What: Lotte Department Store announces the launch of a ‘K-Beauty tour’ service for foreign tourists.

Why it is important: Purchases of beauty products by foreign tourists from January to July increased by 500% from last year.

The store will give tourists free beauty pouches that contain large samples of beauty products from domestic brands. The samples are worth over USD 115 and will be dispersed on a first-come, first-served basis.

The tour service will begin this month in the main Lotte store in Seoul and eventually expand to the Jamsil and Busan branches.

South Korea’s Lotte Department Store launches ‘K-Beauty’ tour service 

What: Rolex SA is buying Bucherer AG in a deal that will give Rolex a presence in consumer sales.

Why it is important: The purchase of Bucherer will allow Rolex to start selling its watches in its own stores as the only store owned and operated by Rolex is in Geneva.

Bucherer will continue to operate independently, keep its name, and sell other watches. The deal between companies was done in part based on its long-term relationship. This acquisition is the second major shift in retail strategy for Rolex after it launched its authentication certificate program in December for used watches at authorized dealers.

Rolex to buy Bucherer in major retail move for Swiss giant

What: K11 newest stores enjoy high traffic and sales.

Why it is important: They aim at resetting retail by offering a different experience including community and culture. No information is given on profit however.

K11 Musea and K11 Art Mall are experiencing their highest footfalls and sales since their launch, with a 120% increase in sales at K11 Musea from pre-pandemic levels. The "cultural commerce" model has attracted high-end consumers, leading to a 260% increase in sales among luxury brands compared to before the pandemic. Around 30% of tenants have achieved record-breaking sales results. The model's success is driving demand for shop space among premium businesses, maintaining K11 Musea's occupancy rate at 98%. The malls are expanding their tenant mix and adding international brands like Maison Kitsune and Maison Margiela Fragrances to their lineup. K11 Art Mall is introducing retro fashion boutiques to attract new customers.

K11 Art Mall and K11 Musea report their highest footfall and revenue

What: Stockmann Itis is Helsinki has been renovated in both concept and floorplan and will celebrate its grand opening on September 2nd.

Why it is important: The redesign of the store adds elements of omnichannel shopping and a circular economy to the company therefore making it more sustainable and pleasant for its customers.

The store will have a showroom concept in which extended and seasonal selections are presented and can be easily ordered and delivered directly to customers’ homes.

Stockmann Itis will also offer more circular fashion services such as a range of sorting and recycling services as well as a sewing service. There is also a playground and rest areas for families along with the possibility of fiting online purchases which would go with it advnacements in omnichannel shopping.

Renewed Stockmann Itis offers omnichannel shopping opportunity 

What: The “buy Japan” moment is tarnished with a very rare strike movement, highly unusual in Japan

Why it is important: Even in the most traditional companies in the most traditional countries, employees are not afraid anymore to break rules and conventions to save their jobs or express angst.

Department store staff at Tokyo's Seibu are going on strike for the first time in over 60 years, protesting against the planned sale of the company to US investment group Fortress. The strike will involve around 900 workers and will shut down the Seibu Sogo flagship store for a day. Strikes have become increasingly rare in Japan over the years, with only 33 recorded in 2022. The decline in strikes despite challenging working conditions and stagnant wages indicates a reluctance among Japanese workers to take collective action. The Seibu strike highlights the growing concern about the direction Japan's labour market is taking and the impact of foreign investment on traditional Japanese industries.

France knows very well as its image was tarnished too before the summer, without consequences on tourism however.

Is the highly unusual strike at Seibu going to tarnish Japan’s image of retail excellence?

What: Nordstrom releases its Q2 earnings and forecasts for the FY23 revenues.

Why it is important: The results reflect the company’s progress on the Nordstrom Rack division, its inventory productivity, and supply chain optimisation. US shoppers saved the day in Europe, but US retailers are struggling domestically which could generate a snowball effect.

The company surpassed expectations and reported Q2 earnings of USD 137 million, earnings per diluted share of 84 cents and EBIT of USD 192 million. Net sales decreased by 8.3% compared to 11.6% in the first quarter. GMV also decreased by 8.5%. Shareholders received a quarterly dividend of 19 cents per share.

