What: In February 2023, a new Simon Kucher study surveyed 15,440 consumers’ purchase intentions in 17 countries for the next twelve months.

Why it is important: French consumers are the most pessimistic of the panel. On average, they expect to reduce their expenditure on fashion by 7%.

Also on fashion expenses, the following countries are expecting a decrease:

•    Denmark: -6%.

•    Spain: -5%.

•    Germany: -4%.

•    Turkey: -4%.

•    Mexico: -1%

UAE and China remain positive.

Pessimistic outlook for consumption in the coming months

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What: The legal framework in EU related to fast fashion and its environmental impact is starting to get tighter.

Why it is important:  It might be a double-edged sword for department stores, as the new regulation might be helpful to compete with fast-fashion operators, provided they can also cope with the new laws.

The European Commission is proposing stricter regulations to combat overproduction and overconsumption of clothing and shoes, as part of the Green Deal.

The regulations would aim to ban fast fashion, ensuring that products are made of as much recycled fiber as possible, free of hazardous substances, and more durable, reusable, and recyclable.

The EU also wants to stop the destruction of unused or returned textiles, reduce microplastics and microfibers in nature, and regulate "green claims" better.

MEP Delara Burkhardt believes that the EU must legally oblige manufacturers and large fashion companies to operate more sustainably, as leaving the market to self-regulate would leave the doors open for a fast fashion model that exploits people and the planet's resources.

EU wants to ban fast fashion with stricter clothing rules 

What: The department store announced the opening of its experiential store in collaboration with the local sporting goods company, Tennis Metro.

Why it is important: The store will feature experiential elements, including an actual tennis court which is the first of its kind in the industry.

Occupying 500 square meters, the store will carry major tennis-related brands including Nike, Wilson, and Babolat and also include a variety of tennis gear and clothing.

Customers will be able to try out the products and even take lessons from professionals at the tennis court.

Lotte Department Store to open tennis experience store

What: On Coronation Day, footfall across UK retail destinations was 20.6% lower than the previous Saturday.

Why it is important: The impact of the Coronation on retail footfall was worse than expected, proving that city center events can cause disruptions in operations

In Central London, the increase in visitors coming to the city resulted in a lower drop in footfall, with a 9.3% decrease between the time of the parade and ceremony. Visitor traffic was on par with the week before and non-retail traffic saw an increase of 8.5%.

In London’s Knightsbridge, footfall rose by 57.7% compared to the prior week. Other high streets and towns in the UK also saw an increase such as King Edward Street in Hull and New George Street in Plymouth.

Across all UK retail destinations, total figures showed a 13.2% decrease compared to the same day last year, with Central London seeing an 11.3% increase. Additionally, when the parade and event were taking place, Central London saw an increase of 21.5% in retail areas and a 46.4% increase in non-retail areas.

The figures demonstrate that while large city center events may bring in more visitors, they can result in disruptions in operations and Paris during the 2024 Olympics will be no exception.

Coronation dents retail footfall but Knightsbridge gets massive bonus

What: Research from a customer experience platform has revealed key insights for brands to consider when adopting generative AI technology.

Why it is important: While early skepticism around generative AI is beginning to soften, customers still struggle to trust AI content more than human content.

Diqo, a customer experience platform, has been tracking customer perceptions of generative AI with an initial survey performed last March and another in April of this year to gauge the differences brands should know for successful adoption.

In the first survey, the results showed challenges for the technology, including low-level knowledge, overwhelming distrust, and a call for transparency as customers were worried about how AI will impact the future.

As customers have repeatedly been exposed to generative AI and received transparent communications, early skepticism is starting to soften.

Customers have still reported low knowledge and low usage, however the technology is exploding among certain with Gen Z being the fastest-growing segment.

Trust has improved slightly but remains a challenge in the space as 54% of users stated they trust AI content less than human content.

As a result, customers expect transparency when the technology is used as they also report low confidence in the ability to identify AI-generated content.

Researchers from Disqo stated that consumer buy-in will be a determining factor in whether generative AI sticks around or loses out to the next new technology.

