What: Korea is already reaping the fruits of the borders reopening.

Why it is important: The trends might give an idea of what is next for international department stores once Chinese customers start travelling again outside of Asia.

South Korea sees an uptick in sales as international shoppers are coming back. Hanwha Galleria reports that its luxury section has increased sixfold when compared to the previous semester, even though the proportion of foreign customers is still below the prepandemic levels (5% vs 15%).

Similar trends are noted by Lotte (sales to international customers increased +590% yoy) and Hyundai (+1142.8%).

Chinese customers account for the most, followed by Southeast Asians, Americans and Japanese.

Korean department stores see a rebound in sales 

What: POS solutions can help create better in-store shopping experiences for consumers.

Why it is important: As shoppers return to physical stores in full force, retailers need to catch up with demand by simplifying and improving their in-store technology.

Data has shown that consumers are returning to physical stores in full force which is having a profound impact on how retailers and brands assess, deploy, and integrate their in-store technology.

In an NRF panel, multiple retailers agreed that the store experience is still important and alive. The retailers discussed the importance of cloud POS and how these solutions can improve the shopping experience through reliable systems.

As shoppers move fast, retailers need to catch up with these cloud POS systems that allow them to make transactions smoother, friction-free, and fully integrated.

Rethinking tech needs as shoppers return to physical stores

What: Nike piloted a robotic circular shoe repair technology at its Nike Town London store, demonstrating the sustainable direction that major brands are taking at their retail outposts.

Why it is important: The greater availability and growing popularity of circular initiatives have the potential to transform retail spaces. Consumers will need to be seduced into opting to wait out and shop around.

Nike debuted a new circular technology at Nike Town London this past September. Named B.I.L.L (Bot Initiated Longevity Lab), the system is robot-augmented and is capable of cleaning and repairing shoes in as little as 45 minutes. The pilot programme is intended to extend the lifespan of Nike products, helping meet the brand’s circularity and sustainability goals.

Shoes are loaded into the machine – currently compatible with four different product lines – and a 3D model is created to identify the areas that need to be improved. Customers can select patches to repair different areas, adding an interactive element to the maintenance.

A B.I.L.L. repair takes about 45 minutes, But the brand understands this might not be enough to get customers to buy into the inconvenience of waiting. So the process cleverly engages customers, combatting the time of repair . Though only in its pilot stage, B.I.L.L.'s integration provides Nike with the opportunity to not only distinguish itself from its competition as an endorser of sustainability but to reimagine the customer experience in its physical stores.

Nike’s repair robot 

What: Takashimaya’s future is linked to upmarket tourists travelling to city hubs.

Why it is important: A similar trend remarked worldwide, department stores are all focusing on their key flagship units as they struggle to generate profits in their regional stores.

Japan's department store industry has been in decline for the past two decades due to various factors such as fast fashion, budget-conscious consumers, e-commerce, and deregulation. As a result, the number of department stores in Japan has decreased from 210 in 2019 to just 192 at the end of 2022.

Luxury-focused stores such as Takashimaya and Tokyu have also been hit hard, with some stores closing due to poor growth prospects. However, Takashimaya has shown signs of recovery, with strong sales growth in January across its 15-store chain. The revival of inbound tourism has played a key role in driving category sales, particularly in apparel and expensive personal accessories. The return of overseas visitors has also been a boost for stores that derive a significant portion of their sales from tax-free sales to tourists.

Takashimaya's overseas business is stabilizing with its four units outside Japan in Singapore, Ho Chi Minh City, Shanghai, and Bangkok generating nearly $219 million in the first nine months of 2022 and contributing 4.1 billion yen in operating profit. The weak yen has been a factor in the improved numbers for the overseas stores.

The Shanghai unit is now much improved, and management is confident it can be profitable in the long term. In Singapore's Orchard Road, Takashimaya operates one of the largest department stores in Southeast Asia, with 20% of sales from tourists. Takashimaya's Vietnam store and Bangkok flagship are also on the rise.

The company sees huge promise in Toshin's expertise in developing retail small tenant support and other uses such as office and residential to build out integrated mixed-use projects (Toshin is the development arm at Takashimaya).

With the department store business recovering nicely, Takashimaya announced revisions to its earnings forecast for FY23. The big city flagships are recovering well, but regional stores are lagging, and the company is looking at ways to cut costs, including having fewer store personnel.

