What: The reopening of China to the world allows many industries to wake up and see normal levels of traffic again.

Why it is important: The perspective of vouchers distribution at the national level might very well trickle down and encourage a consumption boom in the country.

Xinhua reports that following the downgrade of Covid-19-related regulations in China, restaurants, malls and cinemas, now fully reopened, witness a rise in terms of footfall, up to 75% of pre-pandemic levels in cinemas for instance.

Overall, the consumption is boosted by the ice-snow industry boom following the Winter Olympic games, which also helps the domestic flight and hospitality industries. When it comes to retail, it is expected that residents increase their consumption per capita from 8 to 12%, and total retail sales increase anywhere between 7 and 11%. It is also expected that China, following example from many other countries, step up the issuance of consumption vouchers, a practice that was already done at the local level, for a total value of $3.3bn, and it is expected that the total figure might quintuple that amount.

China’s consumption on the rise after Covid response shift 

What: The group will open eight "full-line" stores in shopping centres such as the Bullring, Birmingham, and the Trafford Centre, Manchester, as well as in retail parks and high streets. It also will open 12 food halls, including in Stockport, Barnsley and the North Ayrshire seaside town of Largs, Scotland.

Why it is important: The group last November had proposed a target to reduce its full-line stores by 67 to 180 by 2028, while increasing its food-only stores by 104 to 420. Chief Executive Stuart Machin said that the investment in stores "fits into the levelling-up agenda, with the creation of jobs across the whole of the UK."

Marks & Spencer plans to open 20 new stores in Britain

What: The Printemps department store group announces the recruitment of Jean-Baptiste Dacquin as Director of Human Resources.

Why it is important: He will be in charge of the recruitment, mobility, training, Printemps Académie and social relations departments.

Since 2019, he was managing director at Claudie Pierlot. This graduate of EM Normandie began his career in recruitment consulting before joining Kiabi and staying there for twelve years (in HR and operational functions in France and abroad). He joined the SMCP group in 2012, evolving as the group's HRD, then at the head of Claudie Pierlot for three years.

The Printemps group has a new Director of Human Resources

What: Selfridges and new owners Central Group and Signa Holding, have plans to offer shoppers mood-boosting experiences and countless ways to tap into the circular economy.

Why it is important: Amid all the domestic turmoil, Selfridges is shifting up a gear, accelerating its green agenda and its commitment to experiential retail. It’s also promising a year of positive intentions, colour therapy and a call to action on the environmental front.

Selfridges’ new year is set to begin on Monday with the unveiling of windows in London, Manchester and Birmingham, England. They’ll be filled with a host of colourful, original illustrations around this year’s theme, Selfridges Celebrates.

The store asked illustrators to create pieces that will be displayed in the windows and across the stores throughout the year, they are to be a point of contrast in a world that celebrates the hyper-connected and the multisensory and be a celebration of form and color.

As reported last September, Selfridges accelerated its net-zero carbon-emissions goal, moving its deadline up to 2040 from 2050 as a promise to the Climate Pledge, a cross-sector group of companies committed to reaching net zero 10 years ahead of the Paris Agreement.

As part of that commitment, the retailer also set a new target of ensuring that at least 45% of its transactions (excluding food, restaurants and homeware) come from recycled products or circular services such as resale, rental, refill or repair.

It has also established “Reselfridges,” a portfolio of circular initiatives it hopes will eventually become the backbone of the business.

As part of that commitment to the circular economy, the store plans to launch a bag subscription service this year and expand its existing rentals for childrenswear.

Selfridges is also taking on new labels that have embedded green values into their collections, such as urging customers to buy less and more responsibly.

Co-chairman of Selfridges Group and chairman of the executive board of Signa, said initial investments at Selfridges will focus initially on the food and beauty halls and the omnichannel offer.

The plan is to have a food market in addition to a series of restaurants.

The new owners are also planning to refurbish the Old Selfridges Hotel, next to the Oxford Street store in London. The space hasn’t functioned as a hotel for years, although it’s been used for fashion shows and other events.

The two partners said they want the new hotel space to enhance the surrounding neighborhood on Oxford Street and serve the community for the next 20 to 30 years.

Selfridges continues to raise the retail bar

23

23

What: Data shows ongoing workforce issues across retail and service-related business segments.

