What: Business of Fashion brings the Happy Returns director and a consumer psychologist together to discuss how companies can transform customer pain points in the return process into growth opportunities.

Why it is important: Competition around having the cheapest and most convenient experience is now conflicting with CSR efforts and the financial and logistical costs of facilitating returns which has led many retailers to consider restructuring their return process.

While many customers report the importance of free returns (87% according to research by PayPal and TRC), the importance of convenience demonstrates greater importance with over 50% of customers have abandoned carts due to a lack of convenient return methods. According to consumer psychologist, Kate Nightingale, the simple act of touching a product increases the sense of ownership by over 20% which influences satisfaction when customers encounter difficulties in the return process. The sponsor of the discussion, Happy Returns, expresses the importance of in-store, package-free returns to provide a convenient and more environmentally friendly method. The stores do not have to be brand owned, however, if customers return to the store, they are more likely to purchase something.

Returns are a pain point for both retailers and customers, thus, gamifying the process for consumers can encourage loyalty and improve attitudes and thinking around returns. For retailers returns should become part of inventory management through processing returns in-store, ultimately eliminating many troublesome steps from receiving packages directly from consumers.

The benefits of improving return processes can be seen through studies and reports that show how customers who frequently make purchases tend to have the highest rate of returns and are likely to increase order frequency when the experience is efficient and positive.

Reimagining returns to drive growth

What: The American Dream mall in New Jersey has secured a deal with credit lenders that will provide a four-year extended debt maturity.

Why it is important: American Dream, the massive shopping and entertainment centre in New Jersey, has been struggling financially since the pandemic having missed an 8.8-million-dollar debt payment and lost 60 million dollars in 2021 due to expenses beyond its rent revenue.

The announcement of the financing deal comes with hopes that success will follow and allow for a recovery following its ill-timed opening in 2020 and the mass layoffs and missed mortgage payments which followed.

American Dream mall extends debt maturity

What: Ahead of Christmas, Marks & Spencer seeks to strengthen its menswear offering by adding third-party brands including Ted Baker, Superdry, Lyle and Scott and Musto to M&S.com.

Why it is important: The strategy reflects the overhaul of Marks & Spencer’s clothing and home offering, with sales rising 14% in the first half of the year and third-party brands accounting for 4.1% of its clothing and home sales.

In the past year, third-party brands brought in 70 million pounds of revenue.

Marks & Spencer add third-party menswear brands to offering

What: The Shanghai government’s announcement Tuesday of a policy that requires new arrivals in the city to stay away from public places for five days is likely to put even more pressure on the local luxury retail market.

Why is it important: According to a report published by Barclays, the latest round of restrictions in one of China’s most important luxury hubs will bring an additional headwind to China luxury sales in the fourth quarter.

Starting Thursday, people entering Shanghai will be barred from public venues, including restaurants, pubs, shopping malls, department stores, supermarkets, indoor gyms and internet cafes for five days upon entry. They must take three nucleic acid tests three days in a row, the last test on their fifth day in the city, before being allowed to travel freely with a green code.

Shanghai’s announcement is particularly relevant for the luxury sector, as it effectively prevents non-local luxury consumers from making short to mid-length shopping trips into the city.

According to an earlier report published by Barclays in September, non-local clients can contribute up to 50% of sales to malls in major cities such as Shanghai and Beijing.

After the new rules were introduced in Shanghai, cities such as Shenzhen, Nanchang, Xi’an, Sanya, Zhengzhou and Harbin followed up with identical policies. Travel restrictions for new arrivals ranged from three to five days. Local governments also urged residents to cancel travel plans if possible.

China reported more than 29,700 new cases on Wednesday, topping a record high since the Shanghai outbreak in April. Shanghai reported nine confirmed COVID-19 cases and 58 asymptomatic cases on Wednesday.

According to a Goldman Sachs report published on Nov. 6, China is likely to exit its “zero-COVID-19” policy in the second quarter of 2023, after the second Congress of the Party next March, when President Xi Jinping will renew his presidency.

New Shanghai Covid-19 restrictions put pressure on luxury market

What: Shein is opening its first-ever permanent store in the fashion precinct of Harajuku in Tokyo, Japan this November.

Why it is important: Customers cannot take products home from in-store, but instead can make purchases by scanning QR codes and buying through the Shein app which will then ship products to their home or office.

Along with the store opening, a Shein pop-up will be open in Osaka until the end of January, with nine fitting rooms and around 800 items across men’s, women’s, home and pet categories. Inside the 201-square-metre two-story building in Harajuku, the first Shein store will include three fitting rooms and an Instagrammable photo booth.

Shein opens first permanent store in Tokyo

What: Dillard’s third quarter retail sales and revenues increased 3% over the period with net sales for the quarter reaching 1.5 billion dollars compared to 1.48 billion for the previous year.

