What: Frasers’ profits jumps as elevation strategy drives strong performance.

Why it is important: Frasers Group continued to open new elevated stores and expressed ambitions to be the leading sports retailer in EMEA.

Frasers Group's half-year pre-tax profits rose by 8% to GBP 310.2 million, with sales increasing by 4.4% to GBP 2.77 billion. The company attributed this growth to strong trading performance driven by its elevation strategy, particularly in Sports Direct, and the impact of acquired businesses.Despite declines in Game UK and Studio Retail, the UK sports division posted a modest 0.8% revenue increase.

The company’s chief executive, Michael Murray, expressed confidence in the elevation strategy, indicating continued investment in premium lifestyle business and strategic international M&A initiatives.

Frasers reports a strong performance in H1

What: According to a study by Sainsbury's RSM UK, retailer-branded labels are expected to drive fashion growth in the UK in 2024.

Why it is important: More budget-conscious consumers are turning to own-brand clothing ranges amidst the cost of living continuing to shape shopping habits.

The study revealed that over a third of consumers are buying more own-brand products than last year. The survey also showed that clothing and accessories saw a six percentage point increase in own-brand product purchases. Additionally, over a quarter of consumers are planning to cut back on clothing and accessories spending in the next three months, with women being more likely to do so.

Despite the trend of adding third-party brands, retailers like Next, M&S, Sainsbury's, and John Lewis are focusing heavily on their own labels, with consumers appreciating their value in difficult times.

Own-brand fashion's appeal to grow in 2024 - UK report

What: In Asia, payments by QR codes become ubiquitous.

Why it is important: Soon, Western retailers will need to catch the train in order to remain up to date with tourists from this region.

Juniper Research forecasts a significant increase in QR code payment volume in Southeast Asia, from 13 billion transactions in 2023 to 90 billion by 2028. This growth is attributed to the financial inclusivity QR payments offer, especially for unbanked consumers. Southeast Asian countries, including Vietnam, Thailand, Singapore, Malaysia, and the Philippines, are focusing on enabling cross-border QR payments to revitalize their economies post-Covid-19.

QR code payments are favored for their convenience and adaptability to contactless trends accelerated by the pandemic. However, larger-scale deployment raises issues of transparency, accuracy, and network stability.

Originally developed in Japan for the automotive industry, QR codes have evolved into a popular payment method, especially in China and India. In Southeast Asia, direct arrangements between central bank systems are replacing third-party services for foreign payments, promoting fee-free transactions and favorable conversion rates.

Each country in the initiative has its own national QR code system, such as NETS in Singapore and PromptPay in Thailand. The agreement, which aims to bypass the US dollar in transactions, reflects the region's fintech ambitions and adapts to global economic shifts.

Beyond Southeast Asia, cross-border QR payment systems are emerging in other parts of Asia-Pacific, like between Nepal and India. Global payment giants like Visa, Mastercard, and Google Pay are also showing interest in cross-border QR payments, although uptake in Western markets remains limited compared to digital/mobile wallets and card-based payments. However, with increasing travel from Southeast Asia, Western markets may soon embrace QR payment methods more widely.

What retailers need to know about the rise of QR code payments in SEA

What: Neiman Marcus rejects Saks’s proposed takeover of Neiman for close to $3 billion.

Why it is important: The potential merger would allow the luxury department store chains to negotiate better terms with suppliers and reduce duplicate costs, as the changing landscape of retail and the increasing power of luxury brand owners are creating challenges for department stores.

A merger between Saks and Neiman could result in the closure of some overlapping store locations, as they have multiple stores in the same malls. Neiman's bankruptcy and subsequent restructuring in 2020 helped the retailer shed significant debt, and both chains have experienced fluctuations in luxury goods purchases during the pandemic. The potential agreement is still under negotiation, but a final deal is not expected until early next year.

Neiman Marcus rejects $3 billion takeover bid by Saks

What: IKEA reported a "record year” of sales and celebrated with price reductions and bonuses for its workers.

Why it is important: The company is showing its  generosity toward its stakeholders by prioritising affordability for customers and rewarding its employees, thereby demonstrating a dedication to both consumer satisfaction and employee well-being.

The company experienced over USD 6.3 billion in total sales, featuring a 6.6% year-over-year revenue growth for the 2023 fiscal year, and notable increases in e-commerce sales and online visits.

