What: Even though innovation is everywhere, some players are focusing on a seemingly simple tool: the barcode.

Why it is important: Tweaking the approach to be able to embed more information into a barcode could be a great and cheap way for retailers to improve their operations with low changes in their organisations.

The retail industry is embracing new technologies such as automation, VR, and AR, but behind the scenes, barcode technology is changing for the benefit of businesses and customers.

For instance, the 2D barcode, developed by GS1, looks like a QR code and can hold more information than traditional barcodes, allowing for custom web pages to deliver information about the product in question. Woolworths has integrated 2D barcoding into its fresh food and point-of-sale technology, which alerts cashiers when produce has expired or is subject to a recall. The barcode can be scanned by customers, providing valuable information on provenance, quality, and sustainability, and differentiating one product from another.

QR code adoption was low before Covid but increased quickly, and companies such as Haleon are working on integrating QR codes into their marketing moving forward.

Are barcodes the new big thing in retail tech? 

What: The UK department store group will be investing GBP 12.5 million this year, building on the GBP 10.3 million investment it made last year.

Why it is important: M&S has invested nearly GBP 23 million in London over the past two years, with the new stores set to create over 200 new jobs.

A majority of the investment will be going towards boosting food sales, as sales for grab and go items are higher in the city, but non-food upgrades are also in the works.

The investment plan intends to help the retailer reach even more customers across London as a third of its stores are located in the city and its suburbs.

Last year, the renewal of its Kingston full-line store resulted in an 8% increase in Clothing & Home sales. The group also plans to fully renew its Victoria Cardinal Place store and redevelop its Marble Arch store to be in the top 1% of London’s sustainable buildings.

M&S invests millions more in London stores

What: Mall owners are repurposing their properties with alternative uses and attracting tenants and experiences not typically found in shopping centers.

Why it is important: Department stores are increasingly leaving traditional mall formats in the US, leaving mall owners to get creative with their vacant space.

Diversification and densification are driving Maerich’s strategy, a California-based mall owner that expects 30 to 40 percent of its portfolio to be non-traditional use. Currently, that number is at 15 to 20%, as they repurpose square footage that was previously occupied by department stores and other retailers.

The California-based mall owner has transformed these vacant spaces and underutilized parking lots into residences, hotels, experiential concepts, fitness centers, and added more food and beverage options, as well as a variety of DTC consumer brands.

Malls and shopping centers need to continue to adapt as consumers’ discretionary spending goes more towards experiences and less on material goods, mall traffic decreases, and Amazon continues to be a top competitor.

To see success, the mall owner has been remerchandising and redeveloping its real estate with a differentiated, alternative mix of tenants in addition to adding square footage to existing assets that are productive.

Top malls today look much different than 10 to 15 years ago with the exit of department stores and other traditional retailers. Maerich is increasingly adding experiential-type tenants as they drive foot traffic and bring energy to the mall, which results in improving sales and better rent. Leasing volumes come from a mix of both traditional retail and nontraditional concepts like fitness centers.

The leasing environment is the strongest the company has ever had, with 93.6% of its malls leased a the end of the fourth quarter. The company is expected to see USD 56 million growth in annual rent income from store openings this year through the end of 2025.

In 2022, total revenues came to USD 859.1 million. Additionally, traffic is tracking 95% of pre-COVID levels and retail sales are closer to 115% of pre-pandemic levels.

Making the most of a mall

What: John Lewis teams up with the Open University to offer undergraduate scholarship to young people in care.

Why it is important: Even thought the company is going through difficulties, it keeps an eye on its social commitment and keeps on working towards more inclusion.

The Care Experienced Scholarship, launching for the first time in 2023/24, offers four full undergraduate scholarships to young people aged 25 and under who have spent time in care and faced significant barriers to higher education.

The scheme is linked to the John Lewis Partnership's "Building Happier Futures" program and is part of a series of scholarships offered by The Open University (OU), worth £3 million in total. The scholarships aim to provide equal educational opportunities for young people in care, allowing them to pursue their passions and unlock brighter futures.