Why tourists and flagships are essential to Takashimaya’s recovery 

What: Opened at the end of 2020, when physical stores were experiencing new closures, the French website of Dutch department store, De Bijenkorf, will close on March 1, 2023. Online shops in Germany, Austria, Luxembourg and Monaco will also close. Posting positive results, only the Dutch and Flemish sites will remain open.

Why it is important: With e-commerce slowing down, De Bijenkorf couldn’t maintain online operations outside of its native territory.

De Bijenkorf to close its French website

What: The global tax refund service company released its monthly tax-free shopping business update, revealing that recovery is continuing to strengthen across Europe and Asia Pacific.

Why it is important: As travel picks up and tourists return, consumer recovery rates are increasing and duty-free shopping is recovering, particularly in Continental Europe.

In Continental Europe, issued sales in-store have a stabilized recovery at 106% in January vs. the same period in 2019, with US nationals continuing to lead the recovery in the region.

Asian shopper recovery continues to progress in Europe with South East Asia shopper recovery reaching 153%.

The Mediterranean countries are at the forefront of recovery for destination markets, with the recovery being led by France at 145%, followed closely by Portugal at 144%, Greece (139%), Spain at 120%, and Switzerland (107%).

In Asia Pacific, recovery reached 96% in January in comparison to 2019 with Japan remaining a leader in the region.

Japan led with a recovery rate of 115%, followed by South Korea at 76% and Singapore at 70%.

Within the reopened travel corridors, consumption recovered to 158% in comparison to 2019.

With Chinese borders reopening on January 8th, the consumption recovery rate of mainland Chinese consumers in continental Europe reached 22%, increasing by 4% compared to December.

Additionally, Chinese consumers’ willingness to travel reached a record high at 76%.

Global Blue’s latest report: Mainland China’s consumers’ willingness to travel reaches a new high of 76%; duty free shopping is recovering in Asia Pacific and Europe

What: Saks Fifth Avenue considers to open a new kind of experience in its premises.

Why it is important: It’s all about the experience, to make sure tourists and customers have a good and very unique reason to come, and it is all the more telling that this project would eat retail space.

Hudson Bay company, the owner of SFA, has announced it would bid the state in order to convert the top three floors of the store into a casino. There are currently three available licences to be attributed, and the project would span over 20,000 sqm.

For now, the considered floors are dedicated to sales items and the SaksWorks flexible office, now closed. Competition in the city for the said licences is tough, as Hudson Yards and other malls would also use them as a way to attract more tourists.

Saks Fifth Avenue plans to open a casino on the top of its NYC flagship store 

What: Leaders from LVMH, Neiman Marcus Group, and Harrods discuss what the future looks like for their brands in the current economy

Why it is important: While luxury firms may be more resistant to a recession, they feel the impact of shifting consumer patterns and need a plan to win over consumers, retain existing shoppers, and innovate.

At the National Retail Federation’s Big Show, attendees heard from luxury leaders from LVMH, Neiman Marcus Group, and Harrods. With reports of the luxury sector slowing due to slowing Chinese tourism and consumers shifting their spending habits more on experiences, the retailers discussed what their plans are to tackle the challenging world economy today.

The luxury sector is said to be more resistant to recession, but definitely will not be immune to the effects. LVMH is taking Web3 and innovation seriously as they feel they are prepared for the recession with their financial strength. They also believe that the recession won’t be as impactful as Covid-19 and will continue to see customers return as they did during the pandemic because of the appeal luxury has on consumers to keep them coming back.

Neiman Marcus Group is focusing on growing and strengthening relationships and reaching more people. With 2% of their customers generating 40% of their revenue, their big focus is on how to recruit more people that have that potential and getting more share of their current customers’ wallets. Additionally, they are focusing on getting customers in-store, as they see the average order value increase with customers at their brick-and-mortar locations.

On the contrary, Harrods is focusing on improving their online experience. They partnered with Farfetch to revamp their website in hopes to recreate the same extraordinary experience and feeling customers have in-store, online. Their managing director believes traditional wholesaling in luxury will be replaced by an e-concession model where brands have more control over their future. While the retailer is focusing on technology, they also caution that technology isn’t the end-all be-all and buyers still need to purchase items that are new and intriguing.

