What: The retail rental price evolution is usually a great manner to understand where the challenges are.

Why it is important: HK has for long remained the commanding location when it comes to retail. Three years after the pandemic, things have changed.

Hong Kong's Tsim Sha Tsui, previously the world’s most expensive retail district, has slipped to third place globally behind New York's Fifth Avenue and Milan's Via Montenapoleone. Tsim Sha Tsui now commands annual rents of US$1,493 per square foot, compared to US$1,766 in Milan and US$2,000 in New York. The decline in Hong Kong is attributed to the pandemic's impact on tourism and a period of civil unrest, resulting in a 39% drop in rents.

Despite this downturn, Tsim Sha Tsui remains the most expensive retail destination in Asia-Pacific, followed by Causeway Bay and Tokyo's Ginza. Hong Kong's stringent pandemic measures led to a tourism and retail recession, causing Upper Fifth Avenue in New York to overtake Tsim Sha Tsui as the world's costliest shopping area last year.

Cushman & Wakefield notes that Hong Kong's retail recovery is resilient, supported by growth potential from a low base during Covid-19. However, shifts towards "retailtainment" and experiential offerings are changing the retail landscape. This shift might discourage luxury brands from expanding in Hong Kong, as local brands and businesses like pharmacies increasingly take up retail space. The trend of mall operators using entertainment features to attract customers is growing, reflecting consumers' desire for unique shopping experiences.

Despite the recovery of Hong Kong's tourism and retail sectors, visitor spending on shopping remains below pre-pandemic levels. The changing retail landscape, e-commerce growth, a strong Hong Kong dollar, and competition from neighboring cities pose challenges for Hong Kong retailers. As a result, innovative retail solutions are being implemented to stay competitive.

World’s priciest retail streets

What: Bloomingdale's has opened a scaled-down version of its store called Bloomie's in Seattle at the University Village lifestyle centre.

Why it is important: The opening of Bloomie's in Seattle represents Bloomingdale's strategic approach to expanding its brand and presence as well as maximizing relevancy in the retail market.

This is the third Bloomie's store, following openings in Virginia and Illinois. Bloomie's focuses on casual and contemporary styles, with curated brand mix and product categories based on local preferences.

The Seattle store predominantly features women's apparel, including private brands and denim from various designers. The first floor also includes a curated beauty boutique with luxury fragrances and skincare products. The second floor offers men's denim, sportswear, and classic collections.

Bloomingdale's plans to assess the success of Bloomie's format before considering further expansion.

Bloomie’s opens in Seattle

What: Frasers Group has opened new stores for Sports Direct and Flannels at Gateshead’s Metrocentre, transforming the former Debenhams unit.

Why it is important: The transformation of the former Debenhams unit into flagship spaces for luxury fashion, sports retail, and a hybrid gym, offers a diverse range of experiences for shoppers.

The flagship 50,000sq ft Flannels store on the ground floor features luxury fashion brands like Givenchy, Marc Jacobs, and Vivienne Westwood, as well as contemporary brands such as Amiri and Off-White. It also includes a beauty shop with fragrance counters from Burberry and Moncler. The store now offers the newly-added Kylie Cosmetics and a Dermalogica Skin treatment room.

On the first floor, Frasers unveiled a new 50,000sq ft Sports Direct store with specialist areas for running, football, and outdoor sports across men’s, women’s, and children’s wear. The store also accommodates Frasers' USC, Games, and Evans Cycles brands. Additionally, the group's Everlast Gyms is opening its 10th elevated and largest hybrid gym, providing a variety of fitness areas, including a full-size boxing ring, saunas, and chill tubs.

Frasers Group opened ‘revolutionary’ Sports Direct and Flannels stores 

What: Knightsbridge, home to Harrods and Harvey Nichols, is expected to surpass pre-pandemic footfall numbers during the upcoming festive season.

Why it is important: The forecasted increase in footfall and total spend during the festive season in Knightsbridge signifies a recovery for the luxury retail sector and the return of high-spending international shoppers.