Consumer sentiment around generative AI remains challenging 

What: Selfridges hosted a car boot sale with proceeds going to Women for Women International.

Why it is important: The event encourages customers to shop second-hand and backs the department store’s Worn Again initiative which encourages circular shopping through a variety of shopping experiences.

Customers could find pieces up to 75% from more than 100 brands and VIPs who donated items as part of Selfridge’s Worn Again initiative.

All proceeds went to Women for Women International, a charity which works with women living in countries affected by conflict.

Selfridges hosts upscale car boot sale 

What: Falabella has reported a negative performance for the first quarter of 2023.

Why it is important: The retailer is focusing on its efficiency plans and the digitization of its processes in aim to see significant improvements for the remainder of the year.

Falabella reported revenues of USD 3,476 million for the first quarter, a 6% decrease compared to the same period last year. The company’s sales also fell 9% and online sales were down 11%.

Despite the decline in online sales, the sales of its vendors increased by 23% to USD 173 million.

Gross profit contracted by 17%, which the company attributed to a 36% decrease in its department store division and a 24% decrease in its home improvement format.

Losses for the retailer reached USD 76 million, plummeting its triple-digit net income by 186%. Additionally, Ebitda fell 57%.

Falabella’s CEO stated that the company plans to continue to work on the transformation of its business, as it is advancing its efficiency plans and the digitization of its processes.

Falabella posts USD 76 million loss, plummeting 186%

What: M&S unveiled growing food and clothing sales as it plans to modernize the business seems to be paying off.

Why it is important: The retailer’s profits beat expectations despite inflation.

M&S recorded a successful quarter with food sales jumping 8.7% to GBP 7.22 billion and clothing sales growing by 11.5% to GBP 3.72 billion.

The retailer’s pre-tax profit surged 23% on a statutory basis while group sales jumped 9.9% to GBP 11.98 billion. Like-for-like sales in clothing and home increased 11.2% and online and in store sales also reported increases. However, its Ocado Retail joint venture recorded a GBP 29.5 million loss for the business.

M&S has plans to protect its magic, exceptional product, trusted brand, and strong values while also modernizing the rest of the business.

In the food sector, M&S is focusing on value, reducing the number of promotions, and offering cheaper opening price points.

The company is also reducing the number of options in clothing and investing in categories that drive style perceptions.

The retailer is focusing on digital, with a goal to increase online sales and achieve a better margin for online.

M&S also has plans to invest in new stores with 20 “bigger and better stores” opening by 2024;

The company has set a target of 1% growth in market share in both clothing and food, and aims to bring its operating margin up to 4% in food and 10% in clothing over the next five years.

M&S clothing and food sales jump as profits edge up 

How M&S plans on protecting its magic while mondernizing its business

What: Burlington High School in the US (Vermont) was condemned and is currently being demolished.

Why it is important: After 10 weeks of adaptation works, a former Macy’s department store found a new purpose to become a new temporary school which will run until 2026. Brand names such as Levi’s and Michael Kors are still visible.

A school in a former department store

What: UK-based JD Sport is unexpectedly healthy financially speaking in spite of financial adjustments.

Why it is important:  As it is currently eyeing Courir in France and other businesses in Spain, this might become a new regional player European department stores might have to count with.

JD Sports reported a nearly one-third drop in full-year profit due to a GBP 550 million charge related to the sale of smaller sports brands and the cleanup of previous acquisitions. Pre-tax profits for the 12 months to January 28 fell to GBP 440 million, down from GBP 654 million the previous year. However, when adjusted for these items, the company's profit before tax was GBP 991 million, up from GBP 947 million the previous year.

CEO Régis Schultz attributed the company's success to the shift from formal wear to leisurewear, particularly sneakers. Schultz, who took over in September, plans to open 1,750 stores over the next five years with an investment of nearly GBP 3 billion. Despite the profit drop, JD Sports expects to surpass the GBP 1 billion profit mark for the first time this year.

JD Sport profit falls after GBP 550mn charge 

What: El Puerto de Liverpool’s 2 day or less delivery service accelerated to 35% in the first quarter in comparison to the previous year.

