What: Predictions claim that one of China’s biggest exports in 2023 will be its social e-commerce phenomenon as TikTok, YouTube and Amazon.com among others begin rolling out features that blend online sharing and shopping.

Why it is important: There’s early evidence that selling goods over live social networking is beginning to take hold outside of China, with viewers enjoying interacting with celebrities and so-called influencers; the ultimate goal is clicks to buy.

Live online shopping revenue will help offset shrinking marketing budgets. U.S. social media advertising spending, which had been growing at around 30% a year, is set to slow to about 12% on average over the next three years, to reach USD 114 billion in 2025, according to data portal Statista. By contrast, consultancy McKinsey projects U.S. social media e-commerce sales will increase 20% annually over the same span, to USD 80 billion.

Social commerce to go viral in 2023

What: After beating Wall Street estimates on the top and bottom lines in the third quarter, the beauty retailer has once again increased its full-year outlook.

Why it is important: Despite inflation, customers don’t appear to be deterred from making beauty purchases at higher prices leading Ulta to beat its Q3 estimates, ultimately raising its 2023 outlook.

Net sales rose 17.2% to USD 2.3 billion in the 13 weeks ended Oct. 29, primarily due to the favourable impact from the continued resilience of the beauty category, retail price increases, and the impact of new brands and product innovation. Cosmetics sales rose 44%, hair care 21%, skin care 16%, fragrance and bath 12%, services 4% and accessories 3%.

Net sales are now forecast to come in at between USD 9.95 billion and USD 10 billion. Diluted EPS are expected to be USD 22.60 to 22.90, compared with prior guidance of USD 20.70 to 21.20.

Ulta beats Q3 estimates and raises full-year forecast

What: The Hong Kong-based group Bluebell is strengthening its position in China through the duty-free market in Hainan Island after completing the acquisition of Star Brands Travel Retail.

Why it is important: The acquisition makes Bluebell Group the sole owner of travel retail operator, Star Brands Travel Retail, in Hainan’s duty-free hub, an important location for luxury shopping in China.

While tax-free shopping has been allowed on Hainan Island since 2011, its activity has boomed since 2020 becoming the preferred destination of Chinese shoppers, deprived of international travel since the pandemic. This trend has continued and accentuated, allowing many houses to achieve strong increases in the region, making Hainan Island a strategic location for the luxury industry.

Star Brands Travel Retail operates 14 brands, has 50 employees, and has seen retail sales under its management grow 300% in 2022 compared to 2021.

Bluebell Group fully acquires Star Brands Travel Retail

What: Disappointed with Farfetch’s declaration for the luxury platform, shareholders sent shares of its stock down 34.9% to USD 5.53.

Why it is important: As customers are beginning to favour in-store shopping again, and in light of the global economic strain, Farfetch’s general goals for driving growth in a fragmented luxury market were not enough to satisfy investors who sent the stock down 34.9%.

Neves presented Farfetch as a collection of three main and intertwined businesses: Platform Solutions, which provides e-commerce capabilities to brands and retailers; the Marketplace, connecting buyers and sellers via e-commerce, and the New Guards Group, which develops brands.

Investors are questioning Farfetch’s capabilities to add up all its ventures, especially how it can leverage New Guards.

Farfetch stock drops 34.9%

What: Nordstrom teams up with an historical Black US university in order to train its future technologists.

Why it is important: It is not only about training and recruiting future talents, but also use this initiative as part of the Nordstrom socially responsible branding.

Nordstrom has inked a partnership with Morehouse College in Atlanta (Georgia) to sponsor a course and a mentorship program. Nordstrom leaders and staff will be teaching classes and mentoring students from this historical Black college. Interestingly, the course sponsored is Tech Product management, in order to train specialists in the use of technology in retail and product management.

Inside Retail sees this initiative as notable for two reasons:

-    It is a smart way for Nordstrom to fill in related positions and create a talent pool on its own,

-    It also allows Nordstrom to champion social inclusivity at the same time.

Companies are increasingly creating made-to-measure courses in partnership with academic institutions in order to train new people and make sure they will be filling in actual needs and positions.