Why it is important: Prioritizing investments in technology to empower frontline workers and improve their work lives will deliver a better customer experience and increase efficiency.

Data has shown that workforce shortages are occurring across retail and service-related business segments. Businesses are open to using to technology to address workforce issues, but can’t commit to making the investments needed.

74% of executives said frontline employees are rejecting work conditions that went unchallenged two years ago, while 80% said frontline turnover has increased. The study also revealed that 80% want to leverage technology to improve the frontline experience but struggle to prioritize digital investments.

Prioritizing the frontline employee experience and investing in technology to improve this experience will lead to a better work life for employees and is also key to achieving business goals, growing revenue, retaining associates, increasing efficiency and delivering a better customer experience.

Retailers continue to struggle with workforce issues

What: Amazon, DHL, and Ikea are investing in soft mobility for short deliveries, also known as last-mile deliveries.

Why it is important: Retailers are reducing their CO2 emissions and reducing the climate footprint of home deliveries.

These retail giants are starting to make deliveries with electric cargo bikes

What: Liberty saw its total revenue leaping to £82 million in the year to the end of last January, from £59.6 million in the previous 52-week period.

Why it is important: Revenue has almost recovered to match the year ending 1 February 2020, but profitability is still affected as the move to online sales has increased its cost base.

Flagship sales per square foot are on a recovery trajectory, reaching £1,072 in the period compared to £779 the year before.

EBITDA before one-off costs, was a narrower loss of £3.5 million compared to a loss of £12.3 million in the previous year. But it still trails the £14.4 million profit generated in the last year before the pandemic hit.

It made operating profit of £2.4 million in the latest year compared to a very small £88,000 operating profit in the year prior. And the loss before tax shrank to £187,000 from a loss of £2.8 million 12 months earlier.

After Covid-related lockdowns and disruptions, Liberty reopened to a market that remained heavily impaired by lower footfall. That said, trading strengthened progressively during the summer months and gave management confidence that the pace of recovery would be in line with expectations for Christmas.

Also, Liberty launched its first subscription service called Beauty Drop, which it says is unique and received a very strong initial response from customers. Basically, subscribers get four boxes of curated beauty products a year in return for a monthly spending commitment.

Liberty on the recovery trail 

What: Neiman Marcus Group creates two new roles geared to accelerate its growth and transformation efforts.

Why it is important: Neiman Marcus is focusing on strengthening its omnichannel capabilities and continues to invest in technology, stores, and supply chain.

Neiman Marcus has named Nabil Aliffi as chief brand officer and has promoted Stefanie Tsen Ward to chief retail officer.

The new roles were created in hopes to accelerate the group’s growth and transformation, which focuses on omnichannel capabilities. The company, through its partnership with Farfetch, is also planning to launch its Bergdorf Goodman website internationally this year.

The speculation that Neiman Marcus Group wants to initiate an initial public offering continues to grow as the business accelerates. If not, there could be an attempt to sell the business to another retailer or private equity firm, in which this new strong management team would help to market the company for a sale.

Aliffi, who was previously the global chief creative officer of Soho House and Co, will become the “creative force” of the brand and be responsible for bringing a cohesive voice and elevating customer touchpoints. Tsen Ward will be working alongside Aliffi as chief retail officer. With the responsibility of elevating 36 Neiman Marcus stores, she will help enable the store’s 3,500 sales associates to provide the best customer service and accelerate Neiman’s integrated retail strategy.

Neiman Marcus pumps up senior ranks

What: Beijing’s policy shift regarding Covid-19 will give the luxury sector a boost in 2023 but a surge in infections and slow economic growth could weaken the recovery after the uplift from the Chinese New Year.

Why it is important: Chinese consumers remain fundamental to the industry’s global growth and the luxury sector’s much-needed comeback in China is finally close as the country lowers its zero-Covid stance.

As Beijing’s Covid-19 policy shifts, analysts and investors are confident in predicting a fast recovery for sales in the luxury market than they did a few months ago, however, the outlook remains highly volatile in the short term. With restrictions lessening, Chinese consumers are increasing their spending domestically. It is estimated that sales in mainland China will drive between 25 to 27% of the personal luxury goods market, compared to 11% before the pandemic. Additionally, as much as 40% of personal luxury goods sales will be made by Chinese consumers.

