What: Luxury goods stocks have taken a hit over fears of a softening US economy hitting demand.

Why it is important: Slowing growth in the US is a growing concern for the sector despite luxury stocks outperforming by a large margin this year.

Shares in Hermès International slumped 5.5%, while LVMH saw a decrease around 4% and Kering dropped around 2%.

While the luxury sector has become a collection of dominant businesses whose growth has held up even as the economy fluctuates, confidence in that view is now decreasing as aspirational US consumers decrease their spending.

The rebound in China has been among the key drivers of strong sales in the sector, however investors are expected to be picky moving forward as the US is expected to suffer an economic slump later this year.

Luxury stocks are still outperforming by a large margin this year, with LVMH seeing a 25% increase and Hermès increasing 34%.LVMH became the first European company to reach a market value of USD 500 billion and also saw its shares hit a record after reporting a surge in sales.

However, early warning signs are starting to emerge as LVMH has seen a slowdown in US growth and Burberry has reported that demand for sneakers and entry-level products is softening among younger Americans.

Luxury Stocks lose USD 30 billion in one day on demand fears

What: Cencosud’s corporate venture capital unit has invested in the Brazilian platform Mimo Live Sales which specializes in live shopping.

Why it is important: The integration of the live shopping platform into its digital sales channels will allow Cencosud to offer an agile and interactive shopping experience.

The online sales strategy allows customers to buy audience in real time as influencers show products and services through the brand’s e-commerce site.

The investment will accelerate Cencosud’s digital and cultural evolution, allowing the company to optimize its e-commerce platforms and improve the shopping experience of its customers.

Cencosud Ventures invests in the Brazilian Mimo Live Sales to boost its digital sales channels

What: European luxury stores will need to wait longer for the mass return of tourists as flights from China remain limited and expensive.

Why it is important: Industry executives and analysts state that it may be more important to consider the type of Chinese visitors to Europe rather than just the numbers when it comes to luxury shopping overseas.

Air ticket prices are up to 80% more expensive than pre-pandemic and the number of travelers over the May holiday period was 64% lower than in 2019. As a result, those returning to Europe are business travelers and wealthier people who are less sensitive to flight prices and more likely to secure visas.

Despite the decrease in travelers, the average transaction value by Chinese travelers in Europe in March was 28% above 2019 levels according to Planet, a VAT refund provider.

Overall, luxury companies are focusing on courting wealthier shoppers and seeing the gradual return of Chinese tourists in Europe. Before the Labor Day holiday, Chinese consumers represented the third-largest spend after French and Americans.

Luxury brands are struggling to see what the baseline to compare with is, as 2022 was a strangely depressed year, 2021 saw unusual growth, and in 2019, 70% of the luxury spend of Chinese consumers was made abroad. Even in the long term, analysts say a return to that level of spending abroad is unlikely.

Fewer luxury shoppers but bigger spenders as Chinese return to Europe

What: Von Maur Department Store was named the 2023 Retailer of the Year by the Accessories Council for its exceptional customer service, curated product offerings, and strong industry partnerships.

Why it is important: The department store’s commitment to providing great products and services to its customers as well as its legacy in the retail industry were key factors in receiving the award.

The Accessories Council Excellence Awards were established in 1996 to recognize companies, brands, individuals, and retailers that have made significant contributions to the accessories industry.

The department store joins an impressive list of recipients who have created memorable and history-changing impacts across the accessories industry

Von Maur is known for its selection of brand name and specialty apparel, shoes, accessories, and gifts, its superior customer service, as wells as its above-market wages and benefits.

The retailer, which operates 37 stores across 15 states, was also named the top department store in the US by Newsweek’s “America’s Best Retailers 2022.”

Von Maur named Retailer of the Year by Accessories Council 

What: Macy’s wants to be involved in helping new brands to develop.

Why it is important: It is an astute way to combine social inclusion and capability to manage the product offer with a strong differentiation point. The amount remains small however in light of the size of Macy’s.

Macy's has launched a program called S.P.U.R. Pathways to support diverse and underrepresented businesses by providing access to funding, mentorship, and opportunities to be suppliers to national retailers.

Macy's has committed $30 million to a partnership with Momentus Capital, aiming to make up to $200 million in loans and equity investments available to underserved growth-stage businesses.

