What: The fashion industry has cheered this year as consumers have repeatedly defied economists’ predictions, and while a global recession may still be on the table, there are still reasons for hope.

Why it is important: Easing inflation is leading to an uptick in consumer sentiment regarding the economy.

Consumers don’t seem to share economists’ and fashion executives’ doom-and-gloom mindset, which was demonstrated through the University of Michigan’s index of US consumer sentiment, hitting 59.7 in December, below a reading of 70.6 a year ago, but up from November and above economists’ average forecast.

And a Wednesday survey from the Confederation of British Industry reported an 11-point uptick in consumer demand in December, up from a 19-point drop in November. Forecasters had been projecting a 20-plus-point decline this month. As well, UK clothing sales volumes rose 2.1% last month, while in the US, sales for stores specialising in clothing and clothing accessories dipped a relatively mild 0.2%.

Hopes for 2023 improve

What: Unexpectedly, German retail trade sales have fallen sharply in October.

Why it is important: Clothing and shoe business revenues were 7.9% below the level of October 2021, while internet trade recorded a drop of 7.2%.

In a year-on-year comparison, the Federal Office reported a real 5.0% drop in retail sales for October and a nominal 6.2% increase. According to economists, a poor mood among consumers due to high inflation has caused revenues to fall by 2.8%. Initially, the drop was expected to be lower at 0.5%.

German retail sees sharp declines

What: Odakyu department store business has been considerably affected in 2022.

Why it is important: The bad performance is not linked to traffic or consumption as the transportation and the hospitality businesses of the same group are both rising on the same period.

Odakyu department stores, which belong to the Japanese railway company Odakyu Electric Railway, saw its revenue down -41.1% to JPY5.78bn, for the full year 2022. Interestingly, this is not correlated to traffic, as the total passenger traffic carried by the train division increased +5.6% and the hotel business division increased its sales by +90.3%.

Odakyu department stores are down -41,1% FY in 2022 

What: Flannels has opened the doors to its latest store in Blanchardstown, Ireland.

Why it is important: Representative of Flannels’ commitment to growth, their first Irish store expands the retail offering across the UK and Europe, marking over 60 stores.

The Blanchardstown store stretches across 30,000 square feet offering luxury and major streetwear brands along with Flannels Beauty and curated luxury fragrances.

Flannels opens first Irish store

What: Coresight Research and Bolt release digital sales data that reveals key holiday trends.

Why it is important: As consumers embrace flexible payment options, retailers and brands are responding by onboarding platforms to meet that demand.

Other trends include more investments in e-commerce management, personalization, and experiential retailing this year. On the front end, the authors of the report said retailers and brands have slashed prices on top categories such as apparel, toys and electronics.

Mastercard SpendingPulse said U.S. retail sales (minus automotive) grew 7.6% year-over-year this holiday season.

Coresight shares digital sales data for holiday trends

What: Falabella announced that in the last meeting of the board of directors the resignation of Hernán Büchi Buc from his position as director of the company, effective December 13.

Why it is important: The departure of Hernán Büchi Buc follows the conciliation agreement approved this November in Chile by the Free Competition Defense Court and signed between the National Economic Prosecutor's Office and Falabella, to end the trial that began in December 2021 for allegedly Violation of the horizontal interlocking prohibition.

Falabella proceeded to appoint Ricardo Cruzat Ochagavía as the new director, who will replace Büchi Buc during the most recent board of directors meeting.

Falabella director replaced by Ricardo Cruzat

What: Following its YNAP acquisition in August of this year, Farfetch lays out plans to reach profitability and secure the luxury market.

Why it is important: The company’s near-term focus is on profitability with expectations of gross profit and order contribution margins to improve in 2023 but expects the costs of new partnerships to amount to around USD 170 million.

In 2023, the company expects GMV to increase 20 to 22% year-on-year compared to the 2022 outlook, reaching USD 4.9 billion, driven by underlying business growth and GMV from signed partnerships. Farfetch has been struggling with GMV this year: in the most recent earnings, Q3, it said GMV dropped 4.9% year-on-year; in Q2 it increased 1.3% year-on-year; and, in Q1 it increased 1.7% year-on-year.  Farfetch’s shares dropped 34.9% today during the investor event during which it announced its plans to achieve profitability.