The Knightsbridge Partnership, a business improvement body representing firms in the area, reports that footfall from January to October has been rising by an average of 27.7% each month compared to the same period in 2022. They anticipate a 2.8% increase in footfall in November and a 3.3% increase in December, compared to the same months last year, and a significant increase of 20% and 55%, respectively, compared to the last two months of 2019.

The CEO of the Knightsbridge Partnership attributes the increase in footfall to the return of high-spending international shoppers, supported by a weaker pound. He also emphasizes the need to reintroduce tax-free shopping to further attract tourists to the neighbourhood.

Knightsbridge festive footfall to top pre-pandemic numbers for first time

What: The role of Chief Digital Officer (CDO) in fashion companies is evolving as every part of the organization now has a digital element and the lines between online and offline are blurring.

Why it is important: The CDO role is becoming more strategic and focused on generating profitable growth rather than just managing digital presence.

Many fashion companies are reevaluating and reassigning the responsibilities and title associated with the CDO position. Some companies, like Tapestry, have eliminated the role altogether after achieving their digital goals. The majority of large fashion players now have a CDO, but they are now working to integrate digital responsibilities into other departments.

The title of CDO may decline in the future as the role evolves into something new, but the need for individuals with business and technology expertise won't disappear. Successful CDOs have strong business acumen, understand consumer behaviour, and possess leadership and communication skills to drive digital transformation.

Do brands need Chief Digital Officers?

What: Walmart shares closed 8.1% lower after predicting weaker consumer spending during the holiday season.

Why it is important: The company's cautious holiday outlook for consumer spending reflects potential shifts in consumer behaviour and sentiment towards essential purchases amidst inflationary pressures.

Walmart's third-quarter revenue of USD 160.8 billion and adjusted earnings of USD 1.53 per share came in slightly ahead of expectations. Sales strength in the US operations was led by grocery and health categories, while general merchandise sales declined modestly.

The company raised hopes for relief from inflationary pressures, as grocery inflation starts to normalize and pricing on general merchandise comes down. Walmart is forecasting full-year net sales growth in the range of 5% to 5.5%, with adjusted earnings per share between USD 6.40 and USD 6.48.

Walmart stocks drops after forecasting cautious spending by consumers

What: The situation in Chile is getting tense for all retailers.

Why it is important: World retailers should have a look at what is going on in Cencosud’s markets, where inflation is a well known pheonomenon, to learn how to deal with it.

The Chilean retailer Cencosud reported a 14.7% drop in net profit in the third quarter, attributing the decline to high borrowing costs and a slowdown in consumer spending, partly due to unfavorable weather conditions in some markets. The company's net profit was $176 million for the period.

Cencosud, one of the largest retailers in Latin America, operates in various sectors including department stores, grocery, and home improvement, with a presence in Brazil, Argentina, Colombia, Peru, and its home country, Chile. For the July-September period, its revenues totaled $4.3 billion, a 3.3% decrease from the previous year.

The company's consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) were $422 million for the quarter. The company cited several challenges, including low economic growth, low annual inflation, high interest rates, and persistent decline in discretionary spending. Additionally, the strengthening of the Chilean peso against other currencies and the impact of the El Niño weather phenomenon negatively affected its results.

Cencosud's third-quarter results do not include the financial effects from operations in neighboring Argentina, which is experiencing high inflation. The company has opened nearly 500 new stores this year across its supermarket, DIY, and department store brands and plans to remodel over 60 stores in the region as part of a customer experience improvement initiative.

The report follows a fine imposed on former CEO Matias Videla for insider trading related to the purchase of over 600,000 company shares last year. Recently, Renato Gutierrez was appointed as interim CEO, marking the company's second attempt at filling the position.

Chile’s Cencosud profits down -15% due to local demand plumetting

What: A new task force has been launched in New York City to address the growing issue of retail theft.

Why it is important: Reported cases of shoplifting have increased by 44% between 2021 and 2022, prompting action from city officials.