Nordstrom partners with Morehouse College 

What: The John Lewis Partnership has revealed plans to build 1,000 rental properties on its land as part of a plan to diversify its business.

Why it is important: John Lewis Partnership plans to utilise its own property portfolio to build 5,000 out of 10,000 homes within the next ten years, which will be available in different sizes with short- and long-term tenure options as well as the option to be furnished by John Lewis.

The first three proposed sites include building over Waitrose shops in Bromley and West Ealing in Greater London, as well as replacing a vacant John Lewis warehouse in Mill Lane, Reading.

The project, which is subject to planning permission, includes commitments to affordable housing and sustainability tied to its 2035 net-zero pledge.

John Lewis looks to diversify through rental properties Source 1

John Lewis looks to diversify through rental properties Source 2

What: Fast fashion production has increased twice as much compared to 20 years ago, leading to a 10-fold increase in textile waste every year.

Why it is important: Calls for reduced consumption of fast fashion items are multiplying and increasingly echoed in mainstream media (such as the FT). Department stores must pay attention to this movement, as it might propagate by capillarity to consumption of other goods in a context combining  inflation with customers having lower purchasing power and climate crisis.

In its opinion column, the Financial Times reviews the fast fashion business model and consumption patterns. In the $100bn fast fashion market, industry players produce twice as much as they did 20 years ago, and it is estimated that 50bn items are thrown away every year.

Since recycling is labour-intensive, the use of new plastics is easier, leading to an increase in permanent waste (polyester is not biodegradable). The Financial Times mentions that industry solutions include lab-grown fibres, however, it strongly advocates for a reduction in consumption instead.

Calls for fast fashion consumption reduction are multiplying 

What: The Baltic countries are experiencing inflation rates that would not be acceptable in other parts of Europe.

Why it is important: They might only experience before the others what is next for all. The worrying part is that Baltic countries have built-in psychological and structural cushions that might miss in other European countries. For that reason, 2023 will be long and difficult both in terms of economy but also politics.

In the Baltics, inflation has reached considerable peaks when compared to the rest of Europe. In Lithuania for instance, inflation reached 21%, which significantly impacted retail activity. It is believed that Baltic countries are canaries in the coal mine when it comes to inflation and Europe, as the three countries might experience what is coming next for other European countries.

Baltic countries already have experience of inflation, and the memories of the forced occupation by the Soviet Union makes the pill easier to gulp. The rest of Europe might not have the same feelings and the shock could be more important. 10% inflation in the rest of Europe could be as impactful and difficult as the current 20% rate in the Baltic countries. Economists are worried that the current levels of inflation might leave permanent marks on the economy.

Inflation in the Baltics, a warning for the rest of Europe 

What: Macy’s aims at helping SMEs from minority backgrounds to develop and scale up their companies.

Why it is important: The new fund is a smart way to both promote diversity but also secure a good ROI in terms of new brands and products access for Macy’s.

Macy’s has teamed up with Momentus Capital, a small business lender, to launch a $200m fund to help entrepreneurs from underrepresented backgrounds, of which Macy’s contributes to $30m.

This fund aims at helping Macy’s vendors to scale their companies and meet the demand, but non vendors can also apply to a variety of support, including 10 years loans or capital participations. This action is part of Macy’s plan to promote diversity and sustainability, but also helps the retailer to secure access to new products and brands as well.

Inside the Macy’s plan to fund underrepresented entrepreneurs 

What: Frasers Group has revealed detailed plans for its new North East mega flagship which will house its major brands alongside a gym.

Why it is important: Back in August, Frasers revealed that the group had snapped up the former department store in the Metrocentre’s Red Mall, in which the Partnership agreed to a 15-year lease on the 130,000 sq ft unit which will include a 70,000 sq ft Flannels on the ground floor, and a 60,000 sq ft Sports Direct on the first floor, incorporating an area for Evans Cycles across 1,000sqft.

The new addition of the Everlast Gym will be on the first floor, according to the plans, plans show, taking up 33,800 sq ft of space including changing areas, two treatment rooms and a large reception area.

The new store is part of the retail giant’s plan to create several UK flagship sites bringing everything under one roof.