The uncertainty and timidness regarding Covid-19 will make the first quarter the most difficult. Resuming life as normal won’t necessarily equate to increased luxury sales, as more consumers intend on spending on experiences rather than luxury goods. The wealthy will lead China’s rebound, making strong connections with current customers a top priority for brands. Some brands have already implemented strategies to reach these consumers, such as Chanel and Dior taking over the third floor of department store SKP to open VIP salons.

Analysts and experts predict that a spending recovery should come to fruition by the end of the second quarter. With this in consideration, it’s forecasted that China will reclaim its status as the top luxury spender by nationality and luxury spending among Chinese consumers will increase to about 30% for 2023.

However, determining the country’s luxury sector recovery will be influenced by how the travel market emerges. Domestic travel is beginning to pick up while international travel will take longer to rebound. However domestic travel will remain important for luxury brands as a growing number of Chinese consumers will continue to shop locally as a result of significant investments in retail and marketing across China by luxury brands.

Luxury set for a bumpy ride in China 

What: UK retail sales fell unexpectedly last month, capping the worst year on record

Why it is important: Retailers should prepare for the looming recession as consumers are cutting back on spending due to inflation

The volume of goods purchased in shops and online fell 5.8% from a year ago, the sharpest December decline since records began in 1977. Economists had originally expected a 4 percent drop but with inflation, consumers are cutting back on spending due to affordability concerns. Experts suggest that consumer spending will remain under pressure going forward with the rising cost of living and increased food prices.

Retailers reported a mixed picture about sales before the official figures were released. Some companies such as Next Plc and Marks & Spencers had better-than-expected holiday sales while others like Dr Martens and ASOS struggled.

In comparison to pre-Covid levels, consumers are having to pay more to buy less as sales were reported 13.6% higher in value terms but volumes were 1.7% lower

UK retail sales had worst year on record in spending squeeze

What: Falabella Retail announced its entry into the car rental service with Arval Relsa.

Why it is important: Falabella is finding new ways to reach its customers through experiences and services that can simplify their lives.

Arval Relsa and Falabella Retail have partnered to create a rental car service, Falabella Renting. The rental car service offers medium to long-term rentals that are paid for monthly. The payment includes insurance, maintenance services, and roadside assistance, among others, so customers only have to worry about paying for gasoline and the TAG.

Falabella rental hopes to expand its operations across other Latin America countries where both Arval Relsa and Falabella Retail are present.

Falabella Retail expands its range of businesses in Chile

What: Changing and unpredictable weather patterns are impacting consumers’ behavior as temperatures fluctuate across the globe.

Why it is important: Climate change is making shopping behavior harder to predict, adding to inventory management challenges for brands and retailers.

Weather has always influenced customer spending, but climate change is making weather patterns more unpredictable, making it harder for retailers to merchandise seasonal products and manage inventory.

While it is easy to overlook with warnings of falling sales from big brands, weather has always had an impact on how customers spend. With weather extremes expected to become more regular and intense, it is becoming harder to predict what people will buy and when.

To help tackle this challenge, retailers should have products that can be versatile, keep tight control over inventory levels, and have a supply chain that can react quickly to fluctuations in demand. Many brands are turning toward data-analytics services that help improve inventory planning, match products on shelves, and push digital ads to the kind of weather consumers are experiencing in real-time. Additionally, brands should look to curb their own emissions and reduce environmental impact.

How climate change is transforming the way we shop

What: Marks & Spencer is investing in its retail network with plans to open bigger and better stores in hopes to better improve their customers’ shopping experience.

Why it is important: Marks & Spencer’s investment in new stores supports a better omnichannel shopping experience that customers want, while also boosting local economies through job creation.

M&S is investing £480 million in 20 new bigger and better stores across the UK. Their plan to future-proof their physical retail stores will create around 3,400 jobs.

Chief executive, Stuart Machin stated that stores are a core part of the company's omnichannel future and their store rotation program is ensuring M&S has the right stores, in the right place, with the right space. The UK retailer has already seen success in its newly relocated and renovated stores, giving them the confidence to move faster with their plan.

