What: The Falabella retail division recovered more than 251 tons of clothes hangers in Chile during the 2022 financial year.

Why it is important: Falabella is managing its waste and continuing to grow in line with the circular economy.

Falabella has recycled 16.6 million hangers since the start of its recycling program in 2019. The retailer stated that the project aims to manage their waste and prevent it from ending up in landfills, while also continuing to implement a circular economy into their company.

The hangers are organized into color, model, and state of conservation. Those that are in good condition are taken back to Falabella stores to be refurbished and the unsalvageable hangers are crushed into raw material and then used to manufacture new hangers or other products.

Falabella accumulates 16.6 million recycled clothes hangers in Chile

What: Wicks joined the company in August 2020, at the height of the pandemic. Her replacement on an interim basis is Naomi Simcock, the firm’s retail director. She’s a 12-year veteran of the company and has worked across a variety of roles in both its John Lewis and Waitrose brands. She was previously with Marks & Spencer.

Why it is important: Most notably, under Wicks’ watch, the venerable Never Knowingly Undersold price-matching promise was ditched as part of the overall revamp of the John Lewis brand that she oversaw, and the successful budget Anyday own-brand was introduced.

Pippa Wicks exits John Lewis

What: The Australian market is increasingly difficult for department stores, as customers are either going for low prices or asking for great experiences, and Australian department stores often find themselves in the middle.

Why it is important: Conditions are ripe for a market concentration, from two players to one, as well for a massive closure of regional, non-profitable stores, in order to be able to focus on the flagships.

The Australian retail industry has seen an increase in spending since the pandemic, going from $26.5 to $27 billion a month to $34 to $35 billion a month. However, it saw a 3.9% decrease in spending between November and December 2022, with most industries experiencing a decrease in turnover during this time. Department store spending saw the largest drop, with a 14.3% decline in spending between the two months. Despite this, year-on-year spending increased by 7.5% from December 2021 to December 2022, but spending appears to be falling from the mid-year high where spending increased by 19.2% in August 2022.

The decrease in spending is believed to be due to a combination of cost of living pressures, price sensitivity, and the end of the lag effect after the easing of Covid-19 restrictions. November is typically a bigger month for retail than December, due to online sales events such as Black Friday and Quick Frenzy. The decrease can also be attributed to the long lead times for deliveries, as Christmas shopping is mostly done in November.

The retail sector will face challenges in 2023, with rising inflation, energy costs, and interest rates affecting consumer spending. Consumers are expected to be more sensitive to price in 2023 and focused on servicing debts, fuel prices, and food. Only 2 options are viable: low price and high turnover, or high price, high profit and more exclusive experiences.

This is why experiential offerings and sustainability are high on the agenda for Australian department stores in the future. The future of traditional department stores is expected to be a smaller model, focused on flagship stores and CBD locations, offering a more luxurious, premium, and prestigious experience. This comes at a price: as one commentator puts it, you can not have a pianist in the cosmetics department, a champagne bar on level three and oysters on level four, when you have 60 stores, but this can be done when you have five.

Can Aussie department stores pivot ahead of a spending decline?

What: Costs are the reason why the French and German speaking markets will be phased out.

Why it is important: Department stores still have to figure out how to solve the e-commerce profitability equation.

De Bikenkorf is discontinuing international e-commerce activities in French and German speaking countries due to rising costs. As a consequence, the website will only focus on the Dutch and Flemish markets.

The phasing out will be completed in the next few months and is the direct result of rationalization due to rising costs.

De Bijenkorf scales back international e-commerce 

What: Returns in the UK hit a record level in 2022 as the cost of living hit consumers hard.

Why it is important: The end of free returns could be getting closer as more and more retailers start charging for returns with changing consumer behavior.

The 26% rise in returns came despite online retail purchases being 11.5% lower.

December 2022 was the busiest month ever for returns, with factors beyond retailers’ control combining to create a perfect storm for returns. The pandemic, looming recession, strikes, and cost-of-living crisis are all factors contributing to the uptick in returns.