Why it is important: The Mexican department store group continues to see advances in its digital channel with figures that reflect the progress in its omnichannel approach.

Its Click & Collect option also saw an increase of 4% in comparison to 2022’s first quarter, reaching 36% of digital sales in Q1.

Liverpool Pocket, the retailer’s app, registered 16% more downloads than in Q1 of 2022, reaching an increase of almost 27% in active users.

In the first quarter of this year, the company raised its total revenue to 16.5% and its gross profit grew 17%, while net profit recorded a 4% decline.

El Puerto de Liverpool accelerates its express deliveries by more than 30%

What: The e-commerce platform reported USD 1.5 billion in revenue for the first quarter and announced that it would be selling the majority of its logistics business, resulting in 20% of its staff being laid off.

Why it is important: The company saw its revenue increase 25% compared to last year and is looking towards AI to help its customers.

In addition to an increase in revenue, Shopify reported USD 717 million in gross profit and an operating loss of USD 193 million, with the operating loss representing 13% of revenue, up from 8% of revenue last year.

In a public memo, Shopify said it had spent the last year focusing on its primary mission of making the best possible e-commerce product that is easier to use, more participatory, and more common.

The company is selling the majority of its logistics business to Flexport who will become their partner and preferred provider. Additionally, Shopify will receive stock representing 13% equity interest in addition to its existing equity interest. As a result of the deal, around 2,300 employees will be laid off.

Shopify is now looking to AI and the the new capabilities it can unlock to better help its customers. In the last quarter, the e-commerce platform launched a new AI assistant on its shopping app and also launched Pinterest as an advertising channel for Shopify Audiences.

Shopify reports USD 1.5 billion in revenue, lays off 20% of workforce

What:  Aldi prepares itself for a new law on waste in Luxembourg, effective January 2024

Why it is important:  This is an example of a sustainable practice that could at the same time contribute to the top line, by increasing sale thanks to marketing, and the bottom one, by saving a few productivity points too.

Aldi Luxembourg is set to distribute its promotional leaflets via WhatsApp as part of a digitization process and in response to a new waste law in Luxembourg.

This law, effective from 1 January 2024, requires consumers to expressly state if they wish to receive physical mailings. Aldi has been promoting its digital leaflet via QR codes on various products, and now customers can also request the leaflet through WhatsApp, receiving a weekly message with a link to the new leaflet.

This move is reportedly a first for Luxembourg.

Aldi distributes leaflets via WhatsApp in Luxembourg 

What: John Lewis Partnership has appointed Nicky Dulieu as Non-Executive Director to its board, where she will chair the Audit and Risk Committee.

Why it is important: Dulieu is expected to bring her extensive experience in financial roles at M&S, as well as her successful track record at Hobbs to the partnership's growth plan.

Ex-Hobbs chief becomes non-exec at John Lewis

What: Lotte, Shinsegae, and Hyundai department stores have reported profits declining in the first quarter of the year.

Why it is important: The country’s top department stores are suffering from a slowdown in the economy and weak consumption.

The operator of the second largest department store in Korea, Shinsegae Inc., saw its operating profit decline 6.8% to KRW 152.4 billion in the first quarter. Sales at its department store unit grew 6.1% to KRW 620.9 billion however sales volume was unlikely to have risen as the prices continue to increase amid inflation.

Hyundai Department Store Co. also reported a decline in its operating profit, dropping 12.4% to KRW 77.9 billion. Its sales rose 17.5% to KRW 1.09 trillion and its earnings still exceeded analysts’ estimates which stood at KRW 42.7 billion.

On its side, Lotte Shopping Co.’s net profit fell 16.4% to KRW 57.8 million however its operating profit increased 63.7% to KRW 112.5 billion. Additionally, its department store unit saw sales increase by 7% to KRW 796 billion and operating profit increased 21.1% to KRW 131 billion in the first quarter.

All three department stores were estimated to have seen only single-digit growth in sales of luxury goods as wealthy consumers began to spend abroad and pulled back on their spending due to inflation and rising interest rates. In comparison, an increase of more than 30% in sales was reported for the first quarter of 2022.

