4% of department store sales in Q2, a rise from 2% in Q1. Shinsegae recorded a decline in duty-free sales, but increased its operating profit by 40% after making adjustments in merchant commission fees. Hyundai's duty-free business also saw reduced operating losses in Q2. Experts predict that the resumption of Chinese tours will boost the profitability of duty-free shops. Additionally, Hyundai G.F. Holdings Co. plans to integrate its core affiliates, including Hyundai Department Store, streamlining its governance structure.

Hyundai and Shinsegae shares are up following encouraging results

What: Pinterest is launching a pop-up store called Possibility Place in London's Covent Garden.

Why it is important: The store brings the online platform to life in a physical space.

The two-day event aims to bring the online platform to life in a physical space on the British high street. The pop-up will feature various sections, including a corner shop called "Provisions," where visitors can find everyday essentials with a twist. There will also be a beauty bar called "Parlour" where visitors can get nail art, tattoos, and hair styling. The "Projects" section will offer workshops on trending homeware pieces and interactive demonstrations from Pinterest's top interior creators. In addition, expert sessions hosted by creators will provide visitors with tips on elevating everyday meals and upcycling household items.

The pop-up is open from September 29th to September 30th, offering visitors a unique and immersive experience.

Inside Pinterest’s reimagined high-street pop-up

What: Australia’s Myer reports best profits in 18 years.

Why it is important: Just like for many other department stores, this performance could be either a peak or the beginning of a new story according to strategic decisions made in an ever-changing context.

Myer reported a profit of $71.1 million, marking its best annual sales in 18 years at $3.36 billion. However, the second half of 2023 saw sales growth slow to 0.4% and a 1.9% drop in comparable store sales over the last six weeks. CEO John King attributes this to broader macroeconomic factors. Despite challenges over the years, Myer believes it's set for success, with a debt-free status and over $100 million cash on hand. The company has focused on its "Customer First" strategy, emphasizing online growth. Online sales reached $690.5 million in 2023, with a target of $1 billion annually in the next five years. Additionally, Myer's loyalty program boasts 4.2 million active members. Significant leadership changes are anticipated, with King exiting in 2024 and CFO Nigel Chadwick retiring next year. The largest shareholder, Solomon Lew, owns nearly 30% of Myer. The company sees a future in expanding online sales, improving distribution, and leveraging its loyalty program with new partnerships.

Myer reports record sales

What: Bloomingdale's celebrates an icon that has become synonymous with New York.

Why it is important: Department stores always strive to be as recognizable as the city where they are located.

The iconic Bloomingdale's Brown Bag, originally designed by Massimo Vignelli in 1971 for the store's linen department, is celebrating its 50th anniversary. Synonymous with New York City style, it's a bag that many have come to recognize and cherish. To commemorate the half-century mark, Bloomingdale's is hosting a series of events and collaborations. The department store will have a special pop-up featuring Brown Bag-themed merchandise from brands like Ralph Lauren, Stoney Clover Lane, and Clinique. An event at Bloomingdale’s 59th Street flagship will include activations on each floor, artistic contributions from Matthew Langille and FIT students, and themed refreshments at various pop-ups.

On October 7, Bloomingdale’s beauty department will join the celebrations with various activations, including raffles and special offers. While the main festivities are in New York, Bloomingdale's locations across the nation will also mark the anniversary on September 9.

Bloomingdales celebrates 50 years old of its Big Brown Bag

What: Flannels opens its second store front in Ireland.

Why it is important: The opening of the new store indicates both Flannels and its owner, Frasers Group’s dedication to the growth of physical retail and introducing luxury destinations to untapped markets.

The 15,000 sq ft. store is locates on St Patrick’s Street and spans across three floors. The store offers a curated selection of menswear, womenswear, and junior luxury designer clothing and accessories including Off-White, Stone Island, and Valentino.

The Cork store location is expected to generate around 6 million customers annually as well as create over 40 new jobs in the local area.