The task force, led by Deputy Mayor Philip Banks III, aims to advise the administration on legislative proposals and implement best practices to combat retail theft. It is based on recommendations gathered from a Retail Theft Report, which was formed in December 2022 after a summit with 70 stakeholders. The report suggests a combination of increased law enforcement efforts and enhanced social service programming to prevent shoplifting.

While retail theft has decreased this year, Mayor Eric Adams acknowledges the need for further action to safeguard businesses, protect jobs, and create a safer city environment. This task force aims to take a comprehensive approach and collaborate with experts and practitioners to address retail theft and its impact on the city.

New York City to crack down on retail theft through new task force

What: Live streaming is a life saver for Space NK.

Why it is important: Harrods has equipped a full room allowing customers to test products advertised on a screen by an influencer streaming live from the other side of the planet

The CEO of Space NK, Andy Lightfoot, reports an unexpected increase in makeup sales, contradicting the assumption that the work-from-home era would lead to a decline in cosmetic use. Despite fewer in-person office interactions, the rise of video calls on platforms like Zoom has made people more conscious about their appearance, driving them to wear makeup more frequently. This trend, combined with the influence of TikTok beauty trends and the return of social events, has led to a 39% increase in makeup sales in the six months leading up to September. This surge contrasts with the pandemic period when makeup sales struggled. Space NK, known for carrying exclusive brands, anticipates continued growth with a projected 37% increase in turnover to £185 million by the end of March. The company plans to expand rapidly, opening 8-10 new stores annually over the next few years, focusing on untapped areas in London, the Midlands, and northern cities.

Space NK sales boom, make-up boosted by Zoom use, more stores coming

What: US antitrust regulators allege that Amazon generated over USD 1 billion in extra profit through a secret algorithm called "Project Nessie”, according to the FTC.

Why it is important: The lawsuit is part of the Biden administration's efforts to challenge Big Tech's market power and represents a crucial test for FTC Chair Lina Khan's approach to antitrust enforcement.

The algorithm was used to control pricing on Amazon's platform and across the market. When other online stores tried to match Amazon's prices, the algorithm would raise the prices of certain goods and keep them higher even after other platforms followed suit.

The Federal Trade Commission also accused Amazon of strategically deactivating the algorithm during periods of heightened scrutiny. The FTC complaint further states that Amazon founder Jeff Bezos directed executives to increase "pay to play advertisements" on the platform, including less relevant ads known as "defects," which harmed consumers. Amazon's advertising revenue has since increased to USD 37.8 billion globally in 2022.

Amazon earned USD 1bn from secret pricing algorithm, FTC alleges

What: Forbes reviews Abu Dhabi’s new airport retail proposition and its added value compared to the regional giant, Dubai.

Why it is important: Due to their regional competition, UAE countries are going to try to attract an increased share of the international transiting traffic.

The newly opened Terminal A at Abu Dhabi International Airport is set to elevate the city's status as a key hub for tourism, trade, and business. This luxurious terminal aims to compete with Dubai's bustling airport and offers an extensive retail space of 380,000 square feet, featuring 163 retail and food & beverage units.

Passengers can look forward to high-end brands like Gucci, alongside more accessible options such as Muji. Terminal A will also be home to the airport's first restaurant by celebrity chef Todd English, offering a diverse international menu.

With advanced biometric touchpoints and streamlined baggage systems, the terminal promises a swift and efficient experience for travellers.

Etihad Airways, as the main tenant, is central to Abu Dhabi's ambition to strengthen its global aviation presence, despite a smaller network compared to regional competitors. Terminal A represents a significant step in Abu Dhabi's growth strategy and aims to attract passengers with its unique offerings.

Abu Dhabi's new international airport retail proposition

What: Harvey Nichols is closing one of its 2 locations in HK.