Slowing economy slams South Korean retailers

Hyundai Department store Q1 results

Lotte Shopping Q1 results

Shinsegae Inc. Q1 results

What: Chinese tourists start to travel abroad in increasing numbers.

Why it is important: In spite of the length of visa processing and the scarce number of flights, many European operators expect Chinese tourists to come back in numbers within the summer 2023. It will be interesting to see if this is the case, or if S.E. Asia remains more attractive for now.

China's outbound tourism has surged during the May Day holiday, with mainland outbound travel bookings for the holiday multiplying by 18 times YoY, according to data from Chinese travel agency Trip.com Group.

The outbound group travel market was suspended in early 2020 due to the COVID-19 pandemic but resumed in February 2021. Hong Kong, Thailand, Japan, and Malaysia were the top travel destinations, and businesses abroad have warmly welcomed Chinese tourists as significant contributors to the international travel market.

The growth of outbound tourism also drives the recovery of the airline industry, and Dai Bin, president of China Tourism Academy, expects a sustained and accelerated recovery throughout 2023.

China’s outbound tourism booms during May Day holiday 

What: H&M is consolidating its brands to remain competitive.

Why it is important: While every operator suffers from the competition with Shein, brand consolidation in the fast-fashion sector might be at the same time good news for department stores (if they manage to attract them) or bad news if this creates more powerful competitors.

Swedish fashion group H&M is merging its Monki and Weekday brands to create a major youth destination and better compete with arch rival Inditex.

The company hopes to address changing customer behaviour and will also bring back the jeans label Cheap Monday with a smaller product line. While the brands will initially continue to co-exist, H&M is exploring options for "combined customer experiences" and the addition of other brands and partners.

Administrative and operational costs will be reduced as Monki's headquarters are closed.

H&M merges Weekday and Monki 

What: Jari Latvanen steps down and is replaced by Susan Ehnbage, who was previously in charge of Lindex.

Why it is important: Now that the transformation has been engaged at Stockmann, leadership is handed over to insiders with an experience in fashion retail business.

Stockmann plc has announced the appointment of Susanne Ehnbåge as its new Group CEO, effective immediately. Ehnbåge, who has been leading Stockmann's fashion retailer Lindex since 2018, succeeds Jari Latvanen, who is leaving the company. Ehnbåge has had previous leadership roles in NetOnNet Group and SIBA, and her appointment is seen as a move to continue Stockmann's growth and transformation strategy, and further the company's digitalization efforts,

In addition, Tove Westermarck has been appointed as the Chief Operating Officer (COO) of the Stockmann division. Both Ehnbåge and Westermarck will play key roles as the company focuses on accelerating growth and increasing shareholder value after significant debt reduction and restructuring.

Stockmann appoints a new CEO 

What: The London department store is opening a 3,500 square foot beauty hall dedicated to haircare.

Why it is important: The “Beauty Workshop” will almost triple the department store’s hair care offering, including new services for a full range of hair types and textures.

Selfridges will become a one stop shop for haircare as it opens its new beauty hall, “Beauty Workshop.”

With a focus on expanding its offering for Black and textured hair types, the retailer has brought on new brands and services that cater to a full range of hair textures.

To attract customers into the space, Selfridges is offering a variety of services. Brands such as Ruka, Living Proof, and Aveda will have exclusive services and piercing services will also be available.

Selfridges’ beauty offering will also include a hair accessories edit including a variety of products from clips to beaded wigs as well as a jewelry edit and a weekly rotating pop-up space.

In the UK, the haircare space is booming as consumers spent GBP 6.2 billion on hair services and GBP 2 billion on hair products with the premium end of the market performing particularly well, seeing an increase of 80% in prestige hair product sales.

With new beauty hall, Selfridges bets on hair inclusivity

What: The retailer is expanding its off-price division with 10 new stores scheduled to be open within the next two months.

Why it is important: The move comes as the off-price segment is performing well as consumers become more conscious of their spending due to inflation and economic uncertainty.

With the expansion, Backstage will now have 319 locations, with 310 of them being located inside Macy’s department stores and nine being freestanding locations.

