What:  A US discount store doubles down on private labels in fresh food.

Why it is important:  Private labels are not the privilege of department stores anymore, and the pricepoint should not be their purpose. Instead, department stores should enhance their brand perception thanks to such labels.

Dollar General is expanding its private-label food offerings with a 100-item expansion of its Clover Valley brand.

The move is aimed at increasing food and beverage sales, which already account for 80% of the company's sales. The expansion includes a variety of new products, such as sauces, condiments, entrees, sides, and snacks. Dollar General is investing heavily in grocery, with plans to install more cooler doors and expand fresh produce offerings in its stores.

Despite challenges from reduced SNAP benefits and inflation, private-label brands continue to see sales growth, and Dollar General aims to differentiate itself in the market with its value offerings.

Dollar General expands its private label business 

What:  Première Vision and Institut Francais de la Mode conducted a survey on 5,000 respondents in the French, British, Italian, and American markets regarding sustainable fashion.

Why it is important: The survey revealed that the second-hand market is becoming a preferred entry point for sustainable consumption and improved consumer information would lead to increased purchases of sustainable products.

The perception of the fashion industry’s environmental commitments has improved. 64.3% of French respondents believe that fashion upholds environmental criteria as rigorously as other industries while 67.8% of Germans, 74.7% of Italians, and 81.5% of Britons share the same sentiment.

Despite inflation, consumers are allocating a quarter of their budget to sustainable fashion and each nationality has shown an increase in spending on sustainable fashion despite fashion sales not having returned to pre-crisis levels.

The study found that there is still a gap between consumer behaviours across various sectors. While 44.9% of French respondents purchased eco-responsible clothing last year, 68% of women bought organic food, and 63% purchased organic cosmetics. In the United Kingdom and Italy, the corresponding percentages were 42% and 54.4% respectively.

Sustainable fashion is also becoming more fashionable, with 9 out of 10 respondents stating that sustainable products are now considered "fashionable"

Addressing consumer information gaps is crucial, in France, non-buyers of sustainable fashion cited lack of information as the primary reason; today, that number has decreased from 50.4% to 33%. In the US and Germany, the percentage of consumers who feel well-informed has doubled, reaching 36% in Germany and 57% in the States.

Consumer behaviour and purchasing patterns are shifting as customers prioritise material quality as they aim to buy less and invest in long-lasting garments. There is also an increasing desire to repair or have garments repaired.

The survey also highlights the sustained popularity of the secondhand market, with half of the women and one-third of the men who participated in the survey purchasing pre-owned garments within the past year. Price remains the primary motivation across all five countries however, the conscious desire for responsible consumption is increasing.

The rise of sustainable fashion: a shift in western consumer behavior

What: Schiaparelli has opened a shop at Neiman Marcus Beverly Hills.

Why it is important: The luxury brand has an exclusive agreement with Neiman Marcus Group, allowing the brand to maintain its extremely limited distribution.

Schiaparelli only has five retail points of distribution, including three at which are operated by NMG and one inside Harrods.

The new boutique-atelier is a unique environment that allows customers to become immersed in the world of Schiaparelli. This is supported by Neiman’s understanding of the brand’s unique sense of exclusivity and creative expression.

The boutique was designed by Schiaparelli’s creative director, Daniel Roseberry in collaboration with architect Daniel Romualdez.

The store embodies the Schiaparelli aesthetic and features ready-to-wear, eveningwear, handbags, leather goods, jewellery, and accessories.

A rare Schiaparelli retail opening

What: Mattel has partnered with over 100 brands and gained a large market presence due to the Barbie film.

Why it is important: The importance of collaborations and brand partnerships in boosting the cultural relevance and revenue generation for the Barbie brand.

Barbie collaborations have flooded the market as part of a global marketing push for the highly anticipated film. Over 100 brands and retailers have joined forces with Mattel, ranging from fashion to beauty to homewares. Luxury brands (Chanel, Valentino, Vivienne Westwood, Versace, etc.) even dressed Margot Robbie for the press tour, capitalising on the cultural phenomenon surrounding the Barbie brand. There have also been brands that offer Barbie fans the Barbie look at a much more accessible price point, such as Zara and Impala.