With flexible study options, the OU helps care-experienced students succeed in higher education. Since 2014, the OU has awarded over 434 scholarships and hundreds of bursaries worth over £10 million.

John Lewis Partnership invests in education for the young people in care 

What: The online fast fashion retailer is set to invest 750 million reais (USD 148.85 million) in Brazil to establish a network with thousands of textile manufacturers in the country.

Why it is important: The company intends to partner with 2,000 manufacturers which should generate around 100,000 jobs over the next three years.

Shein to invest nearly USD 150 million in local production in Brazil

What: Experts in the retail technology space believe that physical stores will soon employ less people and rely on technology like avatars and robots.

Why it is important: The rise of technology in the retail space could be an answer to staff shortages and offer a better customer experience.

“Avatarizing service people” is how one German software development company is approaching it as they argue that self-service kiosks aren’t friendly or intuitive. The company, Humanizing Technology, offers a full-service experience with its cartoon avatars. From welcoming and directing customers, to recommending and up-selling products, as well as speaking multiple languages, the avatars can easily act as salespeople within the retail space.

Verizon offers Proto, a holographic human, which can pose and twirl just like a showroom model as well as communicate through body language and a voiced narrative that talks through the outfit. The 3D hologram gives a full body effect and shows how fabric falls and how items fit while also allowing customers to customize products on the screen. Burberry is currently rolling out Verizon’s Proto across its flagship stores and sees it as a way of bringing their VIP clients closer to their brand.

Hyservsn holograms offers products that can be custom scaled to suit any environment, with a large scale product being ideal for larger spaces like department stores. Their avatar allows 2-way interaction with a digitally rendered human avatar that has real-time conversations with users. The company also offers a high definition product display that can make a product appear to be floating in midair.

The retail space is becoming more phygital as these tools become more accessible and common within the industry.

The retail store of tomorrow will be staffed with avatars, robots, and holograms

What: The 159-years-old department store chain is built as a partnership, a very specific structure in the industry.

Why it is important: While such a capitalistic structure has been an asset in good times, it also needs to be properly managed in the current turnaround, in order to make the most of it.

Nish Kankiwala, the first-ever CEO of John Lewis, faces challenges like surging inflation, poor consumer sentiment, a £234mn annual pre-tax loss and a group net debt of £1.7bn. The retailer's partnership structure, which includes 74,000 employees, limits its financial options.

Kankiwala must address the company's net debt pile while investing in the business and returning it to profitability as part of Chair Dame Sharon White's turnaround plan (already well started with 16 store closures, thousands of redundancies, and new ventures, especially in housing). The company must repay a £50mn loan in December and two bonds worth £300mn each in 2025 and 2034.

Despite the challenges, John Lewis executives are confident in their ability to pay their debts, and the company is in robust financial health with a strong balance sheet and low net debt.

Why John Lewis’ specific structure is both an opportunity and a threat 

What: Brands under pressure to generate profits are looking for ways to reduce costs without losing customers as they revamp their return policies.

Why it is important: 41% of the top 200 brands and retailers in the US charged a fee for customers to make returns by mail, up from 33% the previous year.

Returns have become even more costly for companies as the costs of freight and labor have gone up, while growth in e-commerce has slowed. Additionally, online return rates went up more than 5% in 2022.

As brands feel the pressure to cut expenses and improve their bottom lines, they are opening up to the idea of charging customers to ship their purchases back.

While brands have to share the burden of costs with consumers, they also face losing customers as a study found that 34% of 2,000 consumers surveyed stopped shopping with a brand after it started charging for returns.

Introducing features in the purchase journey to increase the likelihood of customers keeping their purchases or encouraging shoppers to buy more items rather than asking for a straight refund is key to retaining customer loyalty.

One example of this is offering incentives for exchanging their items. One activewear seller introduced a USD 6 handling fee while also increasing the credit it offered to customers who returned an item but purchased something new in the same transaction. The brand was able to keep 33% of the revenue it would have lost in returns and its retention rate has remained at 70% with the new fee.