More growth is planned for its Farfetch Platform Solutions business, the whitelabel arm of the company used by Bergdorf Goodman, Ferragamo and others to run their e-commerce sites. By 2025, Platform Solutions is expected to represent USD 4.3 billion in GMV, while its marketplace represents USD 3.8 billion, growing 8 to 10%. Brand platforms, which includes Off-White owner New Guards Group and the partnership with Reebok, are expected to represent USD 1.5 billion.

Farfetch lays out plans for the future

What: Japanese retail sales rose for a ninth straight month in November, data showed on Tuesday, as the lifting of COVID-19 border controls and the government’s domestic travel subsidy helped consumer demand.

Why it is important: Sales fell from October, with price increases in daily necessities weighing on Japanese households as the nation’s core consumer inflation rate hit a fresh 40-year high, indicating price hikes were broadening.

Retail sales grew 2.6% from the year earlier but short of a median forecast of 3.7%. The pace of annual growth in sales, a barometer of private consumption, slowed from 4.4% in October and 4.8% in September.

A recovery in private consumption, which makes up more than half of Japan’s economy, is key to driving growth in the economy, which unexpectedly shrank in the third quarter.

Japan retail sales stay up thanks to tourism

What: Macy’s Inc. CFO shares insights on the retailer’s new digital marketplace, pricing science and holiday positioning strategies.

Why it is important: Macy’s has adjusted how they view inventories and buying as they use their new marketplace as a testing ground for new categories and products without the same risk and operating expense as a traditional website.

Data showed that customers had been searching for products and categories that Macy’s did not have. Thus, the retailer created their marketplace which has also attracted younger consumers who are generating larger baskets in terms of units per order. According to Macy’s CFO, they are also innovating on the wholesale front by changing the way they buy and integrate teams across planning, finance and the supply chain. Buying has become more conservative as they build reserves into their product purchasing so that they can have more flexibility to adjust during the season based on demand. According to Macy’s data, 96% of marketplace customers are shopping what Macy’s has traditionally bought wholesale and listed on its website.

Price promotions are also seeing a revolution through technology. Using pricing science, Macy’s is conducting markdowns by store, by location, by style and even based on the availability of inventory and the level of sell-throughs.

Macy’s CFO did not underestimate the impact of inflation but believes that the retailer’s recent modernization initiatives have positioned them well for the gifting season.

Macy’s CFO shares on modernization

What: The UK has lost a total of 9,300 retail outlets in the pace of 2 years due to the pandemic.

Why it is important: The country used to have the second highest number of retail square feet per capita in the world, and the pandemic led to a reset for more balance (creating casualties on the way).

According to a BBC/Ordnance Survey, the pandemic contributed to a 13,4% drop in the UK (excluding Ireland) between March 2020 and March 2022, leading to the closure of 328 units (including the Debenhams and Beales entire fleets).

At the same time, 8,5% of fashion stores had to close (4,300 units) including Burtons, Dorothy Perkins, Wallis, Topshop and Miss Selfridges entire fleets. Malls have replaced them by hair & beauty services (+5,9% in total units), services and hospitality-based venues.

In the UK, the pandemic was the most damaging to department stores and fashion stores 

What: Marks & Spencer is set to open a new store in Liverpool One, a retail park in the city’s centre.

Why it is important: Scheduled to open in mid-2023, the store is in a former Debenhams unit, spanning 100,000 square metres over two floors.

The signing completes the evolution of the former Debenhams unit and follows the announcement that Gravity Active Entertainment is creating a 10-million-pound entertainment experience on the remaining upper two levels.

Marks & Spencer to open new store in Liverpool city centre

What: Fenwick has sold its London flagship store in order to focus on its regional stores fleet.

Why it is important: Strategic alignment requires difficult decisions and being able to get rid of symbols, in order to guarantee the perennity of the company.

Fenwick has sold its Bond Street building in London for an estimated amount of 430m pounds. The store, the fourth smallest in the fleet of 8 stores will remain open until Q1 2024. It currently makes half of the Newcastle historic flagship location.

The proceedings from the sale will fund significant investments in the other stores, especially the Newcastle and the Kingston upon Thames ones, as well as improve its digital presence.