In response to consumers' budgetary constraints, IKEA reintroduced its New Lower Price initiative, offering discounts on its products at U.S. stores and online. The company also plans to pay USD 54.5 million to its workers across two-thirds of its U.S. units as part of its "One Ikea Bonus" performance incentive program.

Ikea celebrates sales growth with lower prices

What: The whole business world is focusing on how to master AI, but is it really a silver bullet?

Why it is important: AI is a tool at the service of a vision, not a magical answer to growing complexity in the world.

OpenAI's ChatGPT has rapidly gained popularity, becoming the fastest-growing app ever with around 100 million weekly active users. This success has significantly increased OpenAI's valuation to an estimated $86 billion. However, there is debate about whether this is just hype or a true success story. OpenAI's leadership, including COO Brad Lightcap, acknowledges that aspects of AI are overhyped, particularly with high expectations from enterprise customers. Despite initial underestimations of ChatGPT's popularity, Lightcap remains optimistic about the future potential of AI technologies, though acknowledging the current limitations and challenges.

OpenAI has faced setbacks, including a temporary dismissal of CEO Sam Altman, who was later reinstated. The company continues to deal with technological shortcomings and fluctuating consumer interest. Nevertheless, there is still significant momentum and optimism in the development of AI tools like ChatGPT, with a focus on overcoming current challenges and exploring uncharted potential applications.

OpenAI Sam Altman’s right hand thinks that AI is overhyped

What: The Galeria Karstadt Kaufhof may soon be put up for sale following the insolvency of its parent company, Signa Holding.

Why it is important: The German Trade Association (HDE) is concerned about the potential impact of Signa's insolvency on Galeria, noting the importance of department stores in city centers for attracting customers and benefiting neighboring businesses.

The managing director of the KaDeWe Group, which includes the Berlin KaDeWe and is partially owned by Signa Holding, expressed confidence in their independent financial stability. The German Association of Cities has called for cities to be involved in discussions regarding the future of Galeria locations and for changes in insolvency law to allow cities access to central properties in such cases.

Retail experts are skeptical about Galeria's future, doubting the likelihood of finding an investor interested in taking over the group. The Thai trading company Central Group, a major shareholder in KaDeWe, might consider acquiring individual Galeria locations in major cities.

Galeria could soon be put up for sale

What: Kingfisher expands its retail media activities.

Why it is important: it is done in collaboration with Citrus Ad, which has been a partner for a while now.

Kingfisher, a major player in the DIY sector, is launching a retail media platform with its subsidiary B&Q. This initiative, predicted to generate revenue amounting to 3% of the group's online sales, will be in collaboration with CitrusAd. It allows third-party brands to advertise on the e-commerce websites and apps of all Kingfisher's banners. Already implemented in France, this strategy will expand to the UK, Ireland, Poland, Spain, Portugal, and Romania.

The platform aims to give brands access to Kingfisher's extensive customer base, enabling targeted advertising throughout the customer's shopping journey. Marc Vicente, Kingfisher's group digital director, highlights the effectiveness of retail media and the opportunity for brands to utilize data for more relevant and timely advertising. Alban Villani, CEO of CitrusAd EMEA, comments on the potential to optimize suppliers' media strategies and enhance customer experiences. This move is part of a growing trend in retail where businesses leverage their digital platforms for advertising revenue.

Kingfisher launches retail media business

What: The Robin Report reviews where Kohl’s stands and the perspectives for the company.

Why it is important: Is Kohl’s too big to fail?

Kohl's, once a retail powerhouse, is now grappling with significant challenges. The company, which disrupted the market and outpaced competitors like Mervyns, is stuck in a difficult position in the retail landscape. It faces internal issues like management turnover and external pressures such as investor scrutiny. CEO Tom Kingsbury, a respected retail veteran, is attempting to steer the company back to profitability and growth.

Positives for Kohl's include profitability despite a drop in earnings, improved gross margins, and reduced inventory levels. The retailer's physical stores have seen a slight uptick, and its partnership with Sephora has proven to be highly successful. Additionally, Kohl's real estate strategy, focusing on strip mall locations and testing smaller stores, appears advantageous in the current shopping environment.