Luxury’s play in a challenging world economy 

What: Canada Goose has partnered with Selfridges to create a rental edit

Why it is important: Rental services make luxury brands more attainable, giving consumers the opportunity to test out products at a low cost while also being sustainable.

Canada Goose and Selfridges have teamed up to create a rental edit which will be available on the department store’s website and London flagship. The luxury brand will feature its most loved styles as pieces from its Regeneration collection,

The rental line will be available for consumers to rent for 4-, 8-, 10-, and 20-day periods with prices starting from 55 pounds for four days.

Canada Goose is launching rental with Selfridges

What: In a vote of confidence for the metaverse and Web3, L’Oréal’s venture capital fund BOLD and the British Fashion Council are among participants in a $4 million funding round for French metaverse developer Digital Village.

Why it is important: This marks the beauty giant’s first venture capital investment in the metaverse and Web3 space.

Established in 2018, the Business Opportunities for L’Oréal Development fund, or BOLD, has invested in a range of disruptive start-ups including French biotech firm Microphyt, Sparty Inc., a Japanese firm focused on personalized beauty, and temporary tattoo-maker Prinker Korea Inc.

The Venture Reality Fund, Venrex and others also invested in Digital Village, billed as a “technology platform” devoted to emerging virtual worlds.

According to Evelyn Mora, founder and chief executive officer of Digital Village, technology is enabling “the next evolution of retail.” Digital Village wants consumers to “visit a 3D virtual world and come together for social experiences where brands can engage…in a more meaningful way.” In her view, virtual fashion, art and culture represent a “massive opportunity in what will be the largest disruption for commerce since the emergence of e-commerce platforms.”

L’Oréal invests in metaverse developer Digital Village

What: Rent the Runway will be available on Amazon.

Why it is important: The designer rental specialist said it is launching an Amazon Fashion storefront that will sell “pre-loved” looks and exclusive new items from its Design Collective.

The resale looks from the company’s rental business will include hundreds of styles from more than 35 brands.

Rent the Runway’s cofounder and chief executive officer, described the strategic relationship as a boarder win for resale.

This isn’t Amazon’s first step into second-hand — its Shopbob business has The Pre-loved Edit and the e-commerce giant linked with What Goes Around Comes Around last year — but the collaboration with Rent the Runway extends the push significantly.

Rent the Runway has been pushing to build its business under the harsh glare of Wall Street following its IPO in 2021. And Amazon has been looking to build in fashion and is still looking for ways to crack the designer code. Resale seems to be a growing part of the e-commerce giant’s solution.

Adding Amazon to the mix with resale and the Design Collective broadens the pool of potential buyers significantly; it’s a collaboration that brings something to both sides.

Rent the Runway links with Amazon

What: The mammoth retail and entertainment complex, American Dream, saw big increases in sales and traffic in 2022.

Why it is important: Despite skepticism, delays, and challenges, American Dream is starting to see revenue and traffic gains.

The American Dream, located in New Jersey, is starting to see an increase in sales and traffic after a bumpy start. The $6 billion, 3 million square foot project faced many delays and challenges as it launched in 2019. There were construction delays, leasing and financing challenges, and after four months of being open, the center shut down due to the pandemic.

Now, the center’s partners are finally starting to see a return after a four-year financing deal was made in late 2022 with JP Morgan and the complex gains more brand awareness. The complex expects 95% of the center to be fully leased by the end of the year with luxury stores like Gucci and Balenciaga opening in the fall of 2023.

The center has 15 attractions including a waterpark, aquarium and ski slope which take up more than 50% of American Dream’s gross leasable space. They state that the entertainment is what drives traffic to the retail for them.

American Dream, post COVID-19, capturing crowds

What: Google Cloud is rolling out four new and updated AI technologies to help retailers transform their in-store, shelf-checking processes and enhance their e-commerce sites with more fluid and natural online shopping experiences for customers.

Why it is important: These solutions and upgrades come in response to the challenges retailers and brands encountered with supply chain disruptions and inventory issues.

The shelf-checking AI solution, which is built on Google Cloud’s Veex AI Vision, utilizes Google’s database of facts about people, places and things, giving retailers the ability to recognize billions of products to ensure in-store shelves are right-sized and well-stocked.