The new stores deliver a better shopping experience for consumers and employees while also supporting Marks & Spencer’s investment in new digital services to offer an omnichannel service to customers. M&S stated that they would roll out Digital Click & Collect to 130 stores across the UK and Scan & Shop which allows customers to scan and bag items through the app as they shop.

In M&S’ Christmas trading update, the company announced that there was a 33% increase in sales through the app, and active users grew from four million to five million.

M&S to future-proof its retail with 480 million pound investment and 20 ‘better’ stores 

What: China saw an increase in retail sales during the Chinese New Year as Covid-19 restrictions lessen.

Why it is important: After three years of lockdowns, Chinese consumers are revenge spending, giving hope of an economic recovery and a boost in global growth.

Retail sales during the weeklong Chinese New Year increased more than 12% compared to 2022 holiday season. Positive retail numbers were seen across major retail hubs as pandemic policy relaxed and pent-up demand was unleashed.

In Hainan, China’s duty-free island, daily average sales exceeded 350 million renminbi or USD 51.8 million, tripling pre-pandemic levels. At 12 duty-free shopping centers, sales totaled 2.57 billion renminbi, or USD 380 million.

Additionally, retail sales at key shopping areas increased by 13.7% in Beijing. While brick-and-mortar sales reached 32.3 billion renminbi (USD 4.7 billion) in Shanghai. Sales at popular luxury malls also rose in single digits compared to last year and in Chengdu, sales at key commercial retailers reached 1.174 billion renminbi or USD 173.8 million, a 6% increase from last year.

Luxury brands saw revenge spending similar to what happened after measures were first relaxed in 2021. Louis Vuitton reportedly reached 10 million renminbi (USD 1.48 million) in single-day sales.

Domestic travel has also returned to 88% of its pre-pandemic levels despite a high level of COVID-19 infection rates with Chendgu, Shanghai, and Guangzhou becoming the most popular local travel destinations.

Revenge spending returns for Chinese New Year

What: Time will be of the essence when it comes to the impact Chinese tourists will have on the global economy in 2023.

Why it is important: With rising inflation and concerns in the world, the joyful (and profitable) spirit of Q4 2022 might be well over, and returning Chinese tourists could be a boon for many retailers across the world.

In Thailand, Chinese tourists’ return is highly expected. However, it is challenging to know when to hire more workers and where to find them since many left the tourist region when tourism stopped. The Thai economy is heavily dependent on tourism and has lost out on billions of dollars from Chinese tourists over the past three years.

Tourism Authorities estimate that the city of Chiang Mai for instance will welcome back 600,000 Chinese visitors this year who will spend about $230 million. But real numbers won't start until the second quarter as the Chinese government is not allowing tour operators to restart their businesses until Feb. 6. There has been a shift towards more tech-savvy Chinese travellers taking trips on their own instead of group tours. Over the past decade, group tours have dwindled due to a crackdown on cheap zero-dollar tours. A hotel owner in Phuket believes that big tour groups will come back, but it is uncertain how big they will be.

In London, the Lunar New Year parade in Chinatown saw over 300,000 visitors last week, but few Chinese tourists were present. A restaurant-owner in central London stated he did not expect any travellers from China for the holiday, but is hopeful for their return in a few months. The business is expected to not suffer as 85% of its customers are Chinese students from nearby universities who are not returning to China.

Chinese tourists are returning to Britain and Australia, but their numbers are still far from pre-pandemic levels. The slow growth can be attributed to a lack of flights, higher ticket prices, visa requirements, and expensive COVID-19 tests for Australian travellers. Round-trip flights from China to London are around $1,300 and flights to Australia are between $1,800 and $3,000. Despite the eagerness of travel operators for the return of Chinese tourists, some worry about the industry's ability to keep up with an influx of tourists, as the industry has disappeared for two years and hiring back drivers and tour guides may be difficult. There are concerns about being able to accommodate them properly and provide high-quality service.

Chinese tourists are coming back, but when 

What: Resale presents a lucrative sales opportunity for retailers.

Why it is important: Adding second-hand items to a retailer’s offer opens a new revenue opportunity and can drive traffic to stores and e-commerce sites.

Buying secondhand is increasingly becoming more popular as consumers feel the impact of inflation and also make an effort to be more sustainable.

It is estimated that the resale market could hit $300 billion by 2031 and is growing at three times the rate of the primary market. Additionally, the luxury secondhand market is growing 11 times faster than traditional retail.