Challenges for Kohl's are substantial. The retailer is struggling to find its place in the market, squeezed between discounters like Walmart and higher-end stores like Macy's. Its online business strategy is currently de-emphasized, a risky move in a digital-centric retail world. The company is also dealing with a complicated promotional strategy and aging store locations.

Kingsbury's age and previous semi-retirement raise questions about his long-term commitment to overseeing the company's turnaround. Moreover, Kohl's merchandising strategy, fluctuating between national labels and house brands, needs a clear direction. As the company navigates these challenges, it faces the threat of investor action and the need for a coherent, effective strategy to adapt to the evolving retail environment.

Can Tom Kingsbury Fix Kohl’s?

What: The fate of Sogo & Seibu remains blurry even for insiders following its sales to the US fund.

Why it is important: Japanese department stores are a staple of the national retail industry and can generate heavy emotional customer responses.

The future of Sogo & Seibu, a major Japanese department store chain, is uncertain following its sale to Fortress Investment Group. This sale, initiated by its former parent company Seven & I Holdings, faced opposition and led to the first department store strike in Japan in 61 years due to labour union concerns over job security and cultural preservation. Despite efforts to address these concerns, the sale proceeded amid controversy and delays.

The company faces challenges in its business reconstruction, especially in managing underperforming regional stores and adapting flagship locations. Concerns remain about potential job losses and the impact of reduced store sizes on brand partnerships and customer base. The department store industry as a whole is struggling, and Sogo & Seibu's ability to reinvent itself under new management is being closely watched.

After troubled sale, prospects for Sogo & Seibu uncertain

What: China and Singapore launched a programme where they agree to let their respective tourists pay in digital yuan.

Why it is important: New payment options can be disruptive for department stores, especially in S.E. Asia

China and Singapore are piloting a program where tourists from both countries can use China's digital currency, the e-CNY, for travel expenditures. This initiative, part of a series of agreements to strengthen bilateral ties, was announced during the annual Joint Council for Bilateral Cooperation in Tianjin. Additionally, the two nations agreed on a mutual 30-day visa-free travel arrangement.

This collaboration marks significant progress in the cross-border retail application of the digital yuan. Experts believe this could lead to its wider use in trade and other high-value transactions. The adoption of the e-CNY has been growing, with significant increases in transaction volumes and the number of merchants accepting the digital currency in pilot cities.

China has been experimenting with the international use of the e-CNY, especially considering the rising geopolitical tensions and the need for yuan internationalization. This includes multi-country trials and tests for retail use in Hong Kong, enhancing the digital yuan's potential for broader global usage.

China and Singapore agree to let their tourists pay in e-CNY

What: Retailers are evolving their stores into immersive environments, incorporating sensory elements like sound to enhance customer experiences.

Why it is important: The influence of music on the shopping experience is being explored, with observations that pleasant, soft music may encourage customers to linger longer, while more rhythmic music could expedite decision-making.

They are utilizing services and sensory triggers, such as audio content and unique soundscapes, to engage customers within the store. Agencies like Midi specialize in creating distinctive and innovative sonic atmospheres and are focused on evolving the use of music and sound in retail spaces. Additionally, retailers are experimenting with innovative technologies, such as using plant-generated electromagnetic energy to create sound and old rotary telephones for customer engagement.

Sound design as a differentiation factor 

What: Black Friday in the US was a success. But is it built on sound foundations?

Why it is important: Conditioning customers to low prices and discounts is not new, but it is key for retailers to know the limit before it is too late for them.

US online shoppers set a record by spending $38bn during the post-Thanksgiving period, including $12.4bn on Cyber Monday, the biggest digital shopping day in US history. This 8% increase from last year indicates a potentially lucrative festive season, with higher foot traffic in malls and a rise in credit card spending. Despite negative economic sentiment surveys, retail spending contributed to a significant GDP growth in the third quarter. However, uncertainties remain with slowing labor markets, high mortgage rates, and the resumption of student loan payments, balanced by cooling inflation and lower gas prices.

The surge in online shopping is partly attributed to the convenience of mobile shopping apps and the growth of buy now, pay later programs, raising concerns about overspending. Heavy promotional discounting also drove sales, but this strategy risks hurting profits if it cannibalizes full-price sales.