Frasers to open gym in new Metrocentre megastore

What: Klarna expands its affiliate marketing program through a new platform linking influencers and retailers.

Why it is important: Micro-influencing is everywhere, including in the Buy Now Pay Later payment apps, which is quickly making traditional credit cards program looking old fashioned.

The Buy Now Pay Later company Klarna is expanding its Creator Platform (initially launched in the US in October) globally. This program matches retailers with the right influencer among a pool of 500,000 and tracks performance metrics in real time. This is also a way for Klarna to expand their affiliate marketing business, said to generate 600m leads a year.

Klarna launches a globally curated influencer partnership platform 

What: Due to economic strain and uncertainty, companies must navigate properly by retaining employees, investing in emerging roles and building the skills of current leaders to ensure they have the talents to grow even in 2023.

Why it is important: As most companies are hiring or hoarding employees, the dialogue between companies and recruits is changing, leading to competitive employer branding campaigns and benefits packages.

Business of Fashion highlights Macy’s shift in communication to recruit new employees which has led to 97% of corporate jobs filed and “close to that number” for hourly positions. The crisis caused a huge labour shortage and record quitting rates which has created the challenge of developing new policies such as working from home to attract and keep employees. A potential recession in 2023, means that layoffs will be necessary even as the labour shortage keeps key roles unfilled. Instead of assuming employee loyalty instead, over-hiring or resorting to layoffs when the recession hits, experts stress the importance of grooming and leveraging current talent or creating cross-functional roles.

022 showed a C-suite turnover trend making it difficult to redefine who should lead a fashion company. Leadership is more about partnerships, creating transparency and developing community as new and evolving roles around diversity, sustainability and social governance continue to appear. Hourly employees may be concerned about the lack of or mismanagement of these roles, making them important from top to bottom.

Finally, companies need to be mindful of the impact new policies around flexibility and work-life balance affect the working culture. Leader bias toward certain employees who opt to work in the office instead of online could create dysfunctional dynamics. Thus, being intentional, agile and open to adapting to new work models can help with creating an efficient and desirable workplace environment.

Workplace trends of 2023 defined by BoF

What: John Lewis and Marks & Spencer on Oxford Street will see their business rates drop 60% by April after the government revealed its transitional business rates relief scheme.

Why it is important: The drop in business rates is a welcomed relief for retailers facing the effects of economic strain, customer behaviour shifts, operational cost increases and the cost-of-living crisis.

In addition to the 60% drop for M&S and John Lewis, other Oxford Street retailers, such as Selfridges, Harrods, Reserved and Adidas, are set to see their rateable value fall by at least 40%.

Retailers on Regent Street will see a smaller drop in their business rates compared to Oxford Street, with Burberry expected to benefit from a 37% drop. Followed by H&M and Arket, which will see their rateable value fall by 35% next April and & Other Stories, benefiting from a 25% fall.

M&S and John Lewis’ business rates to drop by 60%

What: Frasers has acquired Amara living, a luxury homeware retailer.

Why it is important: Frasers group continues to acquire brands and retailers, with its latest acquisition aimed at developing Frasers into a credible homeware destination.

Following a string of continually increasing stakes in Hugo Boss, the group most recently added menswear tailor Gieves & Hawkes to its portfolio, snapping up five of the brand’s stores, including its Savile Row flagship.

Frasers acquires luxury homeware retailer

What: Printemps opened a department store in Doha the last week of November, extending over 40,000 square metres on three floors which showcases 600 brands, 200 of which are exclusive to Printemps

Why it is important: Printemps’ newest location is the largest luxury department store in the Middle East and the group’s second-largest brand after the boulevard Haussmann flagship in Paris.

Touted to be the ‘next-generation’ of department stores, ultra-personalised product offers will utilize technology echoing Printemps’ recent launch in Web3 (Digital Fashion by Printemps). A VIP lounge will give customers privacy to use 3D services and holograms to interact with on-site personal shoppers and staff of the Haussmann branch in Paris from Doha.

As well, Printemps has partnered with M7 to create a talent incubator programme which offers a three-month mentorship to local designers that can eventually showcase their creations within the complex. Titled the ‘Doha Oasis’, the complex includes a 5-star hotel, amusement park, cinema, and Printemps’ 2,600 square-metre spa.