Incorporating resale into a retailer’s offer not only opens a new revenue opportunity but also helps drive traffic to stores and e-commerce sites as well as sales of new items across categories and price points.

Adding resale is complex with different selling approaches, a complicated sourcing process, and difficulty with pricing. However, given the buzz around resale from customers and industry experts, retailers should highly contemplate adding resale to their offer.

Resale dominates National Retail Federation’s ‘Big Show’ 

What: The reopening of China does not mean that business is back as usual.

Why it is important: Customers have changed and enjoyed new experiences at home. International department stores waiting for them to come back need also to review their own ways to accommodate them.

China has reopened its borders on the 8th of January 2023 and The Luxury Conversation reviews what has changed (or not) since the beginning of the pandemic now that an expected 18m tourists flow out of China on Q1 and 40m on Q2.

First, the quality of retail in the country has significantly upgraded and international brands and retailers are now also competing with the local options, which are as attractive now (and favoured by the national pride too).

Second, the demographic have changed, with younger and increasingly female customers travelling in and out, with families. As a consequence, some appetites have changed: customers now are longing for wellness and experiences in the nature, including luxury camping for instance. Sustainability is now also a topic, even though the meaning of the term and customers’ expectations are different from the ones in the West.

The Luxury Conversation recommends the 5 following points to be checked by brands willing to be “China-ready”:

-    Social media is key but quality primes over quantity, with one platform to be nurtured instead of trying to use them all,

-    Seamless integration is not even a must, it is a stapple for Chinese customers, especially when it comes to payments,

-     Storytelling primes over the novelty of the products,

-    Phygital is the norm,

-    Being culturally inclusive is the top element to watch, as this can be a dealbreaker.

What the Chinese borders reopening means for international retailers 

What: According to Harrods, the UK is shooting itself in the foot with the cancellation of the VAT refund scheme.

Why it is important: It is not so common to hear Harrods, a notoriously discreet institution, taking such a strong public position against the UK government. Does this mean that department stores, just like brands, are expected to be increasingly politicized?

Michael Ward, CEO of Harrods, warned that London is trailing behind Paris and Milan in luxury trade, due to the lack of attractivity of the country following the decision to stop tourists visiting the UK to reclaim VAT. The measure was scrapped at the end of 2020 following Brexit and was very briefly supposed to be cancelled in Q4 2022.

As a consequence, goods purchased in London are more expensive than in other European capitals, forcing Harrods to source products that are not found anywhere else.

Shoe retailer Kurt Geiger’s CEO also mentioned that the measure was heavily counterproductive and affecting UK sales.

Harrods CEO takes a public stance against the UK government decision to scrap VAT refund

What: eBay invested £7.5 million in the UK-based luxury resale company, Cudoni.

Why it is important: Resale is a fast-growing fashion market and offers eBay an opportunity to expand its marketing position.

An investment from eBay brought the total raised by Cudoni to £14.3 million since its founding in 2017.

Cudoni, which has over 4,000 brands available on its website, plans to invest the £7.5 million raised in its sales and marketing functions. The resale company has seen its volume of sales increase sevenfold on its platform since 2020.

eBay invests in luxury resale platform Cudoni

What:  US customers bought more during the holidays than last year, but this was mainly due to the price increase of goods.

Why it is important:  Even thought facial values are satisfying, the reality is more bittersweet and worrying: customers are reducing their purchases and increasingly looking for discounts.

GlobalData, when researching the holiday season spend (Thanksgiving, Black Friday, Cyber Week, Christmas) in the US, showed that it grew +6.7% compared to 2021. Each celebration was individually growing: Thanksgiving grew +8.4%, Black Friday and Cyber Week +6.9% and Christmas +6.5%. However, volumes (respectively +0.2%, -1.1%, -1.6%) suggest that the growth was mainly due to the price increases.

Online sales grew +7.4% and brick & mortar +6.6%, but the total sales generated might not offset the growing costs of online orders fulfilling.

Overall, US customers set a budget for their purchase (63.1% this year compared to 45.6% last year), reduced the number of gifts, and were looking for discounts.

Total US holiday spend grew 7%... thanks to the inflation 

What: It is now possible to pay at or after the delivery for EU customers ordering on Alibaba.com.