Other brands have no plans to change their free returns policy, but are still looking to reduce the rate orders are shipped back at. This includes increasing the number of photos and using videos to better display item’s features and dimensions.

Should brands stop offering free returns? 

What: Hyundai is using AI to save time on their creative processes.

Why it is important: While it is probable that many companies are going to try how they can save time and increase productivity thanks to AI, one can wonder if writing advertising campaigns is the best topic for a first try, unless this goes hand in hand with a massification of the advertising campaigns (hence the media investments) requiring an acceleration in output.

Korean department store company Hyundai has announced that it will start using AI to write its advertising copy in March 2023. The system used has been developed by the major South Korean IT company and is comparable to Open AI’s ChatGPT3.

The retailing company has been training the system, called Lewis, with 10,000 ads from the past 3 years. Thanks to machine learning, the system can come with a proposal for the text of an ad campaign in 3 hours, while it took a few weeks in the past (the final say is still subject to human validation).

It expected that more retailers will embrace the technology in the coming months.

Hyundai department stores are testing AI for their copywriting system

What: A southern department store chain is experiencing a stellar growth in terms of stock share value.

Why it is important: Traditional retail skills are still central when it comes to maintaining profitability.

Dillard's Inc., a family-run department store chain in the US founded in 1938, has seen its shares soar by more than 1,500% since April 2020, making it one of the best-performing stocks of recent years. Despite having a market value similar to that of Macy's Inc., Dillard's has less than a third of Macy's annual revenue.

The company, which owns the majority of its 280 stores (mostly in the South), has avoided chasing growth and opening hundreds of stores, buying internet startups, or selling its real estate. Dillard's focuses on smart merchandising, shrewd financial management, and personalized customer service, resulting in a loyal following.

Dillard's doesn't host quarterly conference calls or disclose how much of its $6.9 billion total revenue is derived from online sales. The company’s inventory is down 23.5% in the fiscal year that ended Jan. 28, compared with 2019. Meanwhile, profits totaled $891.6 million in the latest fiscal year, up more than 700% compared with the same period in 2019—far outpacing rivals.

The department store company with soaring stocks 

What: The retailer is reporting progress on its multiyear social purpose platform with several accomplishments in 2022.

Why it is important: Macy’s is investing heavily in suppliers, people, and products that help create a more equitable and sustainable future.

Macy’s Inc. launched Mission Every One in 2022,which calls for Macy’s to invest USD 5 billion through 2025 on vendor and service partners, products, people, and programs that foster equality, sustainability, and inclusiveness.

The retailer reported several accomplishments last year with approximately USD 1.4 billion of the USD 5 billion being spent to support diverse-owned businesses, diverse sellers and brands representing 30% of the enterprises on Macy’s online marketplace, 29% jobs at the director level being ethnically diverse, and many other notable achievements.

Macy’s also reported that it expects more than half of its cotton products within private brands to be sustainably sourced by the end of this year.

Macy’s Inc. issues progress report on corporate citizenship

What: John Lewis Partnership might not be a partnership anymore in the future.

Why it is important: Times are troubled for the iconic retailer, which is losing ground to Mark’s & Spencer, and which has been unable to pay bonuses to its staff for the past 2 years.

UK retailer John Lewis (John Lewis department stores and Waitrose hypermarkets) is reported to consider a sale of a stake in its business, after 73 years of operating as a staff-owned partnership. The goal would be to sell a stake worth £1 to £2bn, in order to invest in Waitrose and build a performing IT infrastructure, in order to follow up with the massive store opening that took place between 2000 and 2025, from 151 to 379 stores).

However, some experts doubt this version and suggest that this is a recapitalization in disguise, in order to cover the 2022 losses (£234m) which came on top of the 2021 ones (£27m).

Any decision would have to be approved by the chair, the board and the partnership council, a representative body with elected members from the workforce.

John Lewis is reported to consider reviewing its staff ownership structure 

What: Continued improvement in metro traffic data, which could be an indication of shopping mall traffic improvement, signals a fast-tracked recovery for China.

