What: Made in China brands are exponentially growing and at-home competition is fierce.

Why it is important: Some of them are increasingly credible for overseas expansion. They might be a solution for department stores looking for an alternative to the big Western names going DTC.

In 1987, Ding Shizhong began transforming his family's small shoemaking business in Fujian, China into Anta, a major sportswear retailer. Anta grew rapidly, surpassing Adidas as China's second-largest sportswear brand with $7.8 billion in annual revenues. This growth was fueled by strategic acquisitions, including Fila's China rights and Finland’s Amer Sports.

However, Anta faces challenges with slowing growth in China and adapting to evolving sportswear trends. Financial pressures from a significant loan for the Amer Sports acquisition have led to plans for an IPO. Anta is responding to market shifts and increased competition by refining its product lines and adopting a direct-to-consumer retail model. Despite these hurdles, Anta remains a key player in the dynamic sportswear industry.

Nike challenger Anta faces fresh rivals in Chinese sportswear race

What: Fortnum & Mason has unveiled a window collaboration with six street artists for the launch of its new ‘Unleash the Love’ gifting collection.

Why is it important: Fortnum & Mason, a high-end department store in London, has launched its 'Unleash the Love' gifting collection, accompanied by a unique window collaboration with six street artists. The collection, inspired by the eight types of love in Greek philosophy, aims to celebrate various forms of love. The artists, working with art curation and consultant collective Gone Rogue, were given complete creative freedom to interpret the theme of 'love' in their street-art designs.

The display showcases Fortnum & Mason's commitment to supporting diverse art forms and integrating them into its retail experience. The project not only adds a unique aesthetic appeal to the store's windows but also broadens the concept of love beyond Valentine's Day, reflecting its various forms and interpretations. Additionally, the auction of these artworks for charity highlights the store's engagement with the community and its efforts to contribute positively. This initiative represents a blend of art, commerce, and philanthropy, enhancing the cultural and social value of the retail space.

Fortnum & Mason creates major window installation for gifting

What: Amazon Fashion has introduced new AI-driven features to address the fit problem in fashion e-commerce.

Why it is important: The new tool aims to address the fit problem in fashion e-commerce, reduce returns, and improve the overall shopping experience for customers and brands.

These updates include personalized size recommendations, AI-generated Fit Review highlights, and standardized size charts for customers. One significant addition is the Fit Insights Tool, designed to provide brands with AI-driven insights on product fit and sizing issues based on customer feedback. The tool uses large language models to extract and aggregate customer feedback to identify defects in size charts, offering brands valuable data to improve their products and sizing information.

The personalized size recommendations algorithm evaluates sizing relationships between brands, reviews, and customer fit preferences to recommend the best-fitting size for each individual. The AI-generated fit review highlights summarize customer feedback, helping shoppers make informed decisions about sizing.

Lastly, Amazon has improved its size charts using AI to enhance accuracy and consistency, making them easier to follow and potentially addressing the variability in sizing systems across styles and brands.

Amazon points AI at fashion fit problem

What: Marquette, a lifestyle concept store gathering DNVBs and designed for shopping centers, is planning to expand its presence with four new store openings in 2024, targeting a total of ten stores by the end of the year. The store features a vibrant and colorful layout and offers products from web-born brands (DNVBs) and other trendy brands across various categories like fashion, beauty, and leisure.

Why It Is Important: In the wake of Showfields collapse in the US, Marquette's expansion reflects a successful adaptation of the retail model, integrating online-born brands into physical shopping centers and diversifying its product range beyond DNVBs.

Originating from a collaboration between Digital Native Group and Carmila (Carrefour group), Marquette opened its first store in 2020 and has since grown to six locations in France. Marquette growth strategy not only enhances the mall experience by introducing unique and sometimes lesser-known brands but also demonstrates the viability of a consignment sales model in the retail sector. With plans for e-commerce and potential home delivery services in the future, Marquette is said to already be profitable.