S.P.U.R. Pathways targets growth-stage businesses seeking to scale and supply national retailers like Macy's. The program offers financial literacy education and assistance with applications for loans and ensuring financial readiness.

Macy’s commits USD 30m to help small brands scale 

What: Cencosud’s shopping center division is starting the year off strong with an increase in revenue of 16.3% to USD 93 million.

Why it is important: The growth is attributed to the recovery of tourism in Chile and an increase in the occupancy of its complexes.

With the recovery of tourism in Chile, visits increased by 5.7% year on year, with its Cencosud's Costanera shopping center increasing its visits by 530,000 compared to 2022’s first quarter.

The company’s Ebitda increased 12.8% which was a result of higher revenues and updated contracts with better conditions.

Additionally, Cencosud Shopping has reported that its mobile app has more than 385,000 downloads and 46,000 registered patents just one year after its launch.

Cencosud Shopping increases its revenue in the first quarter driven by the recovery of tourism

What: Harrods’ managing director has called on the UK government to reintroduce tax-free shopping

Why it is important: UK retailers are losing out to competition in other countries as travel returns and tourists can no longer reclaim VAT on purchases in the UK.

Tax-free shopping was scrapped as the UK Treasury claimed it would save GBP 2 billion, however, retailers are feeling the negative impacts of the legislation, including Mulberry who closed its Bond Street store this year as a result.

Many retailers including Harrods and Selfridges have called for a review of the tax as they fear London is losing out to rival cities such as London and Milan and the decline in visitors is impacting footfall and sales.

Harrods boss tells government to ‘stop burying its head’ and bring back tax-free shopping

What: The fourth round of negotiations between Verdi and Galeria group ended without a result as the employer side couldn’t make a negotiable offer.

Why it is important: Increases in incomes are urgently needed as employees are already giving up EUR 5,500 a year due to inflation and the increase in energy prices.

Verdi expects a clear concession and negotiable offer in the next round of negotiations, which is scheduled to take place May 25 in Frankfurt.

Verdi and Galeria: Fourth round of negotiations also remains unsuccessful

What: The US’ largest manager and developer of shopping centers recorded positive first-quarter results.

Why it is important: The results have led to the group raising its quarterly dividend and increasing the midpoint of our its full-year 2023 guidance.

Net income attributable to common stockholders was USD 451.8 million compared to USD 426.6 million in 2022 and funds from operations were USD 1.03 billion compared to USD 1.02 billion last year.

The group is seeing strong demand from the retail sector across many categories in terms of leasing despite economic uncertainty.

Simon’s Other Platform Investments (OPI) group, JCPenney, and SPARC joint venture all remain profitable, with an expectation to remain profitable in the next two quarters, but seeing a majority of the profit in Q4.

JCPenney is also making a comeback according to the group as they bring better brands into the store, fix up stores, and improve beauty floors.

Domestic property net operating income increased 4% and portfolio net operating income increased 3.9% compared to the same period last year.

Occupancy at Simon’s US malls and premium outlet centers increased 1.1 percent to 94.4%. Base minimum rent per square foot was USD 54.84 compared to USD 54.14 in Q1 of the previous year.

Reported retailer sales per square foot also saw a 3.3% increase to USD 759 per square foot.

Simon Property Group posts healthy first quarter

What: Lidl is advocating for change in kids consumer habits and hopes the industry will follow suit.

Why it is important:  low cost retailers are usually not the ones calling for industry-wide change, and department stores should take note.

Supermarket chain Lidl is urging other retailers to make fruit and vegetable packaging more appealing to children, following the success of its own Oaklands Funsize range.

Sales of this range, which features fun names and cartoon characters, increased by over a third after its launch in 2017. To promote healthier eating among children, Lidl also plans to remove cartoon characters from unhealthy products by next spring. This decision, affecting at least 30 products across 14 categories, follows a similar move in 2020 when Lidl removed cartoon characters from cereal packaging.

Peter de Roos, Chief Commercial Officer at Lidl GB, highlighted the positive impact of these small changes and expressed hope that other supermarkets would follow suit.

Lidl is calling other supermarkets to make fruit and veg packaging appealing to children 

What: Several members of the Partnership’s council have requested that this week’s vote of confidence in White’s leadership take place in secret.