Consumers are only keeping what they really love, a growing shift in consumer behavior that has ‘turbocharged’ with household bills increasing.

It is imperative for retailers to ensure a positive experience for each customer as returns volumes increase. Consumers want and need refunds quickly and are making decisions faster on what they keep, therefore retailers should monitor why products are being returned to improve their product listings.

Additionally, retailers should track returns data to understand how carbon emissions can be cut from inefficient routes and how to provide shoppers with purchases they are more likely to keep, as returns volumes of this scale will have enormous environmental and economic costs.

2022 was a year of returns deluge with consumer behavior changing

What: Ikea is increasingly expanding its reach by opening locations in city centres.

Why it is important: Such a strategy emphasizes the interest of city centres and potentially creates new flows, which is great news for department stores, in addition to potentially opening up opportunities of collaboration with Ikea.

Ikea has been working on the past three years on smaller store formats, which opened in various cities across the world (LA, Paris, Moscow, Toronto and New York).

The idea is to reach shoppers where big-box retail is not available, by opening 800 to 900 sqm stores, located in the heart of cities and focusing on specific areas of interest (kitchens, bathrooms, bedrooms).

Ikea is not the only big box retailer to explore such options: Best Buy for instance is also exploring similar ideas.

Ikea goes big for city centres smaller stores 

What: Siam Paragon mall is aiming to reinvent itself in Bangkok

Why it is important: The competition is harsh in Thailand, with Central and The Mall Group having already announced similar projects at a more massive scale earlier, in 2022.

Siam Paragon, a 500,000sqm retail destination in Bangkok, has launched an $88.6m transformation project called The Next Level Evolution to become a global landmark in 18 months. The project aims to upgrade the shopping mall to "bridge the physical world, the digital world, and the metaverse" and is set to be completed by mid-next year.

Siam Paragon's investment plan will meet the surging demand from luxury brands, and more than 100 brands are on a waiting list to open stores in the mall. The mall has exceeded its revenue target and achieved growth of over 50% YoY in 2021, primarily driven by the luxury segment.

Siam Piwat, the company behind the project, is putting away traditional real estate development methods to create a unique destination for brands, entrepreneurs, architects, designers, and tech experts to engage in co-creation. The project will also integrate art, technology, and nature to create a cleaner, more sustainable world. Siam Paragon will continue to trade throughout the redevelopment project with areas refurbished and rebuilt in stages to minimize disruption to visitors.

Inside the $88.6m Siam Paragon mall transformation plan 

What: Instagram is testing a new one-to-many broadcast tool that allows creators to keep followers up to date in a quick and casual way.

Why it is important: Retailers and brands will have a new way to reach and connect with their customers through this tool.

The new feature will allow followers to respond by polls and reactions, eliminating a comment section.

Users will have access to Broadcast Channels in their Instagram inbox, where they can join a channel to be notified when updates are posted.

Instagram tests new broadcast channel

What: In the last quarter, the real estate investment trust traded its share in Eddie Bauer as the group’s net operating income fell 35.4% in the fourth quarter.

Why it is important: If the company is going to reach its potential, retail and brand operations need to improve as the company faces rising costs, including higher interest expenses as USD 1.8 billion in debt matures this year.

Net operating income from Simon Property Group’s retail and brand interests, which include investments in J.C. Penney, Sparc Group, Authentic Brands Group, and Rue Gilt Groupe fell 35.4% to USD 125 million and 33.4% to USD 355 million for the year.

In the fourth quarter, the group’s comparable funds from operations rose 1.1% to USD 1.18 billion and net come attributable to common stockholders rose 33.9% to USD 673.8 million. However, retail and brand operations were still down considerably and must improve.

Simon Property Group sells off Eddie Bauer interest as its retail investments tumble 

What: New research shows that consumers are irritated by keeping track of online shopping login information.