Marquette, a new French concept dedicated to DNVBs

What: Lotte Department Store has signed an exclusive franchise and distribution deal with Moroccan coffee brand Bacha Coffee to introduce the brand in South Korea.

Why it is important: This partnership marks a significant expansion for Bacha Coffee into the South Korean market, leveraging Lotte's extensive retail network. The move reflects the growing trend of global food and beverage brands collaborating with major retail chains to tap into new markets. For Lotte, this deal diversifies its offerings, enhancing its appeal to customers by providing a unique and premium coffee experience. The collaboration also signifies the increasing importance of experiential retail, where shopping is combined with distinctive culinary experiences.

Bacha Coffee, known as the "Hermes of coffee," is set to enter the South Korean market through a franchise and distribution agreement with Lotte Department Store. The first store will open in Seoul's Cheongdam-dong district in July, with plans for further expansion through department stores, e-commerce, and B2B partnerships. This expansion is part of Bacha Coffee's broader growth strategy, which includes recent launches in Taiwan and the UAE.

Lotte department store partners with Bacha Coffee for South Korean expansion

What: It seems that luxury food is thriving in London.

Why it is important: Gourmet halls are increasingly important for department stores, and many should get inspired by what is going on at F&M since the arrival of their new CEO, Tim Athron

Fortnum & Mason, the iconic London department store known for its luxury goods and specialty teas and jams, is set to expand following a particularly busy Christmas season. The 317-year-old retailer experienced a 17% increase in sales and processed over 400,000 orders in the five weeks leading up to Christmas Eve, with orders coming from as far as Bermuda and New Zealand. This surge in demand put significant pressure on its infrastructure.

To address these challenges, Fortnum & Mason has decided to relocate its main UK warehouse to Corby in Northamptonshire, which offers twice the space of the current facility. However, this expansion comes with a downside, as smaller warehouses across the UK will be closed, and 94 jobs are under consultation.

Despite these changes, Fortnum & Mason is not struggling. Since CEO Tim Athron took over in 2020, the store has been working to broaden its appeal beyond its traditional elite customer base. This strategy appears to be successful, as indicated by a 12% increase in annual sales in the year to July 2023. The flagship store in Piccadilly now features a creative hub for food and drink, a test kitchen, and a gin distillery. Additionally, there are discussions about opening a store in the US, although this has not been confirmed.

Fortnum & Mason is expanding and considers entering the US

What: During the Christmas period Fortnum & Mason experienced a significant sales increase, with revenue rising by 17% compared to the previous year.

Why it is important: The significant sales increase shows the company’s successful management of inflationary pressures and potential for sustained growth.

The refurbishment of its flagship London store and the reopening of the third floor contributed to a 30% rise in customer numbers, surpassing 6 million visitors. The restart of deliveries to the EU and the overall growth in 2022 boosted the company's performance. Despite facing inflation and increased costs for food and labor, Fortnum & Mason managed to achieve 12% revenue growth and a 23% pre-tax profit increase.

Although online sales fell by 11% compared to the previous year, they still accounted for 36% of retail sales, with plans to consolidate distribution centers to address growing demand. The company's CEO, Tom Athron, expressed confidence in managing inflationary pressures and foreseeing a shift in price increases.

Fortnum & Mason Christmas sales jump 17%

What: Walmart is closing its innovation unit, Store No. 8, which was established to foster technological advancements and compete with Amazon. The closure will see the departure of Scott Eckert, who led the unit.

Why it is important: This move signifies a strategic shift in Walmart's approach to innovation, indicating a possible realignment of resources and priorities within the company.

Walmart has announced the shutdown of Store No. 8, its technology and business innovation unit, which was instrumental in developing initiatives like in-home delivery and voice shopping. The unit, launched in 2017, was a key player in Walmart's efforts to rival Amazon, focusing on areas such as health and wellness, sustainability, social commerce, and the metaverse. With the closure, Scott Eckert, the senior vice president in charge since June 2019, will exit the company. Walmart's CFO, John David Rainey, stated that the responsibility for future innovations will now be distributed across the company. This decision reflects Walmart's evolving strategy in embracing new revenue streams and adapting to market trends. The announcement comes as Walmart prepares for its fourth quarter and year-end earnings call, following a year where it saw a 5.2% increase in Q3 global revenue but also observed cautious customer spending.