Why it is important: White has been under pressure as the retail group’s latest results showed a GBP 234 million loss and her plan to sell a minority stake in the business would dilute its partnership model.

In the past, secret votes have resulted in significant rebellions which would pile further pressure on White.

The vote takes place twice a year and will follow a meeting in which White and her senior executives will answer questions from the council about its performance.

According to a spokeswoman, councilors have requested a secret ballot as they didn’t want their names to appear in the media. However, recent letters from staff have shown their discontent in White’s leadership.

John Lewis chair White could face secret vote of confidence

What: UK fast fashion retailer managed to reassure markets in spite of a 11% loss in revenue.

Why it is important: Boohoo.com owns Debenhams, which still retains a footprint in many UK customers’ minds.

Shares in online fast-fashion retailer Boohoo rose by up to 12% after the company reassured investors about its growth prospects, despite reporting an annual loss. The UK group's revenue fell 11% to GBP 1.7bn in the year to February 28 due to the cost of living crisis and a return to physical stores post-pandemic.

Boohoo, which also owns Karen Millen and Debenhams, reported a pre-tax loss of GBP 91m, compared to a profit of GBP 7.8m the previous year. However, CEO John Lyttle said the group would reverse the decline in sales and losses this year.

The company is focusing on cost-cutting measures, including reducing stock levels by over a third, and is planning a significant US expansion with a new distribution centre to cut delivery times.

Boohoo reassures investors after slumping to loss 

What:  Attica pre-empts the Athens airport in order to make the most of international tourism resurrection

Why it is important:  Many department stores have tried such a venture in airports in the past, it will be interesting to see how Attica combines this experience with the expected opening of the new Hellenicon store in 2024.

Attica department store is targeting foreign tourists and has opened a 400 sqm space in the Athens International Airport, showing a selection of their products.

Attica’s tax-free sales improved by +52% in Q1 2023, in spite of the longlasting absence of Chinese tourists.

Attica opens a brand in Athens airport 

What: In November 2022, the Inditex group launched Zara Pre-Owned, a second-hand platform, in the UK, offering customers the opportunity to give new life to their garments through repair, donation, or peer-to-peer sales. The company is now focused on expanding the platform to France and Germany, and later in Spain.

Why it is important: This peer-to-peer fashion resale platform focuses exclusively on items from the Zara brand, enabling direct connections between consumers. In addition to Vinted platform, many textile companies have made their own foray into the second-hand fashion market. Kiabi and Carrefour have dedicated corners in some of their stores for second-hand items, while Veepee also launched a program in Spain for the collection and resale of articles, just to name a few.

Zara's second-hand platform to open in France, Germany and Spain in 2023

What: The CEO-powered Fashion Pact is losing its high-profile members and so far delivered little more than a handful of pilot projects.

Why it is important: Fashion Pact was designed to bring together the industry’s decision makers to tackle an increasingly urgent and shared challenge: fashion’s negative environmental footprint.

So far, its impactrests on a handful of pilot projects. High-profile signatories, including Hermès, Selfridges and Stella McCartney have quietly left.

The initiative says fluctuations in membership are normal and after spending the last three years laying the foundations, it’s gearing up for swifter action.

Going forward, it plans to increase focus on tackling emissions in the industry’s supply chain, where most environmental impact takes place. Its efforts rest on a combination of resource and knowledge building and joint projects to test-drive potential solutions.

In addition to the renewable energy power purchasing project the initiative recently launched, it’s working on a pilot programme to explore ways to incentivise lower-impact cotton cultivation. But the strategy to turn these into impactful collaborations at scale remains vague.

Selfridges, Hermès quietly exit Fashion Pact amid slow progress

What: Nordstrom is betting on its off-price stores with plans to open 20 new stores this year as consumers become more value-conscious.

Why it is important: The brand has remained a weak spot in the company’s portfolio, and its success or failure could shape the company’s future.

In FY 2022, Nordstrom Rack reported sales below pre-pandemic levels and in the holiday quarter, its sales dropped 8%. Despite these numbers, Nordstrom is looking to turn the brand into a growth driver as discretionary merchandise is under pressure as a result of inflation.