Why it is important: The world’s second largest luxury market is expected to grow by 19% in 2023  and travel retail will continue to recover according to Barclays

Traffic in major Chinese cities, such as Beijing and Shanghai, has almost returned to pre-COVID levels while Shenzen and Chengdu have significantly passed pre-pandemic levels already.

Travel retail is expected to return to normal as tourism is returning and excessive savings support consumers’ spending.

According to one of the largest luxury shopping mall operations in China, VIP customers had already resumed their spending abroad, but they expect more Chinese to travel during the year and buy luxury goods abroad. Around 15% of Chinese spending is expected to occur abroad this year.

Additionally, Chinese shoppers are ready to spend their COVID-19 savings, which reached 2.1 trillion euros in 2022.

Barclays suggests that Swatch Group could gain the most from China’s reopening as they had the greatest exposure to Chinese consumers before the pandemic, with 50% of sales from China. Richemont is also well positioned as they saw 40% of sales coming from China before the pandemic. Other brands mentioned include Cartier and Van Cleef & Arpels, as consumers may turn to watches and jewelry as an alternative asset that can hold value during inflationary times.

Traffic rebound signals fast-tracked China recovery

What: Online sales are decelerating and foot traffic is up, resulting in retailers investing in technology and improving their supply chain.

Why it is important: As consumers increasingly seek out in-store experiences, retailers should dig into technology and data to better meet customer demands.

Retail is at an inflection point as online sales decrease and foot traffic increases in physical retail stores.

Retailers are increasingly more trusting of the data and technology available to them as they see this change in consumer behavior.

Analyzing this data has allowed brands to rationalize their footprint and analyze their brand performance. With this, brands have learned that closing an underperforming store results in e-commerce suffering in that geography. Additionally, retailers have increasingly looked at strip centers and freestanding stores as mall performance declines.

Technology has also assisted in the uptick of in-store shopping. Localized inventory is encouraging foot traffic as customers can see if an item is in store before going. Consumers now know to buy products quickly due to supply chain issues and retailers are getting smarter about having less inventory.

Frontline retail workers also play a vital role as consumers return to physical retail. We are in a human connection time and employees become a reflection a brand. Retailers should focus on the  technology available to employees and creating a positive work environment to ensure the success of their brand.

Retailers dig into data to rethink locations, footprint

What: Industry experts question whether opening a casino inside Saks Fifth Avenue flagship store would drive traffic for the business or negatively impact the brand’s image.

Why it is important: While the proposal may seem absurd, retailers need to be considering bold initiatives to stay relevant in the marketplace as consumers become more interested in experiences.

After opening a casino on the top three floors was proposed by Saks’ parent company, HBC, experts throughout the industry are discussing the impact it could have on the luxury department store’s business.

The marketplace is moving quickly and demographics are changing consumers become more interested in experiences. As retailers try to engage more in the lives of their customers and create more unique shopping experiences, a casino could drive traffic and attract a larger luxury audience.

The former president of Saks noted that luxury is about quality experiences, not just quality products, and a casino could achieve that if handled correctly in addition to opening up new kinds of partnerships with hotels and airlines.

Other retail experts disagreed with the idea, stating that the luxury department store should stick to what it knows as a casino wouldn’t be compatible with the department store’s hours or business model.

Several sources state the plan should be viewed as a real estate play as HBC greater productivity out of its flagship real estate. The top three levels currently house clothing, the L’Avenue restaurant, Saks Works, and offices.

A Saks casino: gauging the impact to the luxury brand

What: According to reports, the creditors of Galeria Karstadt Kaufhof should waive billions in the ongoing insolvency proceedings.

Why it is important: If creditors reject the concept, business operations will have to be stopped immediately.

The insolvency plan is set to be voted on March 27 by creditors.

The leadership requires landlords, suppliers, and other creditors to waive a large part of claims to enable Galeria to start over. However, if creditors reject the concept, business operations will be stopped immediately.