Why it is important: According to research by Bolt and YouGov, 62 percent of shoppers prefer having one account that can be used anywhere when perusing online sites.

Bolt said this research aims to understand consumers’ shopping concerns and behaviors while also highlighting the need for brands and retailers “to cut friction in the store account creation process to drive lifetime value with consumers,” the company said in a statement.

Using technology that provides users with secure, one-time passwords for a simpler login process can help brands and retailers relieve the checkout process with consumers.

Can frictionless checkout drive conversions? 

What: The latest report from PwC revealed that customers are eager to return to shopping in-store for the experience while also continuing to shop online for deals and more transactional purchases.

Why it is important: As consumers become more mindful of how and where they spend, retailers and brands need to be smart about marketing products that are in stock with lower inventory levels.

When consumers were asked where they shop, in-store shopping topped the list at 43%, followed by using mobile devices at 34%, then computers at 23%. Additionally, 43% of consumers don’t plan to increase online shopping in the next six months, down 50% in comparison to last year’s study by PwC.

Although 69% of the respondents stated that they intend to cut back on nonessential spending over the next six months, there were two exceptions for ESG practices and the luxury segment.

70% of respondents said they were willing to pay more for local produce and goods made by a company known for ethical practices. Additionally, the survey found that 26% of respondents plan to spend the same amount on luxury goods.

ESG and responsible spending saw a big uptick this year in comparison to previous studies. As consumers are trying to find ways to cut back, they are spending their money more responsibly as ESG becomes more important to them.

PwC research shows shoppers seeking in-store experience

What: The ADdress, opening at the American Dream in New Jersey, will sell modest clothing for populations that require cover-up styles.

Why it is important: The specialty department store will be the world’s first modest clothing department store that caters to Orthodox Jews, Muslims, and other populations who need cover-up styles.

The American Dream team developed the department store concept as they understand their culturally rich market and wanted to provide a convenient one-stop shopping experience for the diverse community they live in. The store will fill a gap in the market while also making modest clothing more accessible.

The specialty department store will offer women’s and men’s fashion, footwear, jewelry, accessories, children's clothing, home goods, and gifts.

Dreaming up a department store for less skin-revealing clothes

What: Revenues were down 14% at Gucci and Balenciaga’s backlash from ad campaigns led to a 7% dip in fourth-quarter revenues at Kering.

Why it is important: While Kering’s revenue was down in Q4, LVMH reported a 15% increase in revenues for the last quarter of the year.

The overall Q4 figure represents a slowdown from the third quarter, when sales rose 23%.

For the full year, revenues at Kering rose 9% on a comparable basis to 20.35 billion euros.

Gucci, Balenciaga slowdowns dent Kering’s Q4 results

What: Keith Melker had been appointed as J.C. Penney’s chief transformation and strategy officer.

Why it is important: J.C. Penney is focused on its transformation initiatives and achieving its goals to better serve customers.

Melker will oversee the retailer’s transformation office, ensuring that initiatives are executed effectively as the retailer focuses on its reinvention, optimising processes and initiating strategic partnerships.

The key areas of focus for the NYC-based retailer include driving profitable consumer traffic, enhancing inventory management, further advancing digital growth, exploring strategic partnerships, and evolving the value delivery model.

Melker previously served as CEO of a property management company, and has also held the position of chief strategy officer for Kimberly-Clark Corporation, in addition to more than ten years as a managing director and partner for Boston Consulting Group.

J.C. Penney names new transformation and strategy chief

What: Falabella launched an automated warehouse inside its distribution center in the Lo Espejo district.

Why it is important: The company can increase its storage capacity by up to 200,000 units and increase the speed of online order preparation by four times.

The 100% automated warehouse is specifically dedicated to preparing orders for small e-commerce products and required an investment of 4 million dollars.

The robotic equipment increases the speed of online order preparation by four times, optimizing deliveries and increasing the dispatch capacity of small products by more than 50% which translates into an increase of up to 15,600 units per day.