Nordstrom Rack has formed a dedicated leadership team and also focused on its best-selling brands as part of its strategy. The off-price retailer’s competitors, such as T.J. Maxx, Ross Stores, and Burlington stores, have seen success in opening more stores and driving higher foot traffic, while also seeing higher sales in comparison to the Rack.

The retailer plans to open nearly 30 new locations within the next two years as it hopes to turn the chain around during a “golden moment” for off-price as many retailers and brand have excess inventory.

As shoppers look for savings, Nordstrom hopes Rack stores can fuel its revival

What: The Chilean company opened four new stores, transformed nine stores into new formats and concepts, and remodeled ten stores in the first quarter of the year.

Why it is important: Cencosud is committed to growth and innovation as it continues to open new stores and improve existing ones to better its shopping experience.

The company is set to open 49 new retail stores as well as remodel 47 retail stores and 16 shopping centres this year as part of its 2023 investment plan. Of the total number of stores opening, 80% will be related to the company’s supermarket division.

Cencosud optimizes its presence in the physical channel with new stores, transformations, and renovations

What: Macy’s will open five more off-mall formats as its closes more of its giant mall anchors this year.

Why it is important: In a pivotal time for the retailer’s expansion strategy, its 10 off-mall stores have outperformed the rest of the company.

The department store group is focusing on off-mall expansion with mini-versions of its stores, Market by Macy’s and Bloomie’s, which are about one-fifth of the size of the retailer’s typical stores.

The company is targeting customers in fast-growing suburbs and busy shopping centers as it exits dying malls. The new and smaller stores feature a smaller assortment of popular brands with displays that change frequently to stay on-trend.

At the end of this year, the retailer will finish the test and learn phase of the stores and decide on expansion plans. For now, the CEO states that the size and locations are working and the retailer is hopeful to be able to scale the concept more aggressively in 2024.

The off-mall stores have performed better than the rest of the company, with comparable sales at the stores that have been open over a year grew 8% and 12% in the holiday quarter compared to a decline of 3.3% at Macy’s and 0.6% growth at Bloomingdale’s.

The new store formats have also drawn in younger and more diverse consumers, some of which are first time shoppers.

So far this year, Macy’s shares have dropped almost 26%, underperforming the nearly 7% rise of the S&P 500 and the roughly flat year-to-date performance of the retail-focused XRT.

In 2020, the retailer announced plans to close 125 stores over three years and lay off about 2,000 corporate employees. Currently, 80 Macy’s locations have been closed and the retailer has plans to close five more this year.

The off-mall shops have worked best so far in shopping centers with grocery anchors or stores such as off-mall retailers that draw traffic.

The retailer has found that shoppers at Market by Macy’s tend to be shopping for gifts or occasions and skew a little more towards men than other locations.

Bloomie’s stores have performed well in shopping centers with popular and higher-end retailers. The smaller format has been a way for the retailer to reach new markets and even features a restaurant concept and concierge-like service desk.

While these smaller off-mall formats look to be an opportunity for the retailer, challenges will still linger for the company as discretionary spending is expected to remain under pressure in the US and net sales are expected to decline by 1% to 3% in 2023.

Macy’s opens more strip mall stores as expansion strategy faces pivotal test 

What:  Shrinkage is a nationwide issue in the US

Why it is important:  Soon in your city?

New York City is implementing a comprehensive plan to combat a 44% increase in retail theft over the past five years. The strategy involves understanding the causes behind each theft and directing individuals towards appropriate services or the criminal justice system. The city is focusing on both preventing loss and improving the quality of life for store associates, customers, and communities.

The NYPD is particularly targeting repeat offenders, who accounted for a significant portion of retail theft arrests in 2022.

New York City cracks down on retail theft

What: Richard Price, MD of Clothing and Home at M&S is joing Fabacus as a member of its advisory board.

Why it is important: As one of UK retail’s highest-profile executives, Price is joining the board at a pivotal time for licensing and retail as reporting regulations come into effect.

Fabacus is a data management and bureau service for the licensing industry founded by entrepreneur Andrew Xeni.

With mandated reporting regulations coming into effect, there is a need for more visibility and transparency across the sector.

With over three decades of experience working for the UK’s biggest retailers, Price’s appointment to the board brings invaluable retail experience to the company.

M&S clothing chief Price to join Fabacus board

What: While Chinese tourists are slowly traveling abroad again, analysts state that their shopping taking place overseas won’t return to its peak.