Walmart to close Store No. 8

What: Liberty goes full speed in private label deployment.

Why it is important: In their specific case, their private label is an internationally recognized brand.

Liberty is focusing on expanding its own-brand offerings, particularly in beauty products. This strategic shift aims to leverage the popularity and higher margins of Liberty's own products, such as its LBTY beauty brand, to drive business growth. Last year, LBTY introduced five luxury perfumes inspired by Liberty's renowned prints, with plans to expand into a full beauty line alongside its existing in-house categories like accessories, womenswear, and homeware.

The CEO noted the strong performance of Liberty’s own products, especially the new perfumes, which have seen high demand and international interest. This success aligns with a broader trend in department stores, where private label sales have significantly increased from 9% to 16% of turnover between 2019 and 2022.

Considering the strong demand for Liberty-branded products, Mehboob-Khan envisions opening new stores dedicated solely to Liberty products, marking the first such expansion since the last century. However, he acknowledged the challenge of replicating the unique charm of Liberty’s iconic Great Marlborough Street building, constructed in 1924.

Liberty’s strategy also includes a significant focus on beauty sales, a segment poised for growth even in a challenging luxury fashion market. The beauty sector, having shown resilience and pricing power even in high-inflation scenarios, is expected to continue expanding globally.

The Liberty group, encompassing its retail business, fabric division, and Liberty Brand, has reported a 23% increase in revenues to £185 million and a pre-tax profit of £712,000 for the year ending January 28, 2023, recovering from pandemic-induced losses.

Liberty bets on own-brand goods to drive growth

What: Forbes reviews Galeria’s third insolvency in three years.

Why it is important: Central seems more interested to acquire the rest of Signa’s crumbling empire than Galeria. Is that only due to the non-luxury positioning of the company?

Galeria Karstadt Kaufhof, a prominent German department store chain with 15,000 employees, has filed for insolvency for the third time in four years. This follows the debt-fueled collapse of its parent company, Signa, which also owns Selfridges and several landmark properties. The latest insolvency filing at the Essen district court is seen as an effort by Galeria to break free from Signa's influence, which has been criticized for its high rents and restrictive ownership structure.

Previously, during its insolvency in February 2023, Signa Holding had pledged $219 million in new capital to Galeria in exchange for debt write-downs, which included $645 million from German taxpayers. However, the financial difficulties of Signa, particularly after its insolvency in late 2022, cast doubt on this support. Galeria's struggles were exacerbated by the pandemic, inflation, and energy cost hikes due to the Russia/Ukraine war.

Galeria’s CEO, Olivier van den Bossche, views the current development as a liberation from Signa’s high costs and restrictive management. The company has faced scrutiny and public criticism for its reliance on state subsidies and rent practices.

Signa acquired Galeria in 2019 and merged it with Karstadt in 2020, forming Europe’s second-largest department store chain. Since then, Galeria has closed underperforming stores and reduced staff, with plans to cut around 52 locations by the end of the month. The company has already begun discussions with potential investors, as stated by Galeria’s interim administrator Stefan Denkhaus.

Galeria Kardstadt Kaufhoh files for a third insolvency in 3 years

What: Marks & Spencer is reevaluating its Sparks loyalty programme following a successful Christmas trading period.

Why it is important: The company’s review of its Sparks loyalty program reflects the evolving landscape of loyalty schemes in the retail industry and their significant impact on consumer engagement and sales.

The CEO, Stuart Machin, expressed the need to reconsider Sparks in the short, medium, and long term, emphasizing a focus on quality, style, and value. Machin dismissed the idea of introducing member pricing via Sparks, highlighting M&S' customers' preference for great products at everyday trusted prices.

M&S CEO says company needs to rethink Sparks loyalty programme

What: John Lewis Partnership is reportedly considering cutting up to 11,000 jobs as part of its ongoing turnaround program.