These collaborations provide Mattel with an opportunity to expand its reach and monetise the Barbie brand beyond traditional plastic toys and children’s clothing.

With successful brand turnaround efforts and collaborations driving revenues, Mattel plans to leverage other brands in its portfolio, offering potential for future collaborations and continued growth.

Breaking down the Barbie phenomenon, from Mattel to Chanel

What: A pop-up store will open in Lotte Department Store during the visit of the Manchester City football club

Why it is important: Puma City, the pop-up store, is named after Puma which is the official partner of Man City.

The store will operate from Friday to Sunday at Lotte World Mall in Jamsil, southern Seoul.

Lotte Department Store to open a pop-up store in collaboration with Man City 

What: Concerns are growing that consumers could be pulling back on buy now, pay later as interest rates increase.

Why it is important: Instalment payment services have helped drive sales for years but retailers won’t be able to rely on BNPL as a major driver of sales in the near future in the current economic environment.

Data indicates that consumers are scaling down their use of buy now, pay later to smaller purchases and relying on it to manage their everyday expenses. Additionally, the number of luxury shoppers who use BNPL has also dropped so far in 2023 after years of increases.

Despite rising interest rates and inflation, BNPL is expected to continue to grow as more consumers and retailers adopt it.

Is fashion’s buy-now, pay-later boom over? 

What: John Lewis is downsizing its headquarters and is extending same-day delivery service to more cities and enhancing other services.

Why it is important: The store is expanding the service following the success of the initial launch in London.

The service will now be available to customers in Manchester, Leeds, and Birmingham. Customers who order products online before 10 am can receive their purchase between 7 pm and 10 pm the same evening for the cost of GBP 9.95.

The store has also improved other services such as its click and collect as well as reinstating its deliveries of large items in Northern Ireland.

John Lewis's move is expected to take place next summer when the company will move from Victoria to Pimlico. The relocation is in response to thousands of employees choosing to work from home.

John Lewis extends same-day delivery service to more cities

What: Saudi Arabia’s Public Investment Fund has been identified as the sponsor of the GBP 4 billion takeover of the Selfridges department store.

Why it is important: The investment in Selfridges is part of the Saudi PIF’s expanding portfolio of UK investments.

The fund was able to acquire an interest in Selfridges through Signa Holdings and outbid the Qatari sovereign wealth fund that owns Harrods.  The PIF is part of the country’s Vision 2030 initiative to ease its economy away from the reliance on its energy sector.

Saudi Arabia’s PIF revealed as backer of the GPB 4 billion Selfridges takeover 

What: Poshmark releases ‘Posh Lens’, a tool that allows shoppers to use photos to search for items on their platform.

Why it is important: After being acquired by Naver, Poshmark began to implement its AI and visual search technologies that will improve search functionality.

Posh Lens will offer shoppers the ability to track down specific pieces with just a photo. This launch was also coupled with Posh Shows, a livestream shopping capability, in April.

Second-hand retailer, Poshmark adds visual search tool to app 

What: The article highlights a recent survey conducted by the Kearney Consumer Institute (KCI) in Italy, France and the United States.

Why it is important: The survey reveals a lack of consumer education regarding sustainability in the fashion industry.

The survey found that nearly half of the respondents were uncertain about the superiority of virgin materials over recycled alternatives. Many participants were unaware of the option to recycle or upcycle clothing, leading to a preference for donation or sharing with friends and family, which often results in garments being stored away. The study also highlights the limited progress in the resale market and the failure of clothing manufacturers to prioritize climate goals and responsible disposal practices.

Kearney's "Circular Fashion Index" (CFI) 2023 report further emphasizes the lack of urgency among assessed brands in addressing sustainability issues. The report reveals a heavy reliance on virgin materials, inadequate consumer education on responsible disposal, and a lack of infrastructure for clothing drop-off and collection. Kearney notes that the complex and costly process of sorting used clothes hampers recycling efforts. Despite these challenges, a few brands, including Patagonia, Levi's, and Gucci, are recognized for their sustainable practices.

Kearney anticipates a transformation in the fashion industry due to upcoming regulations like the European Corporate Sustainability Reporting Directive (CRSD), which will require companies to include sustainability reporting as part of their annual reports and undergo third-party auditing. The CRSD aims to drive progress toward environmental accountability and transparency across the business landscape.