Why it is important: Despite facing many of the same economic and supply chain-related issues as other retailers, Dillard’s has managed to maintain growth with their seventh consecutive quarter of gross margin over 40%.

For the entire first part of 2022, Dillard’s reported a retail sales increase of 8% and a comparable store sales increase of 8% as well. Net income is up 11% over last year’s performance with earnings per share up 32%.

The strongest performing categories for the department store group during the third quarter include cosmetics, men’s apparel and accessories, home and furniture and shoes. Juniors’ and children’s apparel were the weakest performing categories.

Dillard’s posts increased sales and earnings in Q3

What: The technology from Emperia enables users to move through unique brand settings on bloomingdales.com in a virtual shopping tour.

Why it is important: Bloomingdale’s has helped create virtual shopping experiences for Chanel, Ralph Lauren and Nespresso, along with a virtual setting encompassing a luxury beauty/spa room, a party room and a gifting presentation as part of its metaverse shopping tour.

The project has been created thanks to technology from Emperia, a London- and New York-based virtual reality technology developer for the retail and fashion sectors.

Bloomingdale’s opens virtual stores

What: Saks is teaming up with TerraCycle to launch its Saks Beauty Recycling programme for beauty containers.

Why it is important: Across Saks.com, Saks Fifth Avenue stores and the US, the new recycling initiative will enable customers to recycle empty haircare, skincare and cosmetic packaging from all brands by dropping them off or sending them by using prepaid shipping labels.

The packaging waste will be collected and sorted for processing to become new raw materials to be transformed into furniture, gardening equipment and other products.

Saks launches beauty recycling

What: After introducing its credit card in partnership with NewDay, John Lewis has issued an apology due to issues surrounding the difficulties to navigate the application process.

Why it is important: Originally a partnership with HSBC, the replaced partner for John Lewis’ credit card has proven to be inadequate as customers complain about needing to reapply, being declined and having their credit limits reduced.

In response, numerous changes to the process to accommodate the different application requirements have resulted in manual underwriting and ultimately a bespoke process for customers to apply for the John Lewis credit card. A dedicated helpline has also been established.

John Lewis apologises for problems surrounding its credit card

What: A Jungle Scout Consumer Trends surveyed 1,000 U.S. shoppers and found that 25% of the respondents are planning to purchase used items as gifts to reduce their holiday spending.

Why it is important: The trend of buying second-hand gifts for the holidays began before the COVID-19 pandemic disrupted the retail industry, but Jungle Scout’s research suggests that it has continued considering consumers’ inflation concerns.

Among the top ways shoppers are cutting back their holiday spending are paying less per person on gifts (54%), purchasing discounted items (47%), buying gifts for fewer people (38%), reducing their holiday decorating spending (36%) and cutting their holiday activities and travel (34%).

Jungle Scout’s report echoes previous research indicating that consumers are turning to used goods to combat rising prices.

A Morning Consult survey found that 79% of respondents were looking for deals, 77% had reduced their shopping and 85% said they are changing their habits due to inflation.

In a ThredUp survey released in May, 44% of respondents said they are cutting back their clothing spending, more than every other category except dining at restaurants.

Retailers also have to adjust to costs rising, for example, Target, Walmart and Best Buy have all cut guidance as they prepare for consumers to spend less in response to inflation.

Consumers turn to second-hand as inflation increases and the holiday season approaches

What: Shares plunged more than 20% in after-hours trading once Amazon reported the possibility of zero dollars in profit.

Why it is important: Amazon anticipates net sales to land between 140 billion and 148 billion dollars, for growth of between 2 and 8% year-over-year which disappointed analysts, who expected 155 billion dollars.

Uncertainty over its projected operating income also stood out as Amazon announced it would fall somewhere “between 0 dollars and 4 billion dollars.”

The company’s convenience and accessibility are expected to support them this holiday season as brands, retailers and customers face inflation and economic strain.

Amazon warns of 0 profit holiday

What: The vegetarian restaurant at its Maison Seoul location is helmed by French 3-star Michelin chef Alain Passard.

Why it is important: Retailers and brands are increasingly venturing into hospitality and are crafting tailored experiences.

Taking over the Gangnam flagship’s fourth floor, the restaurant featured a fall garden theme. Alain Passard’s vegetarian pop-up restaurant opened for lunch, tea time, and dinner, from September 17 to October 29 at Louis Vuitton Maison Seoul.

Louis Vuitton pop-up restaurant in Seoul

What: To give a well-needed boost to tourism, Hong Kong has announced a 500,000 airline ticket giveaway worth 254.8 million USD as well as dropped inbound quarantine requirements.

Why it is important: Luxury and retail markets will likely see a boost in business in 2023 due to Hong Kong’s plan to support an increase in tourism.

The ticket giveaway and the removal of all remaining travel restrictions will begin in 2023 as part of the city’s plan to attract visitors from around the world.