Why it is important: This significant reduction in workforce highlights the challenges faced by traditional retailers in adapting to the rapidly changing retail landscape, marked by increased online competition, economic pressures, and evolving consumer behaviours.

John Lewis Partnership, a prominent UK retailer, is reportedly planning to cut up to 11,000 jobs over the next few years across its various divisions, including its headquarters, supermarkets, and department stores. This move is part of a broader effort to reduce costs and improve efficiency, particularly through technological advancements. The company has already closed 16 department stores and reduced its workforce, reflecting the struggles it faces in a highly competitive market and the impact of the shift towards online retail. Additionally, John Lewis is modifying its redundancy terms, offering one week's pay per year of service instead of the previous two weeks, starting February 1. This decision aligns with the company's strategy to return to profitability by enhancing customer offerings, investing in technology, and optimizing store operations. The spokesperson emphasized that the company's focus is on improving performance, but acknowledged the unfortunate necessity of reducing the number of employees.

John Lewis considers up to 11,000 jobs cuts 

What: John Lewis leadership reaffirmed this Christmas that their focus was exclusively on retail.

Why it is important: They have tried hard for the past 4 years to diversify. Is that a sign that retailers can not evolve into new industries?

The leadership of John Lewis and Waitrose, including outgoing chair Dame Sharon White and CEO Nish Kankiwala, has committed to prioritizing retail in their strategy to revitalize the struggling group. Emphasizing a "one retail mindset," they aim to enhance customer experience and operational simplicity across their divisions. This shift in focus comes after efforts to diversify into financial services and build-to-rent projects under White's tenure since 2020. The company, facing increased competition, also seeks to streamline and become more productive, as indicated by changes like flexible working hours at Waitrose. Despite posting a significant loss and anticipating a longer turnaround time, the leadership is determined to maintain its unique employee-owned structure and avoid mimicking competitors or adopting typical corporate strategies. This approach mirrors Marks and Spencer's successful back-to-basics turnaround. However, internal resistance was noted earlier this year when White considered selling a minority stake, a plan later abandoned. White is set to step down by February 2025, marking a brief tenure as chair.

John Lewis CEO says turnaround will focus on making a ‘brilliant retailer’

What: Neiman Marcus Group reported a pleasing outcome for the holiday season, despite facing challenges in the luxury market and a promotionally charged retail sector impacting margins.

Why it is important: Neiman Marcus’ successful holiday sales performance in the current luxury retail environment gives insight into the company's strategies to drive sales and maintain profitability

CEO Geoffroy van Raemdonck highlighted a sequential improvement in sales trends from the previous quarter and growth in spending among top customers and luxury categories such as jewellery, designer handbags, and beauty. While NMG did not provide specific holiday sales figures, adjusted EBITDA eased to USD 95 million from USD 112 million in the prior year, with sales totalling USD 948 million versus USD 1.034 billion previously.

The company attributed its success to over 1,000 experiences held during the holiday season, leveraging customer insights and real-time data to drive personalised, relationship-based sales. Although NMG underperformed the overall retail industry, it remains optimistic about revolutionising luxury experiences through financial flexibility, investments in experiences, and building relationships with brands and customers.

NMG plans to focus on high-value customers, emphasising in-store and remote selling, as well as long-standing relationships with luxury brands to drive growth and provide valuable retail partnerships. The company aims to drive high customer lifetime value by focusing investments on customers seeking the most desirable luxury brands.

Neiman’s holiday sales down but less so from the fall season

What: Sojo has opened its first permanent concession in Selfridges’ Oxford Street flagship in London.

Why it is important: This move highlights the growing trend towards sustainable fashion practices and the integration of circular initiatives in mainstream retail, emphasizing the importance of clothing repair and alterations in reducing waste and promoting sustainability in the fashion industry.