Nordstrom Inc. saw substantial improvement in sales at both Nordstrom and Rack. Kid’s and men’s apparel performed better than average for the quarter while active and beauty grew by low single-digits versus 2022.

Nordstrom's stock initially rose but later dropped almost 5% in after-hours trading. The company is expecting a decline in revenue of 4% to 6% for the year and earnings per share betzeen USD 1.80 and USD 2.20, excluding charges related to the Canadian operations wind-down.

Fashion United 

Seattle Times 

What: Ikea announced it is delaying the opening of its new flagship on Oxford Circus due to refurbishments.

Why it is important: The company says that Oxford Street needs to support its retailers in any way possible to remain an iconic destination.

The Ikea opening has been delayed from this autumn to next year.

The UK housing secretary, Michael Gove’s former decision to block the development of Marks & Spencer’s Marble Arch flagship on Oxford Street unnerved other retailers as the store was meant to help revive the area. Ikea was one of the supporters of the project.

Ikea’s debut in ex-Topshop flagship delayed 

What: The new collection of Gap sleepwear, loungewear, underwear and intimates for men and women is being sold only at Macy's and marks the first collaboration between the two retailers.

Why it is important: The collaboration raises questions over whether Macy’s would consider expanding its exclusive arrangement with Gap into other categories. Also, Gap could use a lift to its business, which has been reporting sales declines for several seasons: by featuring Gap products on Macy’s different channels, Gap hopes to encourage Macy’s shoppers to visit Gap stores and e-commerce.

Prices range from $12.50 to $79.95. The collection is being sold on macys.com, Macy’s mobile app and in select Macy’s stores around the U.S.

Macy’s partners with Gap on exclusive line

What: House of Fraser’s owner contemplates closing additional stores due to the supposed failure of the traditional department store model.

Why it is important: Under Mike Ashley's ownership since 2018, House of Fraser, acknowledging changing retail dynamics, has significantly reshaped its strategy. Over the past year until April 30, it closed eight branches, halving its store count to 31 in the UK. Closures include the Solihull and Guildford stores by August and September respectively.

Strategic changes yielded robust financial outcomes. Adjusted pre-tax profit doubled to GBP 478.1 million from the previous year's GBP 339.8 million. Foreseeing growth, Mike Ashley predicts a 5% rise, targeting GBP 500 million to GBP 550 million this fiscal year.

Reflecting industry trends, department stores faced decline, prompting House of Fraser's adaptation. Eight closures occurred, and a comprehensive review of the portfolio is underway. Transitioning from 59 to 31 stores since Frasers Group's August 2018 acquisition indicates the magnitude of change.

CEO Michael Murray envisions a nimbler retail footprint, favoring stores around 50,000 square feet, a departure from the classic 150,000 square feet format. Despite changes, House of Fraser remains positive. Aiming for GBP 550 million underlying profit next year, strategic acquisitions drive their growth strategy.

Retail insight Network

Retail Gazette

What: Manju Malothra resigns after 25 years at Harvey Nichols.

Why it is important:3 years after the end of the pandemic, and after the replacement of Stockmann’s CEO, who also had to weather the Covid-19 crisis, crisis leaders are now being replaced in order to reconnect with growth.

Harvey Nichols CEO Manju Malhotra, who served for 25 years at the luxury department store, has resigned. She will step down at the end of the year. Pearson Poon, executive director and son of owner Sir Dickson Poon, will take over as vice chairman until a permanent replacement is found.

Malhotra highlighted her successful tenure and collaboration with talented individuals. The retailer faced challenges due to the pandemic, resulting in a £30 million loss for the year ending May 2022 despite a 58% sales surge to £192 million.

Harvey Nichols CEO resigns 

What: Westfield UK shopping centres have seen a continued growth in store upsizes according to Unibail-Rodamco-Westfield (URW).

Why it is important: The rising trend of upsizing stores has created a strong half-year in retail leasing for the company.

Westfield London and Westfield Stratford City saw increased demand from retailers that wanted to increase their stores’ sizes such as Whistles; Rituals, Bucherer, Zara, and EE Studio.

URW also reported sportswear signings and store openings surged by brands including New Balance, Origin Kicks, and Lids.

Westfield boosted by raft of retailers upsizing stores 

What: The Thai conglomerate is booming and developing on new markets.