Retail giants like Walmart and Best Buy have expressed concerns over increasing reliance on discounts. Compared to last year, when consumers shopped early due to COVID-related issues, this year saw more waiting for holiday promotions. This trend might lead to a challenge familiar to brick-and-mortar stores: customers refusing to pay full price and expecting discounts, potentially leading to a post-holiday slump for online retailers.

Black Friday bonanza could lead to a festive hangover for retail

What: Deloitte believes that there is more than AI for CEOs and they should make sure to focus their attention on other topics.

Why it is important: AI is great… when the retail basics are already mastered and good.

Deloitte's annual Tech Trends report suggests a balanced approach to adopting AI in business, cautioning against overemphasis on this technology at the expense of other critical areas. The report acknowledges AI's potential but warns of the risks associated with poor data quality, potentially leading to amplified errors and biases. Deloitte advises companies to focus first on their strategic goals before determining how AI or other technologies can be used to achieve these objectives.

Additionally, the report highlights the evolving relevance of AR and VR in the workplace, noting improvements in network speeds, processor capabilities, and battery life that make these technologies more viable. It also points out the expanding application of AR and VR beyond gaming to practical workplace uses, such as in industrial settings.

A key concern outlined in the report is cybersecurity. As technology integrates more deeply into business operations, the threat from cybercriminals, including the use of deepfakes and phishing, grows. Companies are encouraged to employ advanced technologies themselves to counter these threats.

Overall, while bullish on AI, the report emphasizes a cautious, holistic approach to technology adoption, considering both its potential and its pitfalls.

Deloitte’s chief futurist warns against letting AI blind CEOs to other priorities

What: Self-checkout solutions are great for saving on human costs… but have also hidden issues.

Why it is important: Forget about the tech cost or the retail theft rates: customers do not really like it in the US.

Self-checkout technology, initially aimed at enhancing customer convenience and reducing labour costs, has faced mixed responses since its introduction. While self-checkout usage doubled from 2018 to 2021, representing 30% of transactions, it has also led to customer frustrations due to technical issues and error codes. Workers, instead of being relieved of repetitive tasks, now monitor both customers and machines, often dealing with increased customer anger post-pandemic.

Retailers are grappling with theft, as self-checkout systems can tempt even law-abiding citizens to dishonesty or lead to accidental losses. Some stores are revising their approach, adding restrictions or removing self-checkout options altogether due to customer backlash and concerns over theft.

Despite these challenges, self-checkout isn't disappearing, especially with ongoing labour shortages. Some customers enjoy the autonomy and efficiency it offers. Advanced technologies like Amazon's Just Walk Out and Uniqlo's RFID-powered systems are being explored for more seamless shopping experiences. Yet, the transition has not significantly eased the workload for store employees, who now face different challenges in managing self-checkout stations.

Self-checkout challenges prompt some retailers to pivot

What: Japanese department stores have benefitted from the touristic boon to thrive when others are currently struggling.

Why it is important: Is this more a trend or a stable situation?

Japanese department stores are experiencing a boost in sales due to an influx of overseas tourists, particularly with the weak yen encouraging high spending on luxury goods. However, executives remain cautious as this growth, largely driven by tourism, is not seen as sustainable in the long term. The focus is on maintaining relevance in the fashion segment for domestic middle-class customers and diversifying into complementary businesses.

While overall sales increased in October, there was a slowdown compared to the third quarter. Growth is primarily concentrated in major urban areas like Tokyo, Osaka, and Kyoto, with regional stores lagging behind. High-value customers and 'gaisho' sales (where sales representatives visit customers) are significant growth drivers, with a notable increase in younger, affluent shoppers.

Diversification efforts include developing mixed-use spaces and commercial activities, as well as positioning department stores as cultural hubs. Despite the positive trend, there's an industry-wide concern about sustaining this growth, particularly as other retail sectors like supermarkets and convenience stores are showing signs of a slowdown. November sales figures are being watched closely for indications of either a continued upswing or a further decline in retail performance.

Japan’s department stores: what’s left when the tourism tide goes out?

What: Central Retail opens its 28th location in Thailand.

Why it is important: This is the opportunity for Central to unveil their new store concept, based on a lifestyle approach.