The store’s interiors have been designed by Canadian studio Yabu Pushelberg, which also designed the La Samaritaine complex in Paris.

Printemps Doha opens with innovative customer experience

What: China is abolishing its zero Covid strategy likely due to a shrinking economy, but Covid increases may delay recovery plans.

hy it is important: China’s production and retail sales missed November forecasts, resulting in the country’s worst output data in six months, with growth at 2.2%, down compared to October’s 5%, and below expectations of 3.6%.

Al Jazeera reported China’s retail sales fell 5.9%, with the service industry especially hit. The slump in retail sales was higher than expected, with online sales of physical goods rising by 4% year-on-year, down sharply from October.

As the world continues to see inflation and higher cost of goods caused by the Russian invasion of Ukraine, demand for China’s exports also fell by 8.7% compared to 2021.

Covid surge dampens China’s retail reopening

What: Kering and L’Occitane are joining forces to launch the Climate Fund for Nature.

Why it is important: In order to protect and restore biodiversity, Kering and L’Occitane will endow the fund with 140 million euros, with a goal to reach 300 million euros in the long term eventually opening up to other partner companies.

The fund will be managed by the management company Mirova, a subsidiary of Natixis Investment Managers dedicated to responsible investment and will be operational in the first quarter of 2023 in the form of a simplified joint-stock company with variable capital. Its aim is to support projects dedicated to the protection and restoration of nature as well as to farmers for the transition to regenerative agriculture.

In addition to being sustainably focused, the fund will prioritise projects that promote the independence of women in terms of access to finance, land and trading in countries where investors obtain their main raw materials.

Kering and L’Occitane team up for climate fund

What: A slowdown in retail sales before the winter stirs fears of a recession in Europe.

Why it is important: Tourism has helped so far department stores to weather the situation, including in November. But many IADS members are wondering what will be in store for the beginning of 2023.

Eurostat reports that retail sales in Europe fell by -1.8% in October 2022, compared to the previous month. This is the largest drop recorded since July 2021, and took place before heating was turned on. By comparison, in the US retail sales increased by +1.3% on the same period.

While the EC forecasts a GDP decline as early as Q4 2022  due to the rapid rise of energy costs and the upcoming cold winter, it is also understood that the resilient European labour market should help into making the feared upcoming recession a short-lived one.

Retail sales are slowing down in Europe

What: Everything in the Corner Shop will be from the Reselfridges category, including ready-to-wear, accessories and lifestyle products.

Why it is important: To fit with the silver theme, the Corner Shop will hold a special section for green jewellery featuring sustainable diamonds made with atmospheric carbon by Sky Diamonds and customizable fine jewellery from Hatton Labs.

The company has set out a 2030 target of reaching 45% of circular transactions to come from circular products and services by stocking products that meet its environmental and ethical standards.

Selfridges transforms the Corner Shop with silvery vintage pop-up

What: Around a dozen companies have signed The Fashion Pact’s Collective Virtual Power Purchase Agreement.

Why it is important: The 12 chief executive officers have committed to procuring renewable electricity with the goal of getting to 100% renewable energy across their companies’ own operations by 2030.

Bally, Michael Kors and Versace owner Capri Holdings Ltd.; Ermenegildo Zegna Group; Farfetch; Ferragamo; Gucci, and Saint Laurent parent company Kering; Ferragamo; Prada Group; Calvin Klein and Tommy Hilfiger owner PVH Corp.; Ralph Lauren; Coach and Kate Spade parent company Tapestry Inc.; Under Armour, and Zimmermann have all signed The Fashion Pacts renewable energy initiative to help the fashion industry move toward more sustainable practices.

Kering, Capri Holdings, Tapestry and PVH sign renewable energy initiative

What: Due to the economic context, France is postponing by 4 months the implementation of a very visible measure related to environment.

Why it is important: It might not remain an exception and other countries might follow suit, even though the economical context is, for now, not encouraging. Be ready.