Why it is important: Even though it is going through some difficulties, Vietnam is the new goldmine, alongside India.

Central Retail Corporation and its subsidiaries saw a 5.6% increase in Q2 revenue, amounting to THB60,002 million (US$1.6 billion), and a 5.3% growth in profit, reaching THB1690 million (US$47.4 million). Sales revenue rose by 4.5%, largely fueled by the fashion sector’s 14.1% growth.

Thailand’s sales rose by 8% and Italy saw a 20% sales increase due to its reopening, benefiting both local and tourist purchases. However, Vietnam’s sales dipped by 10% because of a weaker economy.

As of June 30, the company expanded its net sales area by 3.4% and net leasable area by 6.9%. Despite improved Q2 performance attributed to a robust business model and adjusted strategies, challenges remain, such as rising electricity and operational costs.

Central Retail posts growth in revenue and profit

What: Amazon now offers buy now pay later solutions to its card holders on third party sites.

Why it is important: Who controls the payment process, and the credit visibility, has the best knowledge of the customer profile.

Amazon is expanding its "buy now, pay later" (BNPL) offering beyond its website and app, making it available through the Amazon Pay tool on other retailers' sites. Customers can use Amazon Pay's equal monthly payments option for online checkout purchases of $50 or more and split payments over six or twelve months with 0% interest.

This BNPL option is currently only accessible to customers using Amazon's Visa credit cards. The offering is now available at tens of thousands of online stores, allowing customers to split payments and make purchases more conveniently.

Additionally, Amazon plans to introduce its palm recognition and payment system, Amazon One, to its Whole Foods grocery stores.

Amazon expands BNPL to other retailers’ websites

What: Seibu flagship staff in Tokyo goes on strike in protest against the sale to US investment fund.

Why it is important: This move is unusual in Japan and shows at the same time how the social climate has evolved and to what extent retail in Japan is changing

Staff at Tokyo's Seibu department store are set to go on strike for the first time since the 1950s. The strike, involving around 900 workers, is in protest against the planned sale of the Sogo & Seibu chain, which owns the department store, to US investment fund Fortress for an estimated $1.5 billion. The workers fear the sale could result in job losses as the Ikebukuro store is set to be combined with electronics retailer Yodobashi Camera. Department store workers in Japan rarely go on strike, but the labour shortage and changing dynamics in the country's labour market may lead to increased labour actions in the future.

Seibu workers to go on strike for the first time since 1950s

What: John Lewis receives backlash from local residents in their plan to develop 10,000 homes.

Why it is important: A campaign group, Stop The Towers, expressed their opposition to the John Lewis’ proposed plans to build 20-storey buildings in an area that permits a maximum of 13 storeys.

John Lewis plans to develop and rent 10,000 homes in the next 10 years but was heavily criticised by locals due to the alleged misleading of their intentions.

The Stop The Towers group disapproved of the company’s plan to demolish a local Waitrose supermarket that is less than 18 years old, the submitting of the planning application during the summer holiday period and dedicating 20% of the new builds to affordable housing rather than the ambitious 35% if Greater London Authority Grants are not available.

John Lewis cited that the average proportion of affordable housing in new home developments was 11.4% in England in 2022.

John Lewis faces local opposition over rental homes plan

What: Top department stores in the US are noticing delays in in-store credit card payments and consumers decreasing discretionary spending.

Why it is important: While the article's focus is on the challenges in the US retail landscape, it's crucial to acknowledge that the situation there might differ from the rest of the world. However, it remains important to recognize that specialization and strategic customer targeting will play pivotal roles in the years to come.

US department stores such as Macy’s, Kohl’s, and Nordstrom are grappling with ongoing issues in attracting shoppers, largely due to cautious consumer spending. Macy’s reported a net loss of $22 million in its second quarter, while Kohl’s profits plummeted by 60%, and Nordstrom witnessed an 8.3% decline in net sales. Overall, department store sales have decreased by 1.5% in the initial seven months of 2023 compared to the previous year.

The persistent inflation poses a significant concern for these establishments, as escalating prices deter purchases of items like clothing and toys. Even with a slowdown in inflation rates, the situation remains more challenging for these stores when contrasted with their pre-pandemic performance.