The fashion industry is lagging when it comes to circularity 

What: A very synthetic view on where US department stores stand in their actions to modernize and woo shoppers back.

Why it is important: Off-price, promotions and essentials are presented as a new recipe, but it might not be sufficient to provide the needed solutions to US department stores.

The article from Modern Retail discusses the challenges faced by department stores and their strategies to win back customers. Department stores have had a tough time during the pandemic, with declining sales and reduced foot traffic. Many consumers have shifted their shopping habits online, contributing to the challenges department stores face in attracting customers back to physical locations.

To attract customers, department stores are focusing on several strategies. Macy’s is investing heavily in its loyalty program and focusing on categories such as home, beauty, fine jewelry, and watches. It's also planning to launch a small-format off-mall store, Macy's Backstage, later this year.

Kohl’s is expanding into "underrepresented" categories like gifting, decor, pet, and outdoor, and it plans to place more gift items towards the front of the store in the coming months. The article mentions that Kohl’s is particularly good at selling "hardcore essentials" like underwear, which is less economically sensitive than other categories.

However, even with these strategies, it's unclear whether these department stores will be able to fully recover their pre-pandemic customer traffic. The article suggests that the best long-term strategy for these retailers might be to focus on their core business, as consumers' attitudes towards certain categories like apparel have shifted.

How US department stores are getting shoppers back 

What: Nike is leaning into wellness with its newest initiative.

Why it is important: In an effort to further expand its reach beyond Sports, Nike announced the launch of the Nike Well Collective.

This initiative seeks to expand on ideas of mind, body and life, and to serve as a guide for “wellness journeys” for all of its consumers.

Nike will be transforming its Nike Live stores to become Nike Well Collective locations.

Using what it has designated as its five holistic fitness pillars (movement, mindfulness, nutrition, rest and connection), the brand also has plans to bring on more than 1,000 new global fitness trainers and will tap a roster of experts, from academics, researchers, scientists, medical professionals and academic authors to expand content across its holistic fitness pillars. Reproductive health will also be included in the initiative.

Nike’s Well Collective to shift focus from sports to holistic health 

What: 200 UK companies have been publicly denounced by the government for failing to pay minimum wage.

Why is this important: We live in world of transparency where every mistake, even unintentional, can provoke great brand damage.

Marks and Spencer, WHSmith, and Argos are among 202 companies in the UK named by the government for failing to pay the minimum wage to 63,000 workers, amounting to GBP 5 million in underpayments.

The offenses, which occurred between 2017 and 2019, led to £7 million in financial penalties. WHSmith was the biggest offender, underpaying over 17,000 staff by more than GBP 1 million.

The government emphasized that paying the legal minimum wage is non-negotiable and that companies must face consequences for non-compliance. Several companies, including Marks and Spencer, WHSmith, and Lloyds Pharmacy, claimed the underpayments were unintentional and have been rectified.

UK Retailers named and shamed for not paying minimum wages 

What: The pharmacy group sees the medical part of the business growing, but not offsetting losses incurred by the retail division.

Why it is important: The US and UK are already saturated in terms of retail coverage, more adjustments from other chains should be expected in the coming months.

Walgreens Boots Alliance is set to close 300 Boots stores in the UK and 150 Walgreens branches in the US over the next year to optimize its locations.

The announcement came as the pharmacy group cut its annual earnings forecast due to diminished demand for Covid-related products and a more value-driven consumer approach. The company also increased its cost-saving target after it fell short of Q3 profit expectations.

While retail division same-store sales slightly decreased, pharmacy same-store sales increased by 9.8%. Walgreens now predicts adjusted earnings per share of USD 4 to USD 4.05 for 2023. Despite these closures, Boots remains committed to the UK high street and no redundancies have been proposed, with staff being offered work at other stores.

Boots and Walgreens to close 450 branches in the US and UK 

What: Carrefour is multiplying use cases with ChatGPT, including a new bot helping customers to do their groceries.

Why it is important: Many options are explored: product management, procurement process, but this new way of interacting with customers while actually helping them to save time might be a breakthrough in the use of AI in retail.