Why it is important: Landmark is no longer the main place to go in HK, and Harvey Nichols wants to focus on Pacific Place, on the other side of the bay. Macro structure of the market has significantly changed in the course of 3 years in HK

Harvey Nichols, a British luxury department store chain owned by Hong Kong's Dickson Concepts, will close its Landmark store in Hong Kong's Central district after the end of this year. According to executive chairman Dickson Poon, the decision was influenced by a change in Chinese tourist behavior, as they are no longer as focused on shopping in Hong Kong as before the pandemic. This trend was noticeable during the Golden Week holidays. With locals also increasingly traveling abroad, there seems to be less need for multiple large-scale department stores in close proximity. The company will now concentrate its efforts on its Pacific Place store to build a local customer base and reduce costs.

Despite weaker consumer sentiment, Dickson Concepts reported a 26.1% increase in revenue to HKD 1 billion (US$128.2 million) for the six months ending September 30, with a net profit increase of 41.5%. Sales in Taiwan and China also saw significant increases. Additionally, Manju Malhotra, CEO of Harvey Nichols, is set to leave her role at the end of the year after a 25-year tenure, with Pearson Poon, executive director of Dickson Concepts, overseeing the business until a new CEO is appointed.

Dickson Concepts to close Harvey Nichols Landmark store in Hong Kong

What: According to a report by Cushman & Wakefield, fashion brands made up over 40% of retail floor space across Europe in the first half of 2023.

Why it is important: This report provides valuable insights into current leasing trends and consumer preferences, guiding strategic decisions for retail expansion and experiential offerings.

This trend was especially pronounced in larger retail spaces. The food and beverage sector was also active, making up 17% of transactions. Health and beauty brands, especially premium ones, doubled their space transactions compared to the previous year. The majority of deals were for smaller units, with over 80% being less than 6,500 square feet.

The report also notes a growing consumer demand for experiential and cultural retail experiences, with examples like the Paradox Museum and automotive showrooms. This trend is expected to continue, with entertainment-based brands and electric car companies expanding their retail presence in Europe.

Fashion and beauty brands are leading the race for physical retail space in Europe 

What: M&S has reported a significant rise in first-half profit, exceeding expectations with a 75% increase to GBP 360m.

Why it is important: The rise in M&S's first-half profit and sales demonstrates the success of their growth strategy and resilience in challenging market conditions.

The company's sales also saw a boost of 10.8% to GBP 6.2bn during the six months ending on September 30th. They achieved growth in both food (almost 15%) and clothing and home (5.7%), despite unseasonably warm weather. M&S was successful in becoming the leading brand in womenswear in the UK, capturing a 9.5% market share.

The company credited its partnership with Ocado for contributing to a 6.9% increase in Ocado Retail sales. However, Ocado Retail itself experienced losses of GBP 23.4m, primarily due to the closure of its Hatfield site. M&S remains cautious about the second half of the year due to economic uncertainty, but is optimistic about the upcoming festive season and plans for a good Christmas.

M&S reported better-than-expected 75% rise in first-half profit

What: Real estate giant SPG is investing in AI tools in order to enhance visitors’ experience and ability to find what they are looking for.

Why it is important: The benefits for all / needed investment to achieve this might be extremely good for SPG, especially if it eases the life of the retailers leasing space in its malls. For that reason, department stores should look at these initiatives.

Simon Property Group has launched "HolidAI," an AI-based tool to assist shoppers in finding gifts at its properties, starting at Roosevelt Field in New York and Del Amo Fashion Center in California. This tool, powered by ChatGPT 4.0, will be operated by staff, known as "HolidAI helper elves," using tablets to ask AI-generated questions to help customers locate items in the shopping centers. Besides assisting shoppers, these helpers will also entertain with impromptu dances and songs every weekend until December 23.

Simon is expanding its use of technology in retail, having previously introduced the Simon Search tool for locating in-stock items across its properties. This initiative is part of a broader trend of retailers like eBay, Amazon, Google, and Walmart integrating AI into retail. The National Retail Federation has released principles to guide retailers in the ethical and effective use of AI technology.

Simon Property Group introduced AI in malls

What: Indian e-commerce player Myntra opens physical stores in a Bengaluru mall.