France was planning to ban receipt tickets starting 1st of January 2023, due to anti-waste concern (and as a part of a wider set of measures, including having shops keeping their doors closed when heating or AC is on). However, due to inflation and the fact that receipts are still important to customers, it has been decided to postpone the enforcement of this measure to 1st of April 2023.

The measure still allows customers to get their printed receipts (including bank card receipts, ATM receipts etc..) but on request. They represent 30bn pieces of paper a year, difficult to collect and recycle due to their size.

France delays ban on sales receipts due to inflation 

What: Korean department stores are entering in the second-hand business in order to remain relevant to younger generations.

Why it is important: Even in such a hot market, customers are becoming price-conscious and concerned about the environment. Second-hand is now a worldwide trend in department stores, even though the profitability of such operations remains to be proven.

Korean department stores are increasingly looking at second-hand items in order to attract younger and price-conscious customers. With that in mind, Hyundai has opened an entire floor dedicated to second-hand in its Sinchon branch (Western Seoul), after a sneakers-only resell store in the Hyundai Seoul which opened in February 2021 and proved successful in attracting new customers.

otte is testing the idea through popup stores, the latest one being a second-hand store called “Closet Share” in Busan in September, which sold out within two days. The company also invested in Joongonara, the largest e-market for second-hand products in Korea, for $23.04 million.

To be noted, Shinsegae also invested in another second-hand specialist last January.

Hyundai and Lotte venture into second-hand items stores 

What: The Australian department store company is being sold off by its owner, the South African retailer company Woolworths to Anchorage Capital Partners.

Why it is important: David Jones, just like Myer’s, has been lagging in terms of profitability for a number of years, as the Australian market is increasingly polarized.

Woolworths Holding, the South African retail giant who bought Australian David Jones in 2014 for $1.41bn, is reported to sell the company to Anchorage Capital Partners, a private equity firm. According to the newspaper, the selling price would be between $120m and $130m and the deal should be closed before the end of this year.

Woolworth has created an agreement with Anchorage Capital Partners due to a disappointing return on investment, resulting in Woolworth’s withdrawal from the department store market and Anchorage’s takeover of 43 stores, some of which had already closed as part of Woolworth’s turnaround efforts.

It is specified that David Jones' flagship on Bourke Street is not included in the sale and that with its estimate of AUD 250 million it would likely be sold next year. The current CEO, Scott Fyfe, is expected to stay on, with the new owner backing his recovery plan (referred to as Vision 2025+), with the company expected to continue to focus on physical and online sales.

David Jones, after suffering from the Covid-19 pandemic like other retailers, turned a profit in 2021 for the first time since 2018, and revamped its flagship stores in Sydney and Melbourne.

David Jones to be sold to private equity firm SOURCE 1

David Jones to be sold to private equity firm SOURCE 2

What: Inflation is hitting a 40-year high and retailers are concerned that the mounting costs squeezing margins, in combination with rising return rates will sour this holiday season.

Why it is important: Several surveys conducted by separate companies and organizations have revealed the consumer perceptions around returns and their increased likelihood to return gifts this year.

According to a survey by Phelps United, 52% of respondents said they expected to return at least one gift received via an online merchant, 47% said they expected to return at least three gifts, with nearly 1 in 5 (19%) saying they planned to return at least five gifts and 6% planning to return more than 10 gifts.

With returns being so ubiquitous, more than three-fourths (76%) of respondents said they scrutinize return policies, saying they would be more likely to shop at an online retailer in the future if it provided free shipping on returns (82%), a flexible window of 30 days or more for returns (58%), and a hassle-free or no-questions-asked return policy (52%).

The logistics company ParcelLab also reported that 62% of consumers stated that they are unlikely to shop again with a retailer or brand that had a poor/inconvenient returns process, with 37% saying returns that include shipping fees as part of the returns process might lead them to shop less.

In a separate survey conducted by PayPal, nearly 50% of consumers say they’ll be returning holiday gifts this year, with 86% of consumers saying they make a point to check a retailer’s return policy before they even make a purchase. Nearly 1 in 4 have been returning a greater percentage of their online purchases because of inflation and other economic pressures. This number skews even higher for those under the age of 45.

Higher inflation, a higher rate of returns?