Founded by Josephine Philips, Sojo offers in-person fittings and consultations for tailoring and repair needs, with most services completed at its East London studio. The platform, which started as part of Selfridges’ Reselfridges program, aims to reduce returns and increase circularity in fashion. It provides emission-free delivery of repaired items within a week and offers same-day service for express alterations. Sojo's partnership with Selfridges and its collaboration with brands like Ganni and Nanushka signify a significant step towards sustainable fashion solutions in the retail sector.

Fashion repair and alter platform Sojo opens in Selfridges

What: There is a changing landscape of luxury e-commerce and challenges faced by the first movers in this sector, such as Yoox Net-a-porter, Matches, and Farfetch.

Why it is important: The power and influence of multibrand e-tailers have diminished, with many luxury brands opting to build their own online retail presence.

These e-commerce platforms, which revolutionized the luxury retail experience, have seen a decline in their value and relevance due to shifts in market forces and the brands' direct-to-consumer initiatives.

Despite the challenges, there is recognition of the ongoing value of multibrand retailers in terms of curation, convenience, and trust. The article emphasizes the need for these e-commerce players to adapt to the changing dynamics and redefine their roles for sustained relevance. Mytheresa, a smaller player in the European luxury e-commerce market, has demonstrated consistent growth and profitability amidst the challenges, suggesting that adaptation and strategic positioning are crucial for success in this evolving landscape.

Luxury e-commerce players face a whole new reality

What: A review of UK department stores’ situation in early 2024.

Why it is important: We start hearing analysts mentioning that the pandemic was not responsible for the fall of previously iconic companies, which were structurally unfit for the new generation customers.

John Edgar, CEO of Fenwick, is overseeing a significant renovation of their flagship Newcastle store, including adding windows and opening up interior spaces. This £40 million project reflects a broader trend among department stores to reinvent themselves in response to challenges like online competition, reduced customer spending, and high operational costs. The department store sector has seen notable declines, with an average annual revenue contraction of 2.7% over five years to 2023.

Fenwick's effort is part of a wider industry movement where department stores must innovate or face extinction. Edgar emphasizes the importance of creating a unique shopping experience, moving away from competing solely on price. Other stores, like Fortnum & Mason, are focusing on creating engaging, thematic environments to attract customers. This shift comes as department stores, once staples of retail, grapple with changing consumer habits and the rise of online shopping.

Despite the challenging landscape, Fenwick remains optimistic, partly due to its family ownership which allows for a long-term perspective. However, the sector has seen its share of closures and hardships, as exemplified by Debenhams and House of Fraser. The future of department stores seems to hinge on their ability to provide unique, experiential shopping environments that differentiate them from both online retailers and each other.

Surviving UK department stores seek to avoid fate of fallen rivals

What: A “virtual human” has launched the first fashion collection of such type ever.

Why this is important: Virtual Humans can drive traffic and increase awareness for retailers, as shown by Lulu from Brazilian retailer Magazine Luisa.

China's first hyper-realistic digital human, AYAYI, has launched a fashion brand named after herself. The brand blends physical and digital elements ("phygital"), using augmented reality (AR), mixed reality (MR), and generative AI to enhance customization and the consumer experience. The inaugural collection, "Dimensional Explorer," inspired by wingsuit flying, features garments each paired with a digital avatar, created through innovative digital assets and AIGC technology exploration.

In addition to real models, AYAYI herself appears in digital form modeling these outfits. A promotional video highlights the collection's minimalist street-style clothing alongside AR avatars exploring urban and mixed reality landscapes.

AYAYI, developed by Ranmai Technology using Epic Games’ MetaHuman in Unreal Engine, was China's first MetaHuman. She has already made a mark as a virtual influencer in various campaigns and is now venturing into phygital fashion, bridging the gap between the digital and real worlds.

A phygital fashion collection has been launched by a virtual human

What: A piece issued from an initial research published in Harvard Business Review, arguing to review how data is currently processed.

Why it is important: Do less, but better.

Dr. Robert Rooderkerk, an Associate Professor of Operations Management, highlights the challenges and opportunities in retail data analytics. He points out that while data collection has grown exponentially, its real value lies in creating actionable insights, akin to refining crude oil. Rooderkerk's research reveals that retail businesses may not be utilizing data as effectively as academia assumes.