The restructuring consultants expect insolvency claims entitled plan payments totaling 1.4 to 2.36 billion euros.

Creditors without collateral should only receive 2 to 3.5% of the amount owed to them if the insolvency plan is accepted while those with collateral face fewer losses.

The state economic stabilization fund (WSF) has supported Galeria with EUR 680 million in recent years and should receive around EUR 88 million from the sale of inventory and will also be involved in the sale of Galeria subsidiaries such as the Belgian chain Inno.

Galeria creditors should waive billions

What: The Consumer Confidence Indicator reached an increase of 0.5 points in February and increased 1.7 points in comparison to February 2022.

Why it is important: The annual rate of the Consumer Confidence Indicator continues to rise annually in addition to seeing annual increases in almost all other components.

The National Survey on Consumer Confidence is carried out during the first 20 days of each month and is based on a sample of 2,336 households in Mexico.

February 2023 closed with an annual increase in almost all components of the Consumer Confidence Index, with the current economic situation of household members and of the country compared to 12 months ago growing.

Additionally, members of the household reported being more likely to purchase furniture or other household items in comparison to last year.

Consumer confidence in Mexico remains positive and accelerates in February 

What: The RealReal is closing down several flagship locations in the world.

Why it is important: Will the second-hand market ever find the way to profitability or shall department stores definitively consider it as a marketing stunt?

Luxury resale market is competitive, with The RealReal announcing lay-offs and store closures to trim costs, resulting in a loss of 80% of its share value in the past year. The company had a 'growth at all costs' strategy, but profitability is now the priority. The market rewards now companies that are trimming costs, moving towards profitability, and offer unique treasure hunt experiences.

The RealReal’s business model faces complications due to the high cost of authenticating luxury items, broadening category mix, and fierce competition from similar companies. Furthermore, the company faces the dichotomy of closing brick-and-mortar stores despite signs of in-store shopping's return.

However, the luxury resale market has untapped potential, with a projected growth of 20% between 2020 and 2025 and reaching $67 billion. The RealReal's competitors seem to be performing better, and a profitable business model is critical. Circular economy is seen as the future, and brands will seek to control the customer experience of resale of their own branded goods. Companies that enable this effectively may emerge as winners.

what the real real closures say about the second hand

What: The first housing project advertised as part of John Lewis’ grand plan is encountering difficulties.

Why it is important: This is a big test, and those difficulties arise just after the exit of the CEO who was in charge to launch this strategy, Pippa Wicks.

John Lewis Partnership's plan to build 430 flats in towers up to 19 storeys high in Ealing, west London is facing resistance and delays.

Local residents and a pressure group have raised concerns about the height of the towers and lack of affordable housing. The project is months behind schedule and has not yet filed a planning application. The delays and objections could impact the company's ethical profile and PR.

The project is part of the retailer's diversification plan to target 40% of group profits from non-retail sectors by 2030, which includes building and renting out 10,000 homes within a decade.

John Lewis runs into trouble over first housing project 

What: A new report showed that Chinese high-spenders are ready to start traveling again after the border reopening in January.

Why it is important: 92% of survey respondents expressed interest in taking an international trip in 2023, with Europe ranking the highest among travelers.

The report noted that two thirds of the money the Chinese spent on luxury goods was done on trips abroad pre-pandemic.

According to Global Blue data, mainland Chinese shoppers were the leading nationality for tax-free shoppers in 2019, accounting for 4.25 million shoppers and spending an average of EUR 1,600 per shopper.

Chinese consumers are looking for newness and to reconnect with destinations, retailers, and brands with plans to spend as much or more as they did pre-COVID, leading to a significant opportunity for retailers to capitalize on the demand.

Chinese luxury consumers eye international travel in 2023, says Global Blue

What: Inventory management has become an advantage for Macy’s in a tough retail environment.

Why it is important: Macy’s margins and profits fell last year with a small sales decline, but the impact was lessened thanks to their disciplined inventory management.

Macy’s CFO has pointed to inventory productivity as a value creation lever.