The company also said there was an update to its Discovery AI solutions while introducing a new personalization AI capability and new Browse AI feature to help retailers upgrade their digital storefronts with more dynamic and intuitive shopping experiences.

Finally, Google Cloud’s Recommendations AI solution features new machine learning capabilities that empower retailers to dynamically optimize product ordering and recommendations panels on their e-commerce pages and deliver personalized suggestions for repeat purchases.

Google Cloud rolls out AI self-checking solution

What: There may soon be two separate Amazon Prime deals. The group is currently testing a "Prime Lite" subscription in India giving access to free two-day delivery, and opening access to its Prime Video streaming platform.

Why it is important: This test constitutes a significant strategic development for the Prime offer if it were to be rolled out outside the sub-continent.

This experiment relates to a subscription formula at 999 rupees (11.30 euros), instead of the 1499 rupees (17 euros) for a classic Prime account giving access to free deliveries in 24 hours.

Amazon quietly testing a cheaper Prime subscription

What: The National Retail Federation’s Big Show saw a common theme, manage inventories and costs conservatively and cautiously and be ready to pounce on whatever shopping trends and hot items emerge.

Why it is important: These forecasts and takeaways can help retailers reach consumers who are becoming tapped out on savings and building up on credit while also shifting towards spending on experiences rather than stuff with the inevitable recession.

The National Retail Federation’s Big Show was packed with more than 35,000 attendees from 75 countries marking a near-record high for the conference. A common theme was discussed between industry experts and economists: manage inventories and costs conservatively and cautiously and be ready to pounce on whatever shopping trends and hot items emerge. They predict that 2023 will be split in two halves for retailers; a tough first half with a rebound in the second half of the year.

With the inevitability of a recession, consumers are shifting towards spending more on experiences while tapping out their savings and building credit. Economists and industry experts said the key to long-term success is to: strengthen engagement with consumers by providing richer experiences that are channel integrated, adopt newer ways to generate additional revenues such as AI, resale, or marketplaces, and be agile and open to change.

In the slowing consumer environment, retailers should focus on their current customers by finding ways to treat them better with a better experience, while also keeping up with the pace of change in the industry and seeking to reach consumers at all touchpoints.

Forecasts and takeaways from NRF’s Big Show

What: House of Fraser is closing down its last city centre location in London.

Why it is important: This follows a general resizing of the department store's presence in the capital city, with the total exit of House of Fraser, the bankruptcy of Debenhams, the announced closures of Fenwick on Bond Street and John Lewis in Oxford Street.

House of Fraser has now completely disappeared from Central London with the closure of its last location in Westfield Shopping Center. The 11,500 sqm has been taken over by a nightclub, which will turn the location into flexible offices, a gym for fitness raves, a members-only club and a restaurant.

House of Fraser closed its Oxford Street location early 2022, which means that the closest to city centre location is now the Croydon store in the suburbs. House of Fraser now has 30 stores in the UK, down from 60 in 2018 when it was purchased by Frasers Group for £90m.

House of Frasers closes its last location in London

What: Eve & Ranshaw is closing its doors after 242 years of trading

Why it is important: After 242 years in business, the store was unable to recover from the pandemic and rising costs of operating.

Eve & Ranshaw has been in the same location since 1781 and will be closing its doors after 242 years of business. The independent department store has struggled to bounce back from the pandemic and increase in costs. The store will close on March 4th with its online store closing on January 30th.

One of UK’s oldest department stores Eve & Ranshaw to cease trading

What: Macy’s announced a lower-than-expected Q4 2022 ahead of the release of the final results.

Why it is important: Even though numbers were in line for the holiday periods, the overall quarter did not reach the expectations due to a very quiet business in-between the celebrations. As other IADS members have noticed, the traffic pattern has significantly changed since 2020 and this will probably be visible in other retailer’s Christmas sales announcements to come.

Macy’s plans a Q4 2022 below its November forecast, as quarterly sales are expected to range in the low end to midpoint of the $8.16bn-$8.4bn initially planned bracket. Sales were unexpectedly slow during the non-holiday periods, even though Black Friday and Christmas were in line with expectations.

The overall outlook for 2023 is toned down according to the CEO, Jeff Gennette.