Why it is important: Forget about the Amazon demise: pure players are still eager to go physical.

Myntra's B2B wholesale division has launched eight stores in a single day at the new Phoenix Mall of Asia in North Bengaluru. The stores include international and in-house brands like Mango, Nautica, and House of Pataudi. This opening marks a milestone for Myntra and introduces the first new format French Connection store in India. Myntra, an online marketplace based in Bengaluru, features over 6000 brands and the Phoenix Mall of Asia showcases a mix of international, national, and debut brands in Bengaluru.

Indian e-commerce player Myntra opens stores in mall

What: Fitch Ratings has downgraded Falabella S.A.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'BB+' from 'BBB-', with a negative outlook.

Why it is important: The downgrade of Falabella's credit ratings reflects the company's current debt position and financial health.

The downgrade reflects Falabella's sustained deterioration in credit profile due to high leverage and operational challenges. Fitch believes there is a high execution risk in Falabella's announced deleveraging plan, which includes real estate asset monetisation. The company's leverage is expected to remain above 6x in 2024, reaching low 5x in 2025, indicating a more consistent 'BB' rating category.

Falabella's operational metrics are likely to remain constrained by slow retail sector recovery and changing consumer behaviour. Sodimac S.A.'s ratings have also been downgraded, reflecting its strong linkage with Falabella.

Falabella’s IDR gets downgraded to BB+ by Fitch 

What: The Economist gives a close look at the situation at Signa and Reneé Benko’s situation

Why it is important: Many department stores could be impacted by the situation if it was to become out of control

René Benko, founder of Austrian property giant Signa, is facing significant challenges as his company, known for owning high-profile assets like the Chrysler Building and London's Selfridges, undergoes urgent restructuring. Despite attempts to project strength, including a lavish party with Boney M’s performance, Signa is grappling with unclear, yet substantial debts and is pressured to raise capital or sell assets in a difficult real estate market.

Benko, who built a vast empire and became a billionaire before 40, is being pushed out of the boardroom by minority co-investors. Signa's complex ownership involves various trusts and holding companies across different regions, and its debts are collateralized against individual properties.

The restructuring process is being led by German expert Arndt Geiwitz, who is tasked with finding long-term solutions and possibly raising fresh capital or selling assets. Signa faces immediate challenges like unfinished projects and a €200 million private bond due for repayment.

Financial regulators and banks, particularly Austrian ones like Raiffeisen, are closely monitoring the situation, assessing their exposure to potential losses. The Thai Central Group, co-owner of some of Signa's valuable properties, might emerge as a potential buyer. Meanwhile, Benko's involvement in a corruption investigation and his controversial business practices, including dealings with major European retail chains and a significant stake in Austria's largest newspaper, add to the complexity of the situation.

How tycoon behind Selfridges was forced out

What: Saks had to close its King of Prussia mall store, a prominant location, due to failing to pay the rent.

Why it is important: While Covid is blamed for such difficulties, it shows SFA’s willingness to scale down even if its reputation is at stake

Saks is facing a rental dispute at one of its stores in King of Prussia, a major shopping destination on the East Coast of the United States.

The store's landlord, DDRTC Overlook at King of Prussia, a subsidiary of Ohio-based real estate investment firm Site Centers Corp, has filed a lawsuit against Saks & Co for USD 1.4 million in unpaid rent.

King of Prussia is home to one of the largest shopping malls in the U.S., featuring luxury brands like Gucci and Louis Vuitton. Saks has been leasing a 3,863 square meter space since December 2016 with an annual base rent of approximately USD 1,052 million, excluding additional charges.

The store, which was warned multiple times about the unpaid rent, attempted to terminate its lease that runs until 2025 but was rejected by the landlord. The complaint was filed on June 21, and while the court date is not yet set, the Saks store in question appears to be closed according to Saks' website.

Saks Fifth Avenue closes King of Prussia store for failing to pay the rent

What: Klarna has expanded its Ads Manager and Creator Shops tools in the UK, Sweden, and the US.