Central Retail Corporation has unveiled its new Robinson Lifestyle Chalong shopping center in Phuket, located within the Robinson Department Store Chalong. This destination, spanning three floors and 43,000 square meters, features a Carnival Village theme and a 'Retailtainment' concept, providing a unique Eat-Shop-Play experience with over 300 brands and specialty stores. The department store, emphasizing community integration and sustainability, incorporates Phuket's tin mining and metal industrial heritage in its design, which includes vibrant colors, reduced finishing, recycled wood, and local handicrafts. This THB 1.3 billion (US$37.2 million) investment marks the opening of Central Retail's 28th location.

Central Retail reveals lifestyle destination at new department store

What: SM keeps on expanding in their home market.

Why it is important: the Department Store division has grown +18% on the first 9 months of 2023 compared to 2022

SM Prime, the Philippines' largest mall operator, has expanded its presence by opening two new malls in Southern Luzon, increasing its domestic shopping center count to 85, in addition to eight in China. These new malls, SM Center San Pedro and SM City Santo Tomas, are part of the company's strategy to focus on less retail-saturated provincial areas. The malls offer a mix of local and international fashion brands, department stores, supermarkets, and various retail outlets.

SM Prime is a key player in the Philippines' highly professionalized mall industry, dominated by conglomerates like Ayala Malls and Robinsons Land. These companies integrate their malls into the community fabric and emphasize environmental sustainability.

SM Prime, part of SM Investments Corporation, generates significant revenue from its mall development and leasing business. 22 of its malls are large mixed-use 'lifestyle cities', combining retail with residential, office, hotel, and convention facilities.

Beyond malls, SM's retail business, originating from a shoe shop in the 1950s, now encompasses thousands of department stores, supermarkets, and specialty stores. The retail sector has seen substantial growth, with increases in revenue and same-store sales across various segments.

The wider Philippine mall industry is experiencing similar growth, with major players like Ayala Land and Robinsons Land also reporting increased revenues. This growth contributes significantly to the country's GDP, with the Philippines expected to have one of the highest economic growth rates in ASEAN, despite high inflation rates. Malls, deeply integrated into the country's culture, are central to this economic success, with developers continually investing in this sector.

SM opens two new malls in Philippines

What: John Lewis has launched its first luxury fashion pre-loved pop-up in collaboration with reseller Sign of the Times at Peter Jones on Sloane Square.

Why it is important: The initiative aims to encourage customers to support sustainable shopping and offers a unique and eco-friendly gifting option for Christmas.

The pop-up, open until 31 January, showcases pre-loved designer pieces such as outerwear, bags, and accessories from brands like Goyard, Chanel, Moncler, Gucci, and Loewe.

Head of category for fashion brands at John Lewis, Beth Pettet, emphasized the premium edit of designer products promoting a more sustainable way of shopping. Sign of the Times' owner and CEO, Antonia Johnstone, highlighted the brand's heritage and synergy with Peter Jones, expressing excitement about curating a sustainable selection for the clientele.

John Lewis opens first pre-loved luxury fashion pop-up

What: Apple’s card program has not been working as well as expected for Goldman Sachs.

Why it is important: Department stores should not discard their traditional credit card partnerships yet

Apple is ending its credit-card partnership with Goldman Sachs, marking a significant retreat for the Wall Street bank from consumer lending. The tech giant has proposed to exit the contract, which includes the credit card launched in 2019 and a savings account introduced this year, within the next 12 to 15 months. This move signifies a reversal from their extension agreement through 2029, intended to be a key part of Goldman's consumer market strategy.

Goldman Sachs, having suffered substantial losses in its consumer operation, had already expressed interest in offloading the partnership earlier this year. Potential successors for the program include American Express and Synchrony Financial, although Amex has shown concerns about certain aspects of the program, and discussions may not be ongoing.

For Apple, this development is a setback in its services business, which has become more vital as iPhone sales slow down. Goldman Sachs, on the other hand, is refocusing on its core clients in corporate and investment sectors after this and other consumer-lending setbacks, including ending another credit-card partnership with General Motors and selling off its personal loans portfolio.

The partnership had a rocky beginning, with disagreements over cardholder approval rates leading to higher loan losses for Goldman and operational challenges. Goldman Sachs is also facing regulatory scrutiny over its credit card practices, leading to internal shifts to address these issues.