Why it is important: The change in behavior stands to impact brands and destinations that have previously been reliant on big-spending Chinese tourists.

China’s big-spending shoppers are back, but they’re doing more shopping at home as domestic luxury offerings have grown and prices of goods are rising across the world. With improvements made to shopping venues and customer services such as flash sales and exhibitions that encourage impulse buys, Chinese consumers are more likely than ever to shop domestically.

62% of luxury spending by Chinese consumers took place inside its borders in April, compared to 41% in the same month in 2019.

Prior to Covid, China was the world’s fastest growing source of tourists with the majority of their luxury spending taking place outside of the mainland in 2019.

Now, the future of Chinese luxury spending can be seen in Hainan, an island for high-end duty-free shopping that saw sales boom during Covid and April sales remaining 203% above 2019 levels.

With luxury being more accessible in China, Chinese consumers no longer want to wait in long lines in European cities, they want to connect with local sales associates who know them and can advise them better.

Big-spending Chinese shoppers are splurging on luxury at home, not abroad anymore

What: The luxury retailer has launched a five-part program which focuses on edit, repair, alter, resell, and give back.

Why it is important: Bergdorf’s new program will help customers extend the life of their luxury items and supports the circular economy.

Bergdorf’s has partnered with the resale platform, Fashionphile, as part of the program where the retailer’s personal shoppers will be able to sell their clients’ luxury pieces in exchange for gift cards.

The program starts with a consultation with a stylist who will review a customer’s closet and suggest what should be taken out, repaired, altered, or resold.

Bergdorf’s and Nemain’s have also partnered with Give Back Box, allowing customers to donate their gently used clothing, shoes, accessories, and jewelry to local participating charities.

Santana Leather Care is also partnering with the retailer, offering its services to prolong the life of shoes and handbags.

The new program is considered as complementary of their Conscious Curation program which promotes exclusive ethical and sustainable items from a variety of fashion and beauty brands.

The Conscious Closet will help Bergdorf’s reach its goal to extend the life of 1 million luxury items though circular services by 2025.

The cost of the program will depend on the relationship Bergdorf’s has with the client; for long-time loyal customers the service could be complimentary while for a newer client the cost would be based on the alteration or change needed.

Bergdorf’s launches a ‘Conscious Closet’

What: India is becoming an attractive market for luxury retailers as the country’s increased spending power and fast-growing economy has led to a rise in affluent customers.

Why it is important: Western luxury brands, including Galeries Lafayette who is set to open its first store in India in 2024, are taking notice of the growing luxury market in India.

Galeries Lafayette has partnered with Aditya Birla Fashion and Retail to enter the Indian market, reflecting the country’s growing appetite for luxury goods.

The luxury department store is currently refurbishing two 100-year-old heritage buildings in the heart of Mumbai to open a store that will spread across 90,000 square feet and carry more than 200 luxury and designer brands.

The partnership also includes the launch of an e-commerce platform and another store in Delhi.

Previously, India hasn’t been a major market for Western luxury brands as complex regulations and limited retail space present challenges. However, due to the increase in spending power, that seems to be changing as the World Bank ranked India 63rd for ease of doing business in 2022, a big jump from being 142nd in 2014.

While there has always been an appetite for Western luxury brands in India, brands are now targeting first-time customers who will fuel the growth.

With the Indian economy expected to grow to USD 5 trillion over the next few years, more brands are bound to enter and invest in the market as an increase in young affluent consumers continues and the aspirational middle class becomes stronger.

India’s growing economy attracts Western luxury brands

What: John Lewis has partnered with an online safety organization to train its staff in 34 stores to become experts in family technology.

Why it is important: The retailer has become the first department store in the UK to offer specialist advice to families on internet safety.

The retailer recently conducted a survey of 1,000 parents which showed that over two-thirds were concerned about internet safety when their child uses an electronic device. As a result, the department store is equipping its partners with specialist knowledge, tools, and skills to support parents and caregivers in internet safety.

The John Lewis staff will support parents and caregivers with the safe and secure set up and use of electronic devices. This will include in-person advice on new and previous purchases, developing healthy gaming habits, balancing screen time, creating a positive digital footprint, and using tech to support digital wellbeing.

John Lewis to offer specialist advice to families on internet safety