The department store leveraged data and analytics to better forecast sales demand, receipt timing, and flow across supply chain.

In the first quarter, the retailer saw signs of consumer weakness and a shift in category demand. As a result, they adjusting the timing, amount and composition of receipts by channel, category and brand.

They also adjusted purchasing accordingly as economic challenges didn’t let up during the year. During Q4, the department store bought closer to need, help open-to-buy reserves and bought into areas of strength.

Inventory levels at the US department store declined 3% last year and have fallen 18% compared to 2019. Inventory turnover was also down 4% last year but has improved by 19% since 2019.

The retailer has been relying more on data and analytics with plans for more inventory productivity initiatives for 2023, as more than two thirds of their USD 1.3 billion in capital expenditures last year went towards data and analytics or other supply chain modernization.

Disciplined inventory management helped Macy’s weather tough 2022

What: One hundred autonomous drones are now at work during non-operational hours to improve stock accuracy and secure availability of products for online or physical retail.

Why it is important: Ingka Group is the first retailer to successfully use this solution for stock inventory.

Inter Ikea Group, Ingka Group, and Verity started developing a fully autonomous drone solution to track inventory and improve the wellbeing of its employees on the floor two years ago. With this solution, employees no longer need to manually confirm each pallet.

The retailer is investing in technology to better support customer fulfilment and become a true center for omnichannel retailing. Introducing drones and other advanced tools is beneficial for customers, employees, and the business as it improves employees’ wellbeing, lowers operational costs, and allows the retailer to be more affordable and convenient.

The one hundred drones that are stocking inventory are current located in 16 locations throughout Belgium, Croatia, Slovenia, Germany, Italy, the Netherlands, and Switzerland.

One hundred drones now used across Ikea retail for stock inventory

What: Harrods increasingly sees itself as a dining destination.

Why it is important: This is not specific to Harrods. Restaurants and bars are an increasingly important part of department stores businesses as they need to provide experience and be a destination for their customers.

Harrods, the world-famous luxury department store in Knightsbridge, London, has seen a significant increase in revenue from its restaurants and bars since the start of the COVID-19 pandemic. Despite dining not being the first thing consumers think of when it comes to Harrods, the department store’s restaurants and bars are now becoming a revenue driver for the business.

Research by Harrods shows that when customers engage with the 26 store’s restaurants and bars they spend twice as long in the building and twice as much money (when compared with pre-pandemic period, this represents a turnover up +44%, and +49% vs. 2019). This has led to a focus on creating “destination dining” experiences, such as the new rooftop Studio Frantzén, to draw local, affluent consumers to the store. The goal is to provide systematic opportunities to convert shoppers into dinners and vice versa. 80% of Harrods Rewards card holders use restaurants now, vs. 29% pre-Covid.

Harrods sees dining as an experience as crucial for its future, which is why it also encourages brands to do so, such as Dior which has opened a café on its Harrods point of sale.

How Harrods built a booming restaurant business 

What: Retailers are trying to fight against their contribution to environmental damage and emissions, but the major issues lie with indirect partners and peers in manufacturing, logistics, and transport.

Why it is important: According to the National Retail Federation, the major retail body in the US, Scope 3 emissions can account for up to 98 per cent of a retailer’s greenhouse gas emissions, and are far more difficult to manage because, unlike Scope 1 and 2, they are outside of a retailer’s direct control.

Retailers are starting to recognize these issues and are taking steps to fix it within their own business and partners they work with. In order to make a change, retailers are having to evaluate and rethink the business’ relationship with plastics.

Originally, everything was wrapped in plastic to protect goods from being damaged in transit. Some retailers have changed this process to ship goods in large cartons rather than in individual plastic bags. But packaging is a major pain point for customers.

Alternatively, other packaging solutions are offering home-compostable shipping mailers. Alongside the mailers, the company is working towards educating retailers and consumers about composting. Customers are asking for alternatives to plastics, so, therefore, such solutions should not be ignored when innovating the future of supply chain and packaging.

The fight to make the supply chain sustainable