In its Q4 earnings report, Macy’s reported that Backstage store-within-a-store locations outperformed full lines stores by 2 percentage points. Additionally, 18% of customers at the store-in-store locations cross-shopped and Backstage customers drove 32% of the building sales.

Customers who shopped both Backstage and full line shop 6.6 times a year in comparison to 3.2 times a year for all shoppers.

Based on data from selected off-price chains, the overall off-price category was up 5.7% during the first quarter of this year.

In January, foot traffic to these chains had also increased by double digits according to analytics from Placer.ai, who also reported that Macy’s with Backstage locations are outperforming stores without the off-price offering.

The off-price offering gives the retailer the opportunity to create a unique space where customers can shop the fullness of its brand, from treasure hunting for bargains to a full-scale department store with luxury brands.

Macy’s adds 10 Backstage locations as off-price sector takes off

What: Lotte to open a pop-up store showcasing merchandise from the National Museum of Korea.

Why it is important: Culture is increasingly a category per se, especially when it overlaps with national pride.

The pop-up store will be located in one of the basement levels of the department store’s Myeongdong branch. It will offer approximately 200 different kinds of merchandise for sale until June 4.

Among the items available for purchase will be a miniature statue of Maitreya in meditation, which gained popularity after BTS member RM was seen with one.

Lotte to open National Museum of Korea popup 

What: Through its Haciendo Escuela program, Falabella will train five students in front end web development.

Why it is important: The program adds to the retailer’s commitment to promote education and opportunities for young people in Colombia.

Through the support of Tiendas Falabella, Programate School, EducMas, and Fundcion Brillas, five students will be trained in front end web development to become creative programmers.

This initiative will allow students to develop skills that are highly valued in the labor market and contribute to their future, giving them opportunities for growth and career development.

In Colombia, 28 schools currently participate in Haciendo Escuela, the program in which Falabella stores fully support educational institutions in their area.

Falabella presents its new educational sponsorship program in Colombia

What: The British beauty retailer is hoping to capture a bigger share of the market through experiential stores and viral brands.

Why it is important: Space NK has seen success with its larger format stores despite intense competition in the UK beauty market.

The British beauty market is known for being difficult to crack with intense competition between department stores, digital mainstays, and drug stores.

UK beauty sales reached GBP 12.9 billion in 2022 according to Euromonitor International. As a result, Space NK is levelling up its brick-and-mortar presence and adding new trending brands to its offering.

Their approach may be paying off, as they saw sales increase 24% and revenue increase from GBP 119.1 million to GBP 142 million. Its in-store sales also rose 31% year-over-year and online sales grew 16% year-over-year while active customers also increased 33% to over 1 million.

Space NK currently operates 73 storefronts across the UK and Ireland, with five locations opening in the past year and two more planned to open this year.

In the past, the brand operated small neighborhood shops that were less than 800 square feet on average. However, the company shifted gears last year and added two large-format stores, both spanning over 2,000 square feet and featuring lounges, treatment rooms, trial spots, and areas for consultations.

At its upsized Westfield location, which is in the same shopping centre as Sephora’s new location, the company saw sales triple. Following its success, Space NK will be opening two more larger format stores and sees the bigger scale stores as the future of the business.

Opening new stores also helps the retailer’s online business, as they have seen an uptick in digital sales in the area.

The company is focused on growth and having a healthy delivery to the bottom line, which they are doing through brand building. Brand founders are attracted to the retailer because of its significant distribution network, local marketing expertise, and price positioning.

Space NK bets on experiential stores, viral brands for growth 

What: A poll revealed that US executives expect the current inflationary cycle to end soon, with more respondents optimistic about the post-inflation period than in previous surveys.

Why it is important: In the US, inflation seems to be evolving into more of a short-term problem rather than a long-term problem.

A survey conducted by Kearney of more than 350 US executives across multiple sectors found that 40% of respondents were confident that the current inflation cycle is positive.

Kearney identified two types of inflation: demand-driven and cost-driven, with positive outcomes including a reset of stagnant categories, innovation cycles, and flexible pricing.

Despite ongoing impacts to supply chains, executives feel that the end is in sight.

Industry executives: Inflation is nearing its end