This logistics center, named Autostore, improves shopping experience by reducing wait times for e-commerce customers and helps meet Falabella’s goal of making the preparation and dispatch of e-commerce orders more efficient.

Falabella invests 4 million dollars in a robotic logistics pole for its retail division

What: FibreTrace seeks to accelerate the fashion and textile industries’ sustainability efforts by democratising access to its digital transparency and traceability tool.

Why it is important: Traceability is becoming top of mind for retail and fashion decision-makers in order to meet shareholder expectations around improving sustainability endeavours.

FibreTrace works with brands, manufacturers, farmers and raw fibre producers to connect the supply chain. It has 2 products: FibreTrace Verified and FibreTrace Mapped.

The FibreTrace Verified product connects digital traceability with physical technology, applying non-toxic, luminescent pigments onto raw fibres at their source. The pigment is indestructible throughout the processing cycle and can be read and tracked at every stage of the supply chain through a hardware device. Each audit is recorded on the blockchain and provides AI-powered insights for businesses.

The FibreTrace Mapped product allows all players to register and upload details at each step of the supply chain process. Once a company uploads its products and information, the next actor in the supply chain is invited to contribute. This continues throughout the supply chain until the product is fully mapped out.

FibreTrace: a free, open-access traceability tool 

What: Amazon saw success in the final quarter of 2022 but will focus on its shopping experience as e-commerce fell under expectations.

Why it is important:  The retailer is focusing on technology to improve its shopping experience to overcome the economic stress it will face in the coming year.

Amazon pulled in USD 149.2 billion in net sales in the final quarter of 2022, beating analysts’ estimates of USD 145.8 billion.

But shares still sank 3% as e-commerce slid in under expectations at around USD 1 billion less than anticipated and Amazon Web Services also fell short for the second quarter in a row.

All of this resulted in quarterly earnings at just 3 cents per share when analysts expected 17 cents per share.

The blame fell on inflation and economic pressure for consumers spending less. Amazon saw consumers spend less on discretionary items, and shift to lower priced items and value brands but continue to spend on everyday essentials.

The retailer plans to focus on technology to improve its customer experience as consumer behavior changes and starts to feel economic pressures.

What Amazon’s earnings say about improving its shopping experience

What: The year has already been full of major retail happenings, with retailers filing for bankruptcy, layoffs, and the threat of recession, some retailers are feeling the pain more than others as the year kicks off.

Why it is important: Value conscious consumers, rising layoffs, and new leadership are shaping the year ahead.

With bankruptcy, ongoing layoffs, inflation, and the threat of recession, consumers have started to pull back and take a more cautious approach to spending.

Default rates are expected to stay relatively low, however its likely that retail’s strong will get stronger and the weak will suffer. However, some sectors could be better off than others.

E-commerce sales are still on the rise, yet digital native brands are suffering through layoffs and cost-cutting as venture capital firms pull back and take a harder stance on profitability.

Consumers are turning towards private labels and seeking out cheaper alternatives as they navigate the current financial landscape, which could result in a boost for the resale market.

What lies ahead for retail in 2023

What: The Italian department store chain, sold in 2018 by the British fund BC Partners to a group of investors and former managers of the brand has appointed the founder and president of Liu Jo, Marco Marchi, as president. He succeeds Giorgio Rossi, in office since November 2018, who remains a board of directors member.

Why it is important: Marco Marchi entered the Coin group in November 2019 by taking a 15% stake through a capital increase and has since been part of the board of directors.

Marco Marchi founded the ready-to-wear brand Liu Jo with his brother Vannis. In 2019, he expanded his group with the acquisition of Blufin (Blumarine).

On the occasion of this appointment, Coin has made public its turnover for 2022, which accounts for 300 million euros with a net profit of 20 million euros and a gross operating result (Ebitda) of 18.7 million euros. The group has 37 points of sale and 102 Coincasa stores dedicated to the home.