Fenwick to close its London store 

What: Frasers Group has announced the acquisition of several premium fashion brands in which JD Sports Fashion has stakes.

Why it is important: The company has snapped up 15 of the group’s retailers via shares held by JD including Tessuti, Base Childrenswear, Missy Empire, Choice, Clothingsites, Cricket, Giulio, Kids Cavern, Nicholas Deakins, Pretty Green, Prevu Studio, Rascal Clothing, Scotts, Watch Shop and Topgrade Sportswear.

All of the indebtedness is to be transferred to the subsidiaries of Frasers Group. Frasers said the amount payable for the acquisition of the shares and indebtedness amounts to 47.5 million pounds, which will be funded by the group’s existing cash resources and completed in 2023.

Frasers Group acquires JD Sports’ premium fashion brands

What: A light Christmas article about the joys of shopping luxury at Bergdorf Goodman.

Why it is important: A very good promotional piece allowing to casually emphasize the behind-the-scene details to make sure customers looking for exceptional Christmas pieces and service know where to go in Manhattan.

The NY Times journalist spends some time within Bergdorf Goodman, which is at the same time a pretext to review the state of department stores affair and also promote the iconic NY luxury destination store. The article astutely insists on the “unique” status of Bergdorf Goodman as a place where true luxury is displayed and where no one ever says no.

Surviving 10 hours and 32 minutes at Bergdorf Goodman 

What: Retail may have been under pressure in recent years, yet Savills report has shown how retail real estate is one of the most resilient for its asset class with major investments during 2022.

Why it is important: Property specialist Savills said that 26.9 billion euros have been invested into the European retail sector so far in 2022, which is up 25% compared to 2021. Investment in shopping centres accounted for 27% of all the retail activity, compared to 14% for the same period last year.

Savills has also observed that there appears to be little change in expansion strategies despite the economic headwinds in Europe. Off-priced retailers and fashion retail investment is continuing with only a small drop in pace during Q3 of 2022.

Prime high street locations are being viewed more favourably due to footfall recovery and rent drops. Savills said on average, prime high street rents across Europe are 34% down on Q4 2019 levels, and they’re even down 29% in usually strong London. The report said that grocery stores still account for around a third of all European retail investment activity and discounters' investment has doubled this year.

Savills reports retail as most resilient real-estate asset class

What: Gen Z is attracted to self-expression and individuality but is easily influenced by price and inclusive marketing.

Why it is important: Several surveys of Gen Z regarding their spending and shopping habits has revealed a new understanding of how they view brand loyalty.

According to the Gen Z Fashion Report by student affinity network Unidays, a majority (61%) of respondents said they think brands should do more to eliminate gender from styling, and just under half said they are more willing to buy from a brand that has better gender inclusivity through their marketing. Overall, Gen Z is harder to please overall, according to Morning Consult which found the average favorability rating for brands across the country is 27% for Gen Z, compared to 33% for all adults and a rating of 36% for millennials.

According to data from Bank of America for September of 2022, 73% of Gen Z say it’s hard to save money right now, and 56% say inflation has created more financial stress. Teens’ self-reported spending increased slightly by 3% year over year to USD 2,331 according to research firm Piper Sandler’s fall 2022 Taking Stock With Teens Survey of 14,500 U.S. teens. Female teens led that spending increase too, with that group’s overall spend up 10% year over year and clothing being 30% of their wallet share, the highest it’s been since 2012.

60% of Gen Z agree that the brands they shop with are an expression of who they are and 77% don’t want to feel like they’re put in a box, derived from 2020 survey data from Wunderman Thompson Intelligence.

Gen Z brand loyalty looks different

What: Falabella Retail opens a location of its express format store in Chile, exclusively focused on fashion.

Why it is important: The 2,000-square-metre establishment, already operating in the Power Center Open complex in Puente Alto, offers the Falabella fashion portfolio including the group’s private labels in a specialized format that utilizes QR codes, virtual assistance and self-checkout payment options.

Falabella opens express format store

What: The former Arcadia Group brands and Debenhams, which were snapped up by Boohoo last year, have continued to make a loss under the etailer’s ownership.