Flannels’ second Ireland flagship lands in Cork 

What: Malls are performing better than expected, pushing Unibail to be less radical than initially planned.

Why it is important: Retail may has morphed, but for now, some staples such as shopping malls resist when they are able to reinvent themselves.

Europe's largest mall operator, Unibail-Rodamco-Westfield, has reconsidered its decision to fully exit the U.S. market by 2023. Despite the pandemic's impact, the company's high-end American malls, including the Westfield Valley Fair in California, have shown strong performance. While the company has divested from some lower-quality properties, it continues to invest in its flagship malls, indicating confidence in the upscale mall business. This move is also strategic, as the company aims to manage its debt while optimizing its asset value.

Mall owner Unibail Rodamco is no longer planning to sell US assets

What: Selfridges has launched Yellow Pages, a new program that encompasses the best of the luxury retailer's services, from shopping and design to culture.

Why it is important: This advertising move creates an immersive experience for customers, showcases brands, promotes its services, and set the store apart from its competition.

The program includes a 72-page zine that showcases various cultural happenings in London and Manchester, such as exhibitions, productions, and anniversaries. As part of this initiative, Selfridges will also introduce audio windows for the first time, providing an interactive experience for customers. Additionally, Selfridges will take over trams in Manchester, showcasing the retailer's distinctive shade. The upcoming activities at Selfridges, highlighted in the zine, will feature renowned brands like Versace, Jil Sander, Harris Reed, and Martine Rose, and will include pop-ups, special collections, and limited edition products;

The store aims to position itself at the forefront of new season trends and cultural discussions, helping customers discover the most exciting offerings.

Selfridges launches the Yellow Pages

What: H&M has joined fellow fashion giants Zara and Boohoo in charging customers for returning items purchased online.

Why it is important: The implementation of this fee is part of a growing trend in the retail industry to address the issue of excessive returns and promote responsible shopping practices.

The policy is a GBP 1.99 charge for returning items purchased online, although returns remain free for H&M members. This change was made with the aim of discouraging bulk buying and excessive returns by customers. It is worth noting that several other retailers, including Zara, Boohoo, Uniqlo, and Next, also charge customers for online returns.

H&M joins Zara and Boohoo in charging for online returns 

What: JC Penney is making a comeback after going bankrupt in 2020 and being purchased by SPG and Brookfield.

Why it is important: The brand aims at reinventing itself through a massive investment, but are customers really demanding that?

J.C. Penney is investing over $1 billion in a turnaround effort focused on improving customer experience and operations. This initiative includes a new brand positioning and campaign called "Make It Count," which centers on making fashion accessible, offering a compelling loyalty program, supporting local and cultural communities, and committing to positive change. The company is reviving its classic logo and aims to balance familiarity with forward-looking elements to appeal to shifting consumer shopping habits. J.C. Penney filed for bankruptcy in 2020 and was subsequently acquired by Simon Property Group and Brookfield Asset Management. The "Make It Count" campaign is the result of a year-long effort, including extensive consumer research.

JC Penney to pivot brand with a USD 1bn turnaround plan

What: The FT explores the reasons why such a giant with so much at stake (12,500 employees) could not be saved.

Why it is important: Beware of whom you partner with. Many critics point out the role of the administrator, PwC, in the final failure.

Wilko, a 93-year-old discount retailer, faced potential collapse with most of its 12,500 staff facing redundancy. Initial optimism about finding a buyer faded. Doug Putman, owner of HMV, withdrew a potential offer citing legacy problems and high costs in running Wilko's systems. Issues with suppliers and reduced stock levels further complicated rescue efforts. M2 Capital's interactions with administrators PwC were contentious. Wilko's administration generated more customer interest, boosting sales temporarily. The Range acquired Wilko's brand and website. Critics question dividend payments made to family owners in recent years.