Why it is important: Instead of trying to change the logistics (Alibaba orders take between 10 and 15 days to be delivered as they are shipped from China), why not change behaviours by making new options appear as benefits (while they are simply adaptations to basic customers’ expectations)?

Chinese internet giant Alibaba has started allowing customers in Europe to pay for purchases on its international e-commerce platform, AliExpress, only after receiving their merchandise in an effort to boost global sales as growth slows at home.

Fintech firm Splitit Payments will join with Ant Group's Alipay to provide a delayed-payment option to customers of AliExpress, which sells consumer products to more than 200 countries.

The service, called "Pay After Delivery," will allow customers to pay for merchandise in instalments via their credit cards. The service will first be rolled out in Germany, Spain, and France and could expand into other international markets.

AliExpress has seen a decline in orders in Alibaba's last three fiscal quarterly reports, due to a weakened euro, changes in EU tax rules and supply chain disruptions caused by the Russia-Ukraine war. Chinese e-commerce firms are looking more abroad to bolster sluggish sales growth at home, as a result of Covid-19.

Alibaba offers delayed payment options to EU customers 

23

What: The CEO of Saks.com gives his insight on how the retailer has seen success and growth since 2019.

Why it is important: Saks.com is the largest luxury e-commerce business in the US and has seen significant growth in the post-pandemic era with its current strategy.

Although Saks.com laid off 3.5% of its workforce, the CEO states the cutbacks aren’t a reflection of the state of business as they reorganize. The online retailer is currently the largest e-commerce business in the US, with the business up 120% in comparison to 2019.

The layoffs were part of a reorganization that created separate teams for technology and operations to eliminate redundancies, accelerate growth and be more efficient. In the reorganization, they also named a new interim chief technology officer and chief operating officer

Approaching $2 billion in annual sales, the retailer is seeing success with the split of Saks.com and Saks Fifth Avenue.  They grew their customer count by 60%, picked up 2.7 million customers online, and omnichannel customers were up 43% since 2019.

The CEO states that with this change, they are able market more efficiently and specifically, invest in technology to personalize more effectively, and use data to expand assortment. Additionally, they have started to implement a marketplace model which lets them give the right level of assortment to customers.

Marc Metrick on growth and reorganization at Saks.com

What: Canadian e-commerce operation, The Bay, is laying off 250 corporate workers.

Why it is important: With sales softening and the possibility of a recession, layoffs are starting to hit the retail sector.

The Bay, which is part of the HBC portfolio of retail businesses, will be laying off about 250 of its corporate workers at its Toronto headquarters. The brand split off from Hudson Bay in 2021 to drive a digital-first agenda, similar to Saks Fifth Avenue and Saks Off Fifth which are also a part of HBC and laid off 100 workers at Saks.com earlier this month.

The layoffs occurring at HBC are across various corporate functions as The Bay states that it’s realigning strategic priorities and increasing efficiencies within its operations. The 250 employees at The Bay represent 2% of the workforce while the 100 employees at Saks.com were about 3.5%.

While retail has steered clear from layoffs up until this month, the cuts happening at The Bay and Saks.com could be a sign of what’s to come in the industry. As the recession looms overhead, industry experts believe that this could just be the beginning and other retailers could start laying off executive positions, rather than sales associates, to cut costs and meet sales expectations.

The Bay triggers 250 layoffs

What: A handful of retail companies have laid off employees so far this year, fueling concerns that retail could be the next sector to be hit hard by layoffs.

Why it is important: Retailers need to recalibrate and manage costs to be more in line with softening revenues as the retail industry could be next to see layoffs.

Over the past week, Saks.com, TheBay.com, and Kohls laid off corporate employees. As consumers spend less on merchandise due to inflation, retailers are under margin pressure as they discount product to reduce inventory and fight price resistance.

A survey of 300 senior retail executives revealed that over the next year, 20% are expecting to trigger layoffs. However, some retail experts have stated that the tech sector layoffs aren’t an indication of what will happen with the retail industry.

While layoffs are still expected to occur, companies should focus on performance and efficiency while optimizing what they already have rather than expansion. Retailers should also use what they learned during the pandemic to help in their strategies and plans.

At retail, pink slips start to surface