Macy’s cautious and conservative for 2023 

What: Shinsegae International has appointed William Kim as its new CEO. He will also continue as the chief digital intelligence officer of the Shinsegae Department Store division to strengthen its digital strategy.

Why it is important: Shinsegae International will continue to strengthen its core competitiveness through the introduction and operation of innovative new brands. With the appointment of Kim, the company plans to spearhead further growth through mergers and acquisitions and international expansion.

Prior to joining Shinsegae International, Kim served as the CEO of Rapha, a British cycling apparel brand. He expanded Rapha's global digital platform and developed its community concept.

Before leading Rapha, he spent three years in Samsung Electronics' mobile division as the executive vice president of the Global Direct to Consumer Center. He was responsible for managing the company's official website, external third-party digital platforms and global retail stores.

In 2012, Kim led British fashion retailer All Saints, which he turned into an iconic global innovative fashion brand. He renewed the firm's business model, focusing on digitalization and globalization to help establish a foundation of sustainable profitability.

His extensive experience in digital management and consumer experience derives from more than 29 years of experience working for brands such as Burberry and Gucci.

Shinsegae International names Kim as new CEO 

What: John Lewis opens popups dedicated to heavy promotions just outside its stores, in front of their entrances.

Why it is important:  If customers do not enter your stores, capture them where they are!

John Lewis will hold an electronics sales popup event in Centre:mk mall, just in front of the store entrance. The mall hall will be filled with appliances brands, and manned with staff from John Lewis.

This is the second time that such an initiative is made by John Lewis, and according to the company, was extremely popular the first time. This is a way for John Lewis to capture additional traffic and attract bargain hunters without damaging too much the footfall quality in the store itself.

John Lewis to hold pop-ups outside its stores 

What: K11 is reporting a healthy growth for 2022, overpassing Hong Kong retail market’s one.

Why it is important: The “Art Mall” is all about experience, which might explain such a good performance in the current context.

K11 in Hong Kong reports a +15% growth in revenue and a 100% retail occupancy at the end of the 2022 exercise, with 40 new tenants. The performance is all the more notable in a context where Hong Kong as a whole reports a +0.8% growth in retail.

K11 also reports a +20% in loyalty program memberships.

K11 reports a robust year 2022 in spite of mainland shoppers in Hong 

What: Harvey Nichols is starting to phase out fur products with the process to be complete by the end of the year.

Why it is important: The number of retailers and brands going fur-free is increasing as the industry work towards a more sustainable future, putting pressure on the remaining retailers who continue to sell fur.

The British department store, Harvey Nichols, is going fur-free by the end of 2023. The company first introduced a fur-free policy in 2004 but began selling fur products again in 2013. Now, the brand has stated that ethical fur doesn’t exist, and fur farming goes against sustainable practices. The department store follows many other brands who have gone fur-free including Frasers Group, Farfetch, Net-A-Porter, Burberry, Chanel, Dolce & Gabana, and Prada.

 Harvey Nichols is latest big name to say no thanks to fur

What: Italy’s antitrust agency has fined online fashion retailer YOOX Net-A-Porter (YNAP) 5.25 million euros ($5.69 million) over misleading pricing and its returns policy, dating back 2019-2022.

Why it is important: Reductions on products advertised by online retailers are under close scrutiny.

YNAP said it would appeal against the antitrust agency’s ruling, adding in an emailed comment to Reuters that it had always followed the highest standards of commercial conduct.

Italian watchdog fines YNAP more than $5 million

What: LVMH is cautiously confident heading into 2023 as signs of recovery in China pick up following the decision to reverse COVID-19 restrictions.

Why it is important: Despite the uncertain economy, LVMH is confident in its ability to continue to grow following its success in 2022.

Following a year of record results in 2022, LVMH is confident it can see the same success in 2023. Especially with COVID-19 restrictions loosening in China, the conglomerate is optimistic about the Chinese market.

Shares in LVMH have risen 15% since the beginning of the year as markets predict that China’s reopening will support the ongoing strength of luxury sales. The company became the first in Europe with a market capitalization of more than 400 billion euros.

In 2022, LVMH posted revenues of 79.2 billion euros, up 23% year-on-year; its net profit rose 17% to 14.1 billion euros, and profit from recurring operations was up 23% to 21.1 billion euros.

LVMH confident on Chinese recovery