Carrefour has introduced a new AI chatbot, Hopla, on its website to assist customers with their shopping. The chatbot, based on OpenAI's GPT-4 technology, can suggest recipe ideas and shopping baskets based on user inputs such as budget, dietary requirements, and menu ideas.

The retailer is also using AI to improve its product sheets and support internal procurement processes. Such AI initiatives, developed in partnership with Bain & Company and Microsoft, are part of Carrefour's strategy to enrich customer experience and transform its operations.

How Carrefour is working with ChatGPT 

What: In his quarterly letter to vendors, Saks’ CEO shared that luxury customers are becoming more deliberate and value-focused in their spending.

Why it is important: Due to the current macroeconomic environment in the States, luxury retailers are having to adapt to luxury consumers’ changing behaviors.

Consumers are shifting their discretionary spending more towards work clothes and fashion for dining out and parties and pulling back spending on casual clothes, sneakers, and handbags.

Saks, its e-commerce operation, saw an 8% decrease in gross merchandise value in the first quarter while Saks Fifth Avenue saw GMV fall 15%. For the entire Saks ecosystem, GMV fell 13% in the first quarter but was up 22% on a two-year stack and 31% compared to pre-pandemic levels.

Despite the expectation of consumer spending staying soft throughout the remainder of the year, the CEO is confident that Saks can weather the challenging macroeconomy. The company will continue on a path toward a lot more scale and efficiencies.

Saks CEO to vendors: luxury sales stay soft

What: A post-modern review of what it took for department stores to go through the pandemic.

Why it is important: While this article is not ground-breaking, it is a nice reminder of the extent of transformation department stores went through because of this event.

Department stores, which have faced challenges due to the rise of online retail and the decline of malls, adopted various strategies during the COVID-19 pandemic to stay afloat. These strategies include:

1. **Curbside Pickup**: This enabled customers to order online and collect purchases from the store's parking area. While this existed pre-pandemic, its use significantly increased during lockdowns, highlighting the importance of customer safety.
2. **Extended Product Return Windows**: By giving customers more time to return products, stores ensured customer satisfaction and loyalty.
3. **Virtual Try-On Technology**: This allowed customers to virtually try on products from home, reducing the need for physical store visits. It gained popularity during the pandemic and is likely to continue being valuable post-pandemic.

The success of department stores in navigating the pandemic was largely due to their ability to adapt and innovate. By restructuring operations, enhancing efficiency, and reducing business risks, stores that were adaptable retained customer trust and loyalty. Moving forward, department stores can capitalize on their strengths, such as a wide range of products and brand history, and stay attuned to consumer trends to reclaim their relevance in the evolving retail landscape.

Department stores survived the pandemic thanks to adaptation and innovation 

What: Frasers Group is set to lay off up to 200 employees as it looks to streamline its business following its string of acquisitions in recent years.

Why it is important: The retailer is reviewing its team structures to identify efficiencies and streamline processes as it has gone through significant change over the last year with its acquisition spree.

Frasers to lay off up to 200 workers

What: Fashion brands are embracing events to generate brand awareness and drive sales as digital advertising costs increase.

Why it is important: Events are a great way to increase foot traffic and drive sales as consumers crave connection post-pandemic.

While events can be costly, brands don’t always expect to close a transaction but rather intend to be top of mind and remind customers that the store is nearby by creating positive associations with the brand.

Marketers say that in-person events such as trunk shows or shopping parties are more important than ever as social media has become a less favorable channel for advertising in recent years. The events are a direct way to reach customers and leave an impression that an ad on social media couldn’t.

Consumers also crave social activities post-pandemic and are eager to for connection, they want to see people and feel special.

The largest and most costly events often result in the least tangible returns, with the ultimate goal being to provide customers with a positive experience with the brand rather than converting a sale.

Events such as Krewe’s crawfish boil can ignite curiosity and allow customers to feel products in real life and become educated on the brand.

Smaller events such as trunk shows or in-store shopping events provide more opportunities to directly drive sales. Marie Oliver, a women’s apparel brand, has seen an overall sales increase and boost in social media engagement following their trunk shows.

Global head of luxury at Boston Consulting Group stated the most successful events tend to be those that bring together an interesting community of people as allowing customers to come together, especially if the founder is present works really well.