Key findings include:

1. Company Culture: Successful companies have leaders who trust their analysts and embrace agility and experimentation. They also prioritize internal knowledge sharing through platforms like internal wikis and conferences.
2. Organizational Structure: Efficient businesses centralize analytics oversight while decentralizing operations, ensuring clear ownership of analytics to avoid slow and disorganized processes.
3. Talent Gap: There is a shortage of analysts who understand both data and business and can communicate effectively.
4. System Integration: Retailers often struggle with integrating online and physical systems, yet an omnichannel approach is essential for modern retail.
5. Data Management: Data storage costs lead some businesses to discard old data, but successful ones consider the cost of not having certain information.
6. In-Store Data Collection: This is an emerging area with potential. Using technology like image-recognition robots for inventory management and tracking customer behavior in-store can offer real-time insights.
7. Privacy Concerns: While leveraging data for customer benefit, businesses must navigate privacy concerns and comply with regulations like GDPR.
8. Inventory and Returns Management: Smart data use can improve efficiency, such as coordinating inventories between online and physical stores and accounting for online returns.
9. Data Sharing and External Data Use: Collaboration between companies (like supermarkets and beer companies) and incorporating external data (like local events) can enhance efficiency and stocking decisions.
10. Role of Researchers: Researchers should aid businesses in strategic decision-making, helping them address key concerns and optimize based on data insights.

In summary, Rooderkerk emphasizes that while data is abundant in the retail sector, its true potential is unlocked through strategic application, integration of systems, smart management, and overcoming cultural and talent-related challenges.

Information overload?

What: AI inspires many retailers to automate call centers and chatbots. Alix Partners argues that other use cases are possible.

Why it is important: Creativity will be key for retailers willing to maximize their use of AI to get ahead of competition.

GenAI (Generative AI) is increasingly becoming integral in the retail sector, offering more substantial business impacts compared to other recent tech advancements like crypto and NFTs. Retailers are using GenAI for content creation and automating routine processes, particularly in call centers. However, its most significant potential lies in combining GenAI with machine learning (ML).

ML analyzes complex data to identify patterns for informed predictions, while GenAI generates new content like text, audio, and video. Their hybrid use can enhance hyper-personalization in marketing, creating a continuous improvement cycle. This combination can significantly improve customer count, basket size, and total trips, leading to notable revenue increases.

For instance, a nationwide specialty retailer implemented a custom marketing solution using ML and GenAI, resulting in a 30-45% increase in email open and click rates, directly correlating to revenue improvements. The process involves using AI and ML to identify high-potential customers based on customer lifetime value (CLV) and develop response propensity models. These models determine which customers are likely to make additional purchases and their likely purchases.

GenAI then crafts personalized offers and messages, with ML models creating micro-segments for tailored messaging. This approach leads to optimized messaging and a virtuous loop of increasing effectiveness.

The potential applications of GenAI and ML extend further, including matching customers with knowledgeable sales associates, implementing advanced marketing strategies, and deploying discount elasticity models to maximize margins. The integration of these technologies into existing processes can significantly enhance outcomes, making it a promising investment for retail businesses.

Combine machine learning with GenAI to multiply the business impact

What: Nordstrom is expanding its Nordstrom Rack off-price stores in the United States.

Why it is important: This expansion is part of Nordstrom's strategy to cater to budget-conscious consumers, with plans to create over 4,000 jobs through its existing and new Rack locations.

The new locations are planned in Houston, Texas; Omaha, Nebraska; Noblesville, Indiana; and Franklin, Tennessee, and set to open in the fall of 2024.

The stores range from 24,000 to 34,000 square feet and will offer convenient services such as online order pickup and easy returns. Nordstrom's commitment to growing its off-price business is evident, as it continues to invest in brick-and-mortar locations even amid sales challenges. The company's push into new markets like Omaha, where it lacks a presence, highlights its determination to capture a broader consumer base.