Multiple factors contribute to the dwindling appeal of department stores: the range of products they offer, their pricing strategies, and the perceived value of their offerings. While certain categories, such as beauty and designer apparel, are performing well, other segments like men’s apparel and handbags encounter hurdles. The arrangement and abundance of merchandise significantly impact sales, with several stores being perceived as overly crowded or uninviting.

To adapt, department stores are reconsidering product placement and concentrating on high-demand categories. However, differentiation of products remains a challenge in a market where consumers can find similar items across various outlets. Altering pricing strategies, including reducing promotions, could potentially backfire, driving customers towards other discounted platforms like Amazon.

Private brand offerings present a potential avenue for growth, with Macy’s and Nordstrom receiving positive feedback for their in-house brands. Nonetheless, a broader perspective reveals that department stores have been steadily relinquishing market share to online and specialty retailers. In terms of market capitalization, Ulta Beauty now surpasses the combined value of Macy’s, Kohl’s, Nordstrom, and Dillard’s. The decline of the department store model is evident, with an annual market size reduction of 4.1% between 2018 and 2023.

Historically, department stores have lagged in adapting to evolving retail trends. While they made advancements in digital sales during the pandemic, many struggled to define their brand clearly, leading to consumer confusion due to new formats. The landscape continues to be intensely competitive, with direct-to-consumer brands, online outlets, and major retail chains posing substantial challenges.

The future of department stores remains uncertain. To sustain themselves, these traditional retailers must devise compelling strategies to attract customers away from competitors like TJ Maxx, Ulta, Target, and Amazon. Failing to do so might result in these stores fading into obscurity.

Fashion Network

Modern Retail

What: Alipay+ Premier Partner Programme has attracted retailers who wish to increase customer engagement through internal digital marketing.

Why it is important: The programme aims to improve the precision and efficiency of cross-border marketing for local and global merchants.

Alipay+ connects businesses with multiple e-wallets and payment options across several nations and regions- including Alipay, AlipayHK (Hong Kong SAR, China), GCash (The Philippines), Kakao Pay (South Korea), TrueMoney (Thailand), and Touch 'n Go eWallet (Malaysia).

Over 1 billion customers will be able to pay in their preferred method, enjoy exclusive offers, and get competitive exchange rates.

The programme can help attract consumers and tourists to China and Southeast Asian countries.

Retailers join Alipay Plus Premier Partner Programme for cross-border marketing 

What: Marks & Spencer is on track to enter the FTSE 100 after a great performing year and a best performer on the FTSE 250.

Why it is important: M&S is returning to its glory days with its stellar financial performance.

M&S’s shares are up 61%, it has a valuation of GBP 3.97 billion and is close to entering the FTSE 100 depending on the figures announced in November as the FTSE is reshuffled quarterly. Deutsche Bank predicts that M&S will be back in the top 100, a position that it lost in 2019.

M&S on track to re-enter FTSE 100

What: Luxury has grown exponentially these last years, and the trajectory should not change in vast proportions, even though some structural changes are on the way.

Why it is important: According to Bernstein, Luxury might not remain a loss leader for masses in department stores if it starts addressing only the super rich now that middle-class might lose the means to episodically buy such products.

After a surge in luxury goods consumption post-COVID-19, consumers are predicted to moderate their spending, returning the luxury sector to its cyclical pattern, according to a report by Bernstein. Despite this, the luxury industry's prospects remain positive, driven by both elite and entry-level customers.

The report highlights that the top 5% of clients contribute over 40% of sales for most luxury brands, while mega brands have expanded into lower-price categories, granting access to a wider customer base.

Luxury's major players are expected to continue penetrating the middle class through category segregation and retail amenities that maintain perceived exclusivity. The normalization of the luxury sector is suggested to follow the American market's example, with post-pandemic euphoria waning after a resurgence and Chinese consumers picking up growth.

Is the luxury party over? 

What: Kohl’s cuts down its stock levels by 14% year-over-year to USD 3.2 billion in Q2.

Why it is important: The reduction in inventory beat the company’s expectations as 2022 stock levels were “out of control” and resulted in discounting which affected the profits.