The airport authority had purchased the tickets from Cathay Pacific back in 2020 as a pre-emptive measure to boost tourism once restrictions eased.

Hong Kong offers free flights to boost tourist economy

What: Sparks Pay has been launched with M&S Bank to roll out across M&S.com and the M&S app, allowing users to apply for a new digital credit account and borrow up to 500 GBP for purchases.

Why it is important: Shoppers will get up to 76 days of interest-free borrowing on their first order when they pay the balance in full and up to 45 days for later transactions with a potential annual interest rate could be 23.9%.

M&S launches Sparks Pay allowing members to borrow GBP 500

What: Deals are starting early with Nordstrom and Nordstrom Rack with services, including gift wrapping, free gift help from stylists, and same-day or next-day order pickup.

Why it is important: Nordstrom has released a celebrity-backed campaign, announced in-store and online events, and refreshed its Balsam Hill Christmas tree lot offer at select stores, among other events and services for shoppers this holiday season.

The department store also plans to hire 20,000 employees across Nordstrom and Nordstrom Rack stores, supply chain facilities and customer support staff in order to execute its in-store and online goals.

Nordstrom boosts pre-holiday events and services

What: Battling e-commerce natives, dealing with high acquisition costs, unpredictable inventory and demand and difficult profit targets are leading some department stores such as Selfridges or Nordstrom to team up with other multi-brand retailers.

Why it is important: To combine merchandising prowess, share customer crossover and leverage each other’s scale or social reach, multi-brand retailers are partnering in different ways as a chance to experiment and improve connectivity.

Choosing the right partner is important, as is navigating the risks around stock management, cannibalisation and feasibility.

The trend of cross-retail partnerships is not new and has proved popular within beauty as can be seen through Sephora’s partnership with Kohl’s or Ulta’s Target shop-in-shops. For fashion retailers, Barneys New York’s example of a wholesale deal to sell its private label collection through the South Korean boutique Boon The Shop started in 2018 and ended only when the store closed in 2020.

Already, Selfridges has partnered with Machine A and Smets to offer a curated selection of products from the two external multi-brand retailers as part of its plan to inject new brands and styles in-store. Nordstrom has partnered with 11 Honoré, a luxury e-commerce platform, and Asos.

Multi-brand retailers team up for success

What: The German company has already received €680mn in the past two years from the German state.

Why it is important: We unfortunately need to be prepared to more news like this as we live in a time of continuous crises. However, in the case of Galeria, the group needs to accelerate harder on its transition, probably at the cost of closing a number of stores.

The German department store chain Galeria Kardstadt Kaufhof has been impacted, like other players in Europe, by the war in Ukraine, energy crisis and low consumer confidence, which leads to unplanned additional spending (€115mn in the next 2 years for energy alone). As a consequence, the company has to apply for German state aid for the third time, after having already received €680mn in the past two years.

This raises some criticism from experts, who lament that the optimisation of the group (with the merger of Kardstadt and Kaufhof) has not been fully finished, and the store fleet is still too large, with 131 stores in Germany.

The group also owns Inno in Belgium.

Galeria Kardstadt Kaufhof is applying for state aid for the third time 

What: This is the second collection of luxury hotel brand The Ritz, done in partnership with Frame, a trendy fashion label.

Why it is important: Through collaborating with the trendy fashion label Frame, the Ritz seeks to bring a new and younger vision to the hotel brand through a branded luxury fashion offering.

A range of about twenty items from pyjamas to sports jackets, jeans and pet items accent the heart of the collection which seeks to deliver high-end basics featuring the institution’s logo.

The Frame X Ritz Paris line is sold in the Frame chain with 15 stores in the UK and US, major retail sites like Net-a-Porter, Moda Operandi, Louisa Via Roma and Frame’s Tmall Flagship store. The collection is also in several retailers such as Harrods, Le Printemps, Le Bon Marché, Holt Renfrew in Canada and NK in Sweden.

The brand recently opened a large pop-up boutique at Bergdorf Goodman during New York Fashion Week.

Frame X Ritz Paris transforms the hotel into a luxury fashion brand

What: John Lewis has hired a new profile in order to revamp its collections and brand perception.

Why it is important: Even though the price point remains important (good quality at a very good price), no retailer is immune anymore to the need of showing customers fashionable and desirable offers.

The days when things could be at a very good price but did not have to follow the trends are over, and this can be felt across all department stores companies operating their own private labels.

John Lewis, which is still struggling to recover both from its initial difficulties and the Covid-19 pandemic (the company posted a net loss of £99m in H1 2022), has launched a turnaround strategy called the “Partnership Plan”, which aims to reach £400mn in profits by 2025. This plan includes the recruitment of a Director of design for fashion, Queralt Ferrer, who started in 2022.