The reasons of Wilko’s shutdown

What: For Zalando, the scarcity of real customer reviews explains why they should be removed.

Why it is important: Some aspects of customer relationship considered as a stapple so far are starting to be deeply reevaluated. Customer feedback is a feature of e-commerce.

Zalando, a German online retailer, has removed its customer reviews feature, citing that only 3% of shoppers left reviews and most products received none. Instead, they've introduced a survey to gauge if product descriptions influenced purchase decisions. The change surprised many industry observers, especially when reviews are increasingly influencing online buying habits. Concerns over fake reviews might have influenced Zalando's decision. Although the review option is gone, customers can still share feedback via their profiles or when providing return reasons. Zalando continues to innovate, recently launching tools like a body measurement predictor and a virtual fitting room for enhanced shopping experiences.

Zalando removes customer reviews from its German website

What: Myer CEO talks about rising theft and customer behaviour in Australia.

Why it is important: It is no secret that Australian department stores are struggling. The fact that John King plans to leave in 2024 opens many speculations about the future of the business.

In FY24's early weeks, Myer's sales fell by 1.9%, but CEO John King remained optimistic about the growth since the pandemic, highlighting its focus on omnichannel retailing. The success was attributed to the combined in-store and online customer experience, with Myer One being a significant driver. King emphasized that customers spending across multiple channels tend to spend more. In FY23, Myer reported a 12.5% YoY sales increase to $2.1 billion and an 18% YoY net profit increase to $45.6 million. Amidst concerns of sustaining these figures, especially with potential capital injection into rival David Jones by new owner Anchorage Capital, King pointed to Myer's diverse product pricing strategy. King acknowledged a sales decline in the last quarter of FY23 and early FY24 but expects more clarity post the holiday season. Myer plans to enhance the shopping experience through tech investments and a new national distribution center. Retail theft, accounting for 1.8% of Myer's FY23 sales (~$60 million), remains a challenge. King intends to resign as CEO in 2024, raising questions about the company's future direction, especially with Solomon Lew's increased stakes in Myer and his known intent to overhaul the Myer board. King acknowledged Lew's increased interest as a sign of support for the company.

Australia’s Myer CEO’s interview

What: Wilko, an iconic retailer, did not manage to raise profitability in spite of growing sales.

Why it is important: In Europe, nobody is too big to fail.

UK retailer Wilko is set to close all 408 of its stores, marking the end of a business founded in 1930 by JK Wilkinson. Once a thriving business similar to the now-defunct Woolworth’s, Wilko took over many of Woolworth's vacated properties. It grew to over 400 stores and 12,500 employees, expanding its product range over the years. Despite experiencing growth and sales of nearly USD 2 billion in 2018, its profitability began declining due to factors such as rising competition from rivals like B&M and Home Bargains, the pandemic, and consumers' preference for out-of-town shopping locales. Administrator PwC confirmed the store closures after failed rescue talks. A potential rescue deal by the owner of entertainment retailer HMV also fell through. The Range acquired the Wilko brand for a reported USD 6.2 million, without buying any stores, while Poundland agreed to take over 71 Wilko sites, potentially saving 1,800 jobs. PwC had also brokered a USD 16.2 million deal with B&M for 51 Wilko properties, though without job guarantees. This marks the departure of another iconic high street name, leaving many former Wilko employees facing uncertain futures.

UK retailer Wilko closes after 93 years of business

What: Frasers Group aims to redefine the traditional department store format and attract high-profile brands, as the sector faces challenges and store closures.

Why it is important: The new Frasers department store concept is important as it aims to redefine and elevate the department store experience, attracting younger shoppers and showcasing high-profile brands, amidst a changing landscape in the sector.