Shopping events are back. Here’s how to make the most of them

What: The Parisian department store has opened “Maison de Parfums”, a space dedicated to niche perfumery in its beauty department.

Why it is important: The department store is looking to distinguish itself from competitors by creating an offer that will attract tourists and younger consumers.

The new space is located on level -1 in the store’s 3,400 square meter beauty department.

Fourteen new brands have been introduced including Matière Première, Maison Crivelli, Amouage, Miller Harris, Les Eaux Primordiales, and HeadSpace.

The department store’s offer balances big market names to attract tourists with more confidential and cutting-edge players as well as a range of limited edition bottles.

La Samaritaine unveils a space dedicated to niche perfumery

What: John Lewis Partnership chairman, Sharon White, has pledged to get the retailer back to sustainable profit before 2026.

Why it is important: The department store retailer has posted three years of losses but is confident in its five-year recovery plan to get the partnership back to profit.

The retailer’s recovery plan aims to create a broadly based business with brilliant retail at the core, built on excellent customer service, quality, and ethics.

White stated that the retailer’s famous annual bonus would be paid when affordable. The bonus was scrapped last year amid losses of GBP 234 million.

While the plan could require external investment, White assured that its employee model wouldn’t be going anywhere.

John Lewis chair promises profits before 2026

What: Unified Commerce presents an opportunity for retailers to simplify and reduce complexity while maximising efficiencies by removing all barriers between offline and online commerce.

Why it is important: Studies have shown that successful implementation of Unified Commerce results in companies experiencing higher organic sales growth than their peers. Additionally, experts agree that investing in Unified Commerce is crucial to delivering a holistic seamless customer experience.

Unified Commerce remains somewhat of an emerging concept for retailers and the fashion industry remains largely unprepared for it.

However, a recent survey conducted by Bain & Company found that retailers are enthusiastic about Unified Commerce and 75% of respondents stated that it was a very or extremely important element of CRM. The majority also agreed that it would benefit profitability, employee experience, and inventory management.

Unified Commerce connects omnichannel’s customer-facing focus with the myriad of backend systems associated with running a retail business; it allows retailers to have one promo engine that serves all channels.

Successful implementation of Unified Commerce can result in organic sales growth and aid in creating a seamless customer experience. This is more important than ever as customers expect the same level of personalised experience online as they would in-store.

Ease of deployment and ability to integrate are important for the successful implementation of Unified Commerce. UC can’t be exclusively an IT responsibility and companies must check with store operations to ensure that the technology is easy to use and making their jobs easier.

According to the Bain survey, POS and inventory management are the areas of business retailers believe would be most impacted by Unified Commerce, followed by marketing and order service management.

What is Unified Commerce and why is it so important for fashion retailers? 

What: The multi-brand specialty store will open a 4,090-square-foot flagship in Iguatemi São Paulo.

Why it is important: The retailer will stock several international brands who are making their debut in the Brazilian market.

Brands such as Jacquemus, Coperni, The Attico, Courrèges, Paco Rabanne, Magda Butrym, Isabel Marant and JW Anderson will be available in Brazil for the first time at the two-level store at Iguatemi.

NK Store has four stores in Brazil, with this new store being the second location in São Paulo and the retailer's central flagship.

NK Store to open flagship in São Paulo, Brazil

What: Luxury is set to pursue its growth in 2023 in spite of uncertainty.

Why it is important:  Luxury brands are key contributors to department stores’ growth, and should continue contributing to it again this year.

Bain & Company's Luxury Goods Worldwide Market Study - Spring 2023 reports a record year for the personal luxury goods market in 2022, reaching €345 billion.

Despite geopolitical and economic uncertainty, growth of 9-11% continued into Q1 2023. Factors contributing to this growth include hyperinflation decrease, local consumer confidence recovery in Europe, China's reopening and easing of zero-Covid policy restrictions, and positive momentum in Japan and Southeast Asia. A slowdown is expected in the US due to fears of a potential recession.

For brands to succeed, the study suggests focusing on consumers, balancing exposure across geographies, offering high-value propositions, and promoting iconic, timeless pieces.

By 2030, the luxury goods market is predicted to be 2.5 times the size of the 2020 market, reaching between €530 and €570 billion.

We will upload the full report as soon as possible.

The 2023 Bain – Altagamma report on luxury is out