Why it is important: Debenhams, Boohoo’s largest acquisition, made an 11.7-million-pound pre-tax loss against 56.9 million pounds in sales in a slightly longer period of 14 January 2021 to February 28 2022.

The group acquired the department store retailer in a 55-million-pound deal in January 2021 after it fell into administration. It then snapped up Burton, Dorothy Perkins and Wallis in a separate 25-million-pound deal the following month.

The online retail giant blamed falling consumer demand and rising returns post-lockdown for the disappointing performance of its newly acquired brands, which also hit the wider Boohoo Group.

Arcadia brands and Debenhams fail to profit under new owners

What: China’s announcement on Monday that it would re-open its borders to visitors and drop quarantine requirements was good news for luxury stocks.

Why it is important: Luxury brands rely heavily on Chinese shoppers, and the lifting of the previously mandatory quarantine for incoming passengers will be China’s first full opening which has already led to a 2.7% increase for LVMH and a 4% rise for Richemont shares.

Despite the lifting of restrictions, China has seen a surge in infections in recent weeks, with some reporting estimates of 250 million cases.

Luxury stocks rise as China re-opens

What: Labour union members took over the sales floor to demand higher wages.

Why it is important: Luxury department store La Samaritaine was shut amid the last-minute Christmas shopping rush as protesters took over the sales floor Thursday.

The store remained closed for the remainder of the day. CGT said about 200 protesters, wearing the union’s signature red vests, entered the store to demand wage increases and stood among the displays of luxury goods, according to AFP.

La Samaritaine closes due to protests

What: Rumors are spreading that Shein is changing its strategy to become a marketplace in order to compete with big online retailers like Amazon and Alibaba.

Why it is important: The Wall Street Journal reportedly saw a memo sent by Shein to its investors stating that they are considering a move to sell merchandise from third-party brands in addition to its own brand which lines up with Shein recently divesting operations and opening warehouses and manufacturing in central Europe.

Shein rumoured to become an online marketplace

What: Platforms selling vintage and upcycled goods are gaining popularity in cities including Shanghai and Beijing as customers become more price-conscious.

Why it is important: Rising prices, more environmentally conscious consumers, and the celebrity effect are normalizing secondhand shopping for Chinese shoppers, buying not only resale luxury goods but pre-owned fashion and accessories across price points.

According to data released by the Chinese National Bureau of Statistics in October, apparel prices rose by 0.5% compared to last year, leading some to adopt secondhand shopping. Gen Z is becoming more accepting of resale, however, they tend to visit secondhand markets for social reasons rather than environmental ones. As well, in a July survey, online technology platform Youth36kr found younger generations are increasingly inclined to save rather than spend.

Recently, sustainable lifestyle company Bottle Dream and content platform Xiaohongshu launched a recycled fashion initiative in Shanghai complete with used clothes exchanges, upcycling craft workshops and other activities. According to Xiaohongshu, the three-day secondhand marketplace brought more than 2,000 people together.

Xiaohongshu is watching engagement around secondhand rise: circular fashion has garnered more than 20,000 notes as of September 2022, a 693% increase on the prior year.

Secondhand shopping starts to take off in China

What: Korean rivals are competing for a new location in Gwangju, south of the country.

Why it is important: While Lotte shies away from the competition, this suggests that there is still room for expansion for physical retail in Korea, one of the most connected markets on the planet.

Hyundai and Shinsegae are competing for a new mixed-use project in Gwangju (south of Korea) which would include a shopping mall, a hotel, a theatre and a park. It would be the first one for Hyundai in the city (where its last location was closed in 2013) and the second one for Shinsegae. Both proposed projects would be of an approximate size of 300,000 sqm.

Hyundai and Shinsegae competing to open a new mall in Gwangju 

What: Advancing in its sustainable commitment, Falabella Retail is launching the +Green Seal, which is a system of evaluation and qualification of the environmental, economic and social performance of its stores.

Why it is important: Developed by the Chile Green Building Council (GBC), Falabella’s +Green Seal is the only seal focused on sustainability for retail operations.

Falabella Retail began the evaluation of 16 stores and all managed to access the +Green Seal, which consists of a total of 28 points across 7 categories: sustainable environment, operations, water efficiency, energy efficiency, material selection, the health and well-being of collaborators, and social responsibility.

Falabella launches +Green Seal