Frasers Group has launched its premium department store concept, Frasers, in Norwich, as part of its strategy to redefine and revitalize the department store format. The flagship store spans 100,000 sq ft across three floors, with two floors dedicated to Sports Direct, USC, Evans Cycles, Game, and Belong. The ground floor houses the Frasers concept, featuring a beauty hall, menswear, womenswear, accessories, and Frasers Home. Each department has its own unique identity defined by color palettes, flooring, and branding. The aim is to attract younger, trendier shoppers by offering an elevated shopping experience and featuring high-profile brands.

The store incorporates marketing activations, with the ability to change stands regularly based on marketing initiatives and seasonal observations.

The company has been actively reimagining the department store format as the sector undergoes significant changes, including the collapse of Debenhams and store closures from other players. The new Frasers concept combines the group's premium portfolio under one roof and aims to rewrite the rulebook for department stores.

Frasers: Can the ‘next generation’ format fix the ‘broken’ department store model?

What: Marks & Spencer has announced its addition of Adidas and Sweaty Betty to its third-party brand lineup, aiming to attract new customers.

Why it is important: This move reflects M&S's strategy to evolve and connect with its customers in a changing retail landscape.

The retailer will launch over 150 products from these sportswear brands on its Sports Edit platform in the near future. Columbia, Regatta, and Sorel will also be joining the platform in the coming weeks to drive online growth. M&S director of third-party brands, Nishi Mahajan, stated that expanding the sporty collections aligns with the goal of becoming more relevant to customers' lifestyles. M&S previously acquired a stake in sportswear platform The Sports Edit and launched it on its website. Alongside Adidas and Sweaty Betty, M&S has also welcomed other third-party brands such as Swoon and Estée Lauder Fragrance to diversify its offerings.

M&S bolsters sports offer with Adidas and Sweaty Betty 

What: The Japanese retail market has tremendously evolved in the past 40 years.

Why it is important: Retailers know more than anyone else that past grandeur is not a safety belt for the future. Sogo has gone through its second major issue in less than 40 years.

Shopping mirrors societal shifts and nowhere is this clearer than in Japan’s department stores, which have evolved alongside the nation's capitalism. Tracing its roots back to 1673 with Echigoya, the journey of Japanese department stores is intertwined with the nation’s economic history. These stores, once symbolic of Japan's economic prowess, faced severe challenges during economic downturns, with significant events such as Sogo Co.’s major bankruptcy in 2000, and Sogo & Seibu Co.’s recent sale to a US fund after a historic worker strike. Such moves highlight the evolving business landscape in Japan, where even long-cherished institutions are being sold to foreign entities.

Although the industry experienced restructuring and a focus on domestic over international expansion, the iconic nature of some stores remains. Currently, there's a transition from premium department stores to discount electronics and online shopping, with younger generations favoring online platforms like Shein. However, flagship stores in major cities are surprisingly thriving, indicating a wealth shift to major urban centers. As Japan's societal norms and economic structures evolve, so will its iconic department stores.

How Sogo reflects the evolution of Japan

What: After plummeting indicators for the third consecutive quarter, Falabella will sell assets to reduce its debt, which is already around USD 5bn dollars.

Why it is important: The project includes the sale of stand-alone stores, distribution centers and the former offices of the Sodimac chain located in Renca, for an estimated total of USD 400mn. Falabella considers other actions that cannot be disclosed yet.

Falabella will sell assets to reduce debt

What: KaDeWe appoints Alexandra Bagehorn as General Manager.

Why it is important: KaDeWe is reorganising their management.

Bagehorn will start the role on December 1st. She is returning to the KaDeWe Group after working at the Alsterhaus in Hamburg and Montblanc. Additionally, Timo Weber, the previous head of KaDeWe in Berlin, has been appointed as the Retail Director of the KaDeWe Group, effective from January 1st. His focus will be on strategically managing three department stores (KaDeWe, Alsterhaus and Oberpollinger) and the development of the two new stores that are planned to open in spring 2025 , Lamarr in Vienna and Carsch-Haus in Düsseldorf.

KaDeWe Group brings Bagehorn back on board as General Manager