Apple pulls plug on Goldman credit-card partnership

What: Following the departure of Gastón Bottazzini, Alejandro González, the company's financial director for the past seventeen years, will assume the interim CEO role starting January 1st, as the search for a permanent CEO continues.

Why it is important: Falabella is observing a significant leadership change with the both the interim CEO and the appointment of Enrique Ostalé as the new president, marking the first time the presidency passed to an executive external to the owning families.

González has been credited with orchestrating the capital increase in 2018 and implementing an efficiency plan resulting in a 6% reduction in expenses.

Falabella appoints an interim CEO as of January 1

What: AR is quietly making its way in retail and could be as important as AI in the selling process.

Why it is important: AI tends to overshadow all other innovations these days, but some are extremely important to consider.

Augmented Reality (AR) is increasingly influential in retail, offering immersive experiences that blend digital and physical worlds. It's expected to revolutionize consumer-brand interactions, but widespread adoption is still developing. Current AR, like Wayfair's in-app feature, is seen as rudimentary. The industry anticipates more integrated AR applications soon, moving beyond gimmicks to core retail experiences.

Key AR technologies in retail include:

1. Mobile AR: Utilizes smartphones to overlay digital elements onto the real world. Major players include Meta, Google, and Apple.
2. AR Smart Glasses: High-end wearables for precision AR experiences, still largely focused on business applications.
3. WebAR: Offers browser-based AR experiences, though less immersive due to hardware limitations.

Mobile AR is the primary focus for retail, enhancing shopping with virtual product trials, reducing returns, personalizing experiences, and expanding customer outreach. Challenges remain, including clunky execution and consumer adoption hesitance, but AR's potential in retail is vast and transformative. As technology evolves, it's poised to redefine the shopping experience, making it more engaging and interactive.

The AR revolution in retail is (almost) here

What: The complexities and challenges of using AI to predict consumer behaviour in the fashion industry.

Why it is important: Experts caution against overreliance on AI for setting initial buys, emphasizing that it may not fully capture the artistry and intuition involved in trend forecasting and creative decision-making.

While AI offers the promise of more accurate forecasting, the emotional and unpredictable nature of fashion purchases presents a significant hurdle.

AI should be seen as a support tool for experienced merchandisers and creative teams, rather than a replacement for human expertise. AI-driven services, such as in-season reorders and pricing optimization, are gaining traction, yet AI-powered demand forecasting is met with scepticism from brands. Many are cautious about relying solely on AI for initial buying decisions, preferring clear, quantifiable assumptions and intuition.

Retailers face the challenge of making accurate predictions about styles, colours, and sizes far in advance, with lead times of up to 45 weeks, and although AI has the potential to provide more precise forecasts than historical methods by considering a multitude of variables, concerns remain about its readiness to entirely replace human decision-making.

Can AI predict what shoppers will buy?

What: LVMH and Chanel are teaming up to tackle the Scope 3 emissions topic.

Why it is important: While retailers are still reluctant to create alliances and share information, largeluxury brands are already doing it.

LVMH Moët Hennessy Louis Vuitton and Chanel, two of the world's largest luxury groups, have initiated a groundbreaking partnership to enhance sustainability in the luxury industry. They aim to standardize corporate and social responsibility reporting and audit processes at the supplier level and support suppliers through the Life 360 Business Partners program. This collaboration includes initiatives like LVMH Circularity for reusing unsold products.

The partnership reflects a growing recognition in the luxury sector that tackling environmental challenges requires cooperation over competition. Bernard Arnault of LVMH emphasized that while competition in design and creativity is essential, sharing information on sustainability is beneficial for the industry.

LVMH's focus on sustainability extends to its malls, including energy reduction achievements and challenges in eliminating fossil fuel-based plastics. Financial support and co-investment in supplier transitions are part of their strategy, acknowledging that suppliers often face significant financial hurdles in sustainable overhauls.

The alliance with Chanel, still in early stages, explores collective audit systems to ease supplier burdens. The collaboration is a response to the urgency of the climate crisis, aiming to establish best practices, particularly in leather sourcing, and set higher standards for suppliers.

LVMH's commitment to sustainability is evident in its business practices, from product packaging to transportation methods, recognizing the need for comprehensive and realistic strategies for ecological responsibility while continuing to grow as a company.

LVMH, Chanel link on sustainability