Marco Marchi becomes Coin’s president

What: Net-a-porter has partnered with The Seam to offer customers alterations and repair services for clothing, jewelry, and accessories.

Why it is important: The British retailer is helping customers extend the life of their clothing and delivering accessible sustainable solutions while working towards its sustainability goal.

The service will launch in February for womenswear, with menswear and more services following at Mr. Porter and the Outnet in the spring.

The Seam is an on-demand tailoring service that connects users with a network of seamsters, tailors, and makers from local communities across the U.K.

Through the partnership, Net-a-porter customers will have access to clothing alterations and repairs, bespoke customizations, as well as care and repair for handbags, footwear, and jewelry. Most services will be completed within seven to ten days with the option for express service.

Net-a-porter urges customers to ‘make do and mend’ with new repair service

What: Falabella has received the LEED Gold certificate for its 25,000-square-meter store located in Parque Arauco.

Why it is important: The certificate is the second highest, recognizing that the store stands out from the vast majority of projects that are certified, reaching high numbers of comfort, sustainability, and energy efficiency attributes.

This recognition is prepared by the US Green Building Council and highlights different criteria including the design and construction of the store, adequate and efficient management of energy resources and water, the correct use of materials, waste management in construction, and the quality of the environment inside.

Falabella Parque Arauco is the first of its stores to measure its carbon footprint during the construction stage. The store also has low water consumption faucets and appliances, 100% high efficiency LED technology, an area for separating waste, and a recycling plan that recycled 96.6% of building waste during construction.

Falabella Parque Arauco officially receives the LEED Gold international certification

What: Frasers Group is introducing its own buy-now-pay-later (BNPL) offer as part of its own brand

Why it is important: The service is expected to boost the group’s earnings and will give the group an advantage as it’s regulated by the Financial Conduct Authority.

The service, Frasers Plus, will allow shoppers to borrow up to GBP 2,000, split and defer payments, or take a loan through the group’s app. Payment plans will start at three months with periods of six, 12, 24, or 36 months also available with interest.

Customers will also be able to earn reward points when they use the group’s financial products, with one point being rewarded for every GBP 1 spent.

Studio Retail, an FCA-regulated firm, that Frasers bought out of bankruptcy last year, will activate consumer loans and technology created by Tymit, in which the retail group holds a 28% stake, will facilitate the buy-now-pay-later payments.

Frasers set to launch own-brand BNPL app-report

What: The company said it would remove several hundred overhead roles from its workforce of about 17,000. The cuts come in corporate functions and not in the staffing of “frontline” roles in logistics centres, customer care and outlet stores or in Zalando Studios.

Why it is important: Zalando — like other e-commerce companies and many fashion players — grew quickly during the pandemic and has since seen those tailwinds subside as life returned to normal and inflation hit the economy.

The full scope of the cuts is still to be determined. The senior leadership level will be impacted.

Zalando isn’t the only e-commerce company to find itself leaning too far forward when the market shifted. Amazon started laying off 18,000 workers in January and Shopify laid off 10% of its workers last summer. Traditional retailers have also been cutting back, from Neiman Marcus Group to Kohl’s Corp.

Zalando to cut jobs

What: The CEO of Iguatemi predicts continued double-digit growth for the luxury retailer.

Why it is important: As Brazil’s most important luxury retailer, the group’s success proves that luxury can be successful in the country despite challenges.

The CEO of Iguatemi predicted that the luxury retailer will continue to see success in 2023. Despite the challenges the group faced in 2022, Iguatemi still managed to score low double digit growth.

Brazil faced a tense presidential election, declining global stock markets, and slow recovery from Covid. Additionally, the market is tricky for foreign luxury labels due to taxation and security among other concerns.

The group owns 16 prestigious malls including 2 key locations in Sao Paulo and Brasilia where major Western brands congregate. In the next decade, the group plans to focus its growth on M&A, pivoting from its previous strategy of building new malls in new cities.

Christina Betts bullish for Iguatemi, explains the Brazilian giant’s future M&A roadmap