Nordstrom plans to open new Rack locations in 4 states next fall

What: The Massachusetts Institute of Technology's study reveals that artificial intelligence is currently not cost-effective for replacing the majority of jobs, particularly those involving computer vision.

Why it is Important: This study is crucial as it addresses widespread concerns about AI replacing human jobs, providing a realistic perspective on the current capabilities and economic viability of AI in the workforce.

The study focused on the cost-effectiveness of AI in replacing human labour, particularly in tasks involving computer vision. The research found that only 23% of jobs could be feasibly automated with AI due to high installation and operational costs. The study, which examined about 1,000 visually-assisted tasks across 800 occupations, suggests that while AI adoption has accelerated, its practical application in replacing human labour is limited and not economically viable in most cases. The findings highlight that AI's impact on jobs might be less immediate and widespread than feared, with significant automation potential in sectors like retail and healthcare, but less so in industries like construction and real estate.

Humans still cheaper than AI in vast majority of jobs, MIT finds

What: Korean department store have resumed their culture centres, paid activities that were launched in the 80s.

Why it is important: This is an astute way to generate an additional revenue (used to refurbish stores) while fostering customer loyalty. El Corte Inglés has a similar approach with their “Ambito Cultural” initive.

After a brief decline due to COVID-19, South Korea's department store culture centers, established in the mid-1980s, are regaining popularity. The major chains – Lotte, Shinsegae, and Hyundai – are not only expanding their culture center classes but are also enhancing them with premium content. This year, class demand has soared by over 40%.

These centers, which initially targeted middle-aged women with traditional classes, now serve as social clubs offering a wide range of courses. They have evolved to include weekend classes for young families and evening classes for professionals, adapting to changing lifestyles and work patterns.

The culture centers play a crucial role in attracting customers to the stores and are seen as key marketing tools, with significant investments made in them. They offer a variety of classes including humanities, arts, fitness, and high-end sports, at prices lower than market rates. Recent additions include premium content like golf and cooking classes using farm-fresh ingredients.

Overall, these centers are a strategic blend of education, social interaction, and marketing, contributing significantly to the department stores' customer experience.

South Korea’s department store culture centres experience, a renaissance

What: In Singapore, rents become increasingly disconnected from the actual state of the business.

Why it is important: Is Singapore poised to become a new playground for regional players looking for new markets?

CapitaLand Integrated Commercial Trust (CICT), Singapore's largest private mall operator, has seen moderate business across various consumer segments recently, reflecting a wider retail slowdown in Singapore. Despite this, the company reported positive metrics in the first nine months of the year, including a 4% year-on-year increase in tenant sales per square foot, with higher growth downtown due to returning international tourists. Mall foot traffic and retail occupancy (99%) also increased, contributing to a 9.8% rise in gross revenue and 6.8% in net property income.

However, a slowdown is apparent in the third quarter, with lower growth rates in revenue and net property income. Turnover rents, which depend on tenant sales, could be impacted if sales continue to be under pressure. Retailers are facing rising occupancy costs, potentially affecting their margins.

Retail sales in Singapore appear fragile, with non-auto retail sales dropping in October. While food and beverage sales have been strong, there was a noticeable slowdown in October. CapitaLand's growth categories include shoes, bags, leisure, and entertainment, with food and beverage also performing well. Home furnishings, however, declined significantly, likely due to the broader economic slowdown and consumer caution.

Tourism, particularly in downtown malls, has been positive but has not yet returned to pre-pandemic levels. The outlook for Singapore's retail sector is cautiously optimistic, with expectations of a recovery in international arrivals by 2024 and moderate retail space openings planned for the next few years.

E-commerce remains steady, accounting for around 15% of retail sales. CapitaLand has been adapting its tenant mix to reduce vulnerability to e-commerce, focusing more on food and beverage, leisure, and entertainment offerings. Special events, or "proactive stakeholder engagements," are also part of their strategy to maintain consumer interest.

The state of play in Singapore malls: Rents climb even as sales stall