Ferrer has been working for Massimo Dutti and Marks&Spencer before joining John Lewis, and therefore boasts the right experience for the challenge. She will have to deal with a long-standing, albeit diluting, affection from Bitish customers for a retailer brand which is now seen more as a national treasure than a company trusted for the trends it proposes.

According to the Financial Times, the first collection for women’s has generated sales growing +38% compared to the previous year, and new services have been launched: clothing and accessory rental, resale and recycling services.

Can John Lewis’ first fashion director deliver both style and sales? 

What: RSR questions the relevance of Black Friday in the digital age

Why it is important: Many IADS members keep on combining Black Friday (and other “institutional” sales dates) with their own labelled-sales campaign. Maybe it is time to review the efficiency of such institutional dates and trade them for more CSR clout?

RSR is arguing that Black Friday is a tradition from the past, which has been made outdated by customers’ behavior changes, the Covid-19 pandemic, and more importantly, the way retailers have acted on the US market, by starting deals and sales way ahead of the date of Black Friday itself. With the rise of online retail, there is no more point for customers to queue up outside early morning to snag deals that they could get from their home. In addition, Black Friday is now competing with retailers’ own labelled sales, Target’s Deal Days or Amazon’s Prime Days.

US retailer REI is going a step ahead and decides to give Black Friday as a day off to its employees, ‘forever’, instead of opening stores and trying to lure in customers. RSR remarks that this move is not so much about saying goodbye to a worn-out practice as it is another indicator that retailers are looking to be, or look, virtuous. In REI’s case, this means showing care to its employees, and RSR bets that this will strike a bell to Millenial and GenZ customers who are increasingly asking retailers to be good citizens.

Is Black Friday still relevant? 

What: Isetan-Mitsukoshi is opening again international outposts, this time in Philippines

Why it is important: The conglomerate closed its entire Chinese operations during the summer of 2022 and announced its will to focus on the Japanese national market. Such an announcement shows that they are still on the hunt for opportunities.

Isetan Mitsukoshi will open in 2022 a first location in Bonifacio Global City, the business district in Manila. It aims to attract a young and middle class crowd, thanks to an assortment of Japanese cuisine, fashion and cosmetics offer. A whole floor will also be dedicated to wellness.

Isetan Mitsukoshi posted an operating loss of $191.9mn in 2021, and closed all of its Chinese locations earlier in July this year.

Mitsukoshi to open a Philippines location this year 

What: The Tokyo department store located in Shinjuku has closed amid a comprehensive redevelopment project around the Shinjuku station.

Why it is important: Odakyu will continue selling goods in a building nearby.

Many visitors took photos and thanked staff as the building will be demolished following 55 years of operation. The moment is bittersweet for residents who have grown up with the landmark shopping mall.

Following the demolition, other department stores alongside Odakyu will be rebuilt. A pedestrian deck connecting the station’s east and west gates is also planned. In place of the former Odakyu building, a 260-meter, 48-story complex with offices and shops is to be built in 2029.

Odakyu Department Store closes for redevelopment

What: Sephora will be opening a London flagship store and extending its e-commerce reach back into the UK after closing its stores in 2005.

Why it is important: Sephora will be transforming Feelunique, which it purchased for 135 million pounds last year, into Sephora.co.uk on October 17th. A London flagship store is set to open in the spring of 2023.

All products and services popular across North America will be available to UK consumers. The Feelunique reward program will remain but will be renamed upon completion of Sephora’s takeover.

Sephora returns to the UK

What: Forbes questions the future of return policies now that their cost is skyrocketing.

Why it is important: There is neither a one-size-fits-all solution nor even one known answer to date on how to address the rising costs of such policies, apart from making sure that customers pay more attention when placing their orders. This is where data and tech might be helpful.

Forbes reviews the thorny question of 100% satisfaction guarantee policies in the US, where no-questions-asked returns became a common currency on the market. This has become an increasingly painful question with the rise of e-commerce, with some retailers even paying for the privilege of customers shipping back their items.

However, this might be coming to an end, as the related costs are too high: Kohl’s is no longer paying for return costs, LL Bean, Dillard’s, J.Crew, REOI and Zara even charge customers who decide to return items. Some are even thinking about writing off on the goods that customers want to return, instead of taking them back.

Cost is the main issue: is represented 16,6% of total US sales last year and $751billion (to be compared with 10,6% and $428bn in 2020), and this figure might even be underestimated, as it needs to take into account hidden costs.

Retailers are therefore in a difficult position, not willing anymore to sacrifice their already thin margin to provide a service that customers take for granted. Nudging might be one of the solutions, thanks to the help of tech, using data as a way to influence customers’ behavior (and make sure they buy the right size or color). One thing is for certain, it will not be easy anymore to return items in the future.

Are the 100% satisfaction guarantee policies a thing from the past?