The inventory shift brought multiple advantages to the company in the quarter that consumer spending is under pressure due to the economic environment. In addition to stock management, Kohl’s also wanted to keep buying budgets open to respond quickly and benefit from trends.

Kohl’s cuts inventory by 14% as it prioritises discipline 

What: Luxury brands are opting for fewer but more spectacular flagship stores.

Why it is important: The monumental stores double as a tourist attraction and increase consumers’ perception of the intrinsic brand value due to their opulence.

Luxury stores need to increase their appeal to gain traffic and engagement all while holding on to the exclusive status. The supersized stores fully immerse customers into the brand and take the shopping experience to the next level. For example, in Dior’s Avenue Montaigne complex, there are several eateries, a museum and a hotel suite in addition to home beauty, and fine jewellery departments. The store is exceptional, and it is worth the visit for customers rather than placing online orders.

China is the prime location for many new projects of supersized stores such as Dior’s expansion in Shanghai’s Plaza 66, Fendi Casa in Shanghai’s 1788 Square Mall, and super mega flagships for Louis Vuitton, Dior, and Hermès in Taikoo Li Beijing. Brands in China are supposedly focused on the super-rich class due to the lack of growth in the middle class, as a wide percentage of revenues are generated from their very important customers.

Luxury brands are also investing in pop-ups, seasonal stores in top resort locations, and private stores.

Behold the super mega flagship store

What: Printemps plans to open a flagship store in New York City’s financial district.

Why it is important: The store will be situated in the financial district in which luxury retailers have struggled to draw sufficient shopper traffic as there isn’t a habit of shopping in the neighbourhood. This will not be Printemps’ first attempt at the US market; its 1984 storefront near Denver only lasted three years before closure.

Printemps New York will be located at the base of One Wall Street in a smaller format of 55,000 square feet compared to its Paris store which is ten times the size. The New York store plans to offer brands that are new to the market. The assortment will include wholesale buying with a mix of big brands and newer labels for fashion, jewellery, beauty, gifts, home, and décor. In addition, there will also be a food and beverage offer: a champagne bar, a coffee shop, a cocktail bar, and a brasserie.

The store will not need to pay rent as One Wall Street is owned by the Royal Family of Qatar, which also owns Printemps. This will give the store time to adjust and find its way. Additional Printemps locations in the US are being considered as well.

Printemps’ New York City venture

What: Fashion brands are experimenting with alternative methods to reduce e-commerce returns without losing customer loyalty.

Why it is important: Returns of online fashion orders in the US incur around USD 25.1 billion in processing costs so retailers are making the process more difficult for customers.

Of the 72% of Americans who made an e-commerce return and believed the process was harder than usual, 91% said that the ease of their returns experience affected their willingness to shop with the retailer again.

Retailers are trying methods of social conditioning to incentivise the behaviours they want. For example: waiving the return fee if the customer is willing to change their return to exchange or receive store credit instead, setting a minimum annual spend to receive free returns the next year, or setting a nominal fee (percentage of the sale) for the return.

Brands are also considering the logistics of the returns. A Turkish brand, Bocan Couture, offers free shipping to customers but asks customers to pay to return products and offers an exchange rather than a refund. Zalando has a high return rate of 50% so its stores products based on the likelihood of the returned items being sold into a different region using a proprietary algorithm.

Poor sizing is the leading reason for returns so Zalando for example is using an AI tool that gives customers size recommendations for specific clothes by using predicted measurements from photographs. In addition to this, previous customers can also provide information about the fit of the garments. The company is now developing a 3D try-on experience.

After reconsidering free returns, fashion brands get creative

What: John Lewis Partnership is recruiting over 10,000 temporary roles in the UK across its brands to prepare for Christmas.

Why it is important: This number also includes 1,700 permanent positions in management in undisclosed departments. John Lewis and Waitrose aim to deliver exceptional service to its customers throughout the Christmas season and are hiring for positions in multiple points of distribution and customer service.

Waitrose is hiring over 2,8000 seasonal roles in its 329 shops and John Lewis is hiring over 2,900 temporary roles in sales, merchandising, warehouse, and delivery positions in its 34 shops via associated recruitment agencies.

The jobs will be going live throughout September and October; all new hires will receive customer experienec training.

Retail Gazette 

The Retail Bulletin