Why it is important: Klarna aims to transform into a growth partner and retail media network, providing more powerful ways for retail partners and creators to reach high-intent shoppers, while consumers enjoy a personalized shopping experience.

The tools aim to help retailers and creators engage with their audiences more effectively and enhance the shopping experience for consumers. Ads Manager allows retailers to reach high-intent shoppers based on Klarna's 150 million strong shopper audience, providing personalized ad targeting and reporting for campaign optimization. Creator Shops, which allows creators to launch their own storefronts, is now available in the US. It provides a consistent shopping experience and allows shoppers to find and shop their favourite creators' product recommendations.

Klarna expands Ads Manager and Creator Shops in UK, Sweden, US

What: Peek & Cloppenburg is joining the German Trade Association, HDE, along with its sister company, Anson’s.

Why it is important: This post-bankruptcy move is a significant step in addressing key industry challenges such as enhancing city attractiveness, sustainability, and skilled worker shortages, leveraging HDE's influence and network for the future of Peek & Cloppenburg.

The HDE's Managing Director, Stefan Genth, recognizes the importance of having P&C, a significant player in the German fashion trade, as a member, strengthening the HDE's role as a representative voice for the industry. P&C's long history of influencing retail and city centres in Germany, with over 160 locations in Europe and 90 in Germany, and its status as one of the largest employers in fashion retail, positions it as a key contributor to the HDE's initiatives for retail's future.

Peek & Cloppenburg becomes a member of the HDE

What: Reliance is aggressively expanding its private labels in free standing distribution in India.

Why it is important: Expect more Indian players expanding their private labels inside and outside their home turf.

Reliance Retail's beauty brand Tira is set to open its first store in the national capital region at DLF Avenue Mall, New Delhi, occupying about 3,000 sq. ft. previously held by Forever 21. The launch is part of a strategic mall rebranding effort to refresh the shopping experience. Right next to Uniqlo, this store adds to the Saket District Centre's allure as a key shopping destination in South Delhi.

Overseen by Isha Ambani, Mukesh Ambani's daughter, Tira aims to capitalize on India's booming beauty and cosmetics market. The brand, which began as an e-commerce platform in February 2023, has already established a flagship store in Mumbai and additional stores in Hyderabad and Chennai. Tira's retail spaces are known for their digital features, including a vending machine for beauty samples, and stock over 150 brands.

Further expanding its beauty portfolio, Reliance Retail recently acquired the India franchisee business of Sephora from Arvind Fashions. This move brought 26 Sephora stores across 13 cities under its wing. Tira also distinguishes itself with high-profile endorsements, having signed Bollywood celebrities Kareena Kapoor Khan, Kiara Advani, and Shah Rukh Khan’s daughter Suhana Khan as brand ambassadors.

Reliance to open Tira beauty store in Delhi

What: Mugler has partnered with French blockchain specialist Arianee to introduce digital product passports for their Spiral Curve 01 and 02 bags.

Why it is important: The collaboration aims to establish a direct and personalized relationship with customers.

These digital passports will provide authentication, traceability, and digital engagement platforms for users. Owners can register their bags by scanning a QR code, allowing for ownership validation and historical tracking. The digital passports also offer behind-the-scenes content, event invitations, and early access to sales.

The European Commission's requirements for digital product passports, including information on product composition and sustainability, are expected to be implemented from 2026.

Mugler teams up with Arianee for digital passports in bags

What: Marks & Spencer is planning to open nine new stores in November, which they claim will be their "biggest ever store opening month.”

Why it is important: The retailer's ongoing store rotation program aims to transition from 247 stores to 180 higher quality, higher productivity full line stores as well as maintain their competitive advantage with the right locations.

The company will invest £80 million into sustainable physical locations, beginning with a 65,000 square foot store in Birmingham's Bullring on November 7. Marks & Spencer will open at least one store per week throughout the month, creating over 2,200 local jobs. This includes two additional store openings, three new M&S Foodhalls, and three store renewals.

Marks & Spencer to open nine stores in November