What: Brands are adopting the popular new platform ‘BeReal’, which poses restrictions on posting that force a level of transparency and authenticity which is unlike other apps.

Why it is important: Tentative experimentation by E.l.f. and Pacsun has shown that there is a demand for brand presence on the app that is opening a new channel for selling and generating brand loyalty.

For brands, the app could be a great opportunity to connect with ‘superfans’ and build on brand loyalty by, for example, showing an inside look into the studios or offices. The app facilitates cross-platform sharing and does not threaten to replace other social media applications.

Users of BeReal have only two minutes to post after they have received a notification allowing them access to take a photo with both their front and back cameras. The result is intended to show a selfie and the location you are in, ultimately forcing users to show what they are doing, where they are and how they are feeling. The app has also openly shared that it is not interested in creating influencers, outright telling users to “stay on TikTok and Instagram” if they want to be famous.

The BeReal creators are surprisingly secretive and have yet to reveal anything about their growth plans, generating speculation on the platform’s longevity and potential monetization. Some believe a subscription service, similar to Patreon, could allow brands the ability to provide shopping codes and exclusive content through the app.

E.l.f. tested a coupon code post on BeReal and saw surprising success. They had no metrics or expectations for the post’s performance which was shared with 150 followers.

BeReal: the social media forcing brand ‘transparency’

What: US retail giant Kohl’s has revealed a new sub-brand under the name ‘Sonoma Community’ as part of its private label flagship brand, ‘Sonoma Goods for Life.’

Why it is important: The new brand will build on the work of Kohl’s Diversity Design Council (DDC), a group of associates who create authenticity in the retailer’s products through their collective experiences and cultures.

The new sub-brand will launch during Hispanic Heritage Month, featuring apparel and products that highlight Hispanic and Latino culture and traditions. Throughout the year, Sonoma Community will offer seven collections reflecting different cultures, including Lunar New Year, Black History Month and Women’s History Month, with artwork created by either the DDC or external guest artists.

Kohl’s celebrates diversity with new private label

What: Meta is testing different social commerce methods across platforms.

Why it is important: Similarly to TikTok, Facebook has announced that it will end live shopping on its platform.

Meta cites the increasing inclination towards shorter video formats regarding customer behaviour. While live shopping will remain on Instagram per post, Meta is testing alternative social commerce methods such as its pay-in-chat function.

While users have complained about Instagram’s full screen ‘Reels’ test, Meta believes social media will continue moving towards a video format. Meta continues to develop its shopping channels and has also opened a physical retail store in California to sell virtual reality equipment.

Meta’s second quarter earnings report in July showed net income for the quarter dropped 36% to about $6.7 billion, total revenue fell 1% and operating income dropped 32% year over year. The company is reportedly also considering its first ever bond sale, according to Bloomberg.

Facebook shuts down live shopping 

What:  Best Buy tries to go away from the big box model, following other operators, such as Ikea in the first place.

Why it is important:  The articulation between offline and online employees makes the most of both world while keeping the customer at the center.

Best Buy is launching new spaces, usually 500 sqm (15% of the usual Best Buy locations size) advertising “new ways to shop”. Customers can use QR codes or the app to discover products, shop and proceed to self-check-out.

According to GDR, the most interesting is the articulation between on-site and off-site workers: on-premises staff are here to help customers understand the space, and then clients have access to remote specialists via virtual video chat for any question they might have.

Best Buy tries smaller and digital first store formats

What: Concept stores selling lesser-known brands took off in China, particularly among young customers, however, pandemic challenges have forced many to close their doors or change strategy.

Why it is important: Post-pandemic operational distress has caused many Chinese beauty retailers to close causing surviving brands to compete for customer retention in a landscape that can no longer rely only on experiential retailing or travel to increase traffic and sales.

Some regular challenges for these concept stores include their size as smaller concept stores lack the bargaining advantage of bigger retailers. In addition, there is a challenge to obtain brand authorization while official channels are still monopolised by well-established stores such as Sephora and Watsons. The source of goods for many beauty collection stores is still regular purchases from department stores or from agents. This creates doubts about product authenticity, makes the margin of prices uneven, and creates competition within the brands they carry. As customers are determined to go where they can find the products, loyalty is a serious challenge.

A wide range of brands and a high number of SKUs have been a common trend among beauty collection retailers that have survived the pandemic. One example is Harmay which has more than 400 brands and more than 9,000 SKUs with a selected range of products that includes well-known international first-line beauty brands as well as exclusive authorisation of well-known international boutique brands.

These mid-to-high-end positioned beauty collection stores have also adopted a conservative expansion strategy, typically following a "one store in one city" approach. With core competitiveness remaining in brand selection, beauty buyers can improve the selection by scouting trendy brands only available abroad and focusing on the local aesthetics and needs of their Chinese customers. For consumers, mid-to-high-end brands are most worth revisiting.

Affordable collection stores need a clearer brand positioning, with more tactical spending on store investment and marketing. While the concept store model was effective in acquiring customers, retention will be vital for longevity.

Beauty concept stores shift strategy in China

What: Macy’s lowers 2022 guidance following their Q2 reports showing deteriorating consumer discretionary spending influenced by the macro-economic downturn.

Why it is important: Macy’s Inc., lowered its forecast for the overall year 2022 citing inflation’s impact on sales and consumer behaviour which caused top- and bottom-line declines.

Operating income dropped to 399 million USD last quarter from 597 million USD in the year-ago period. Net income for the quarter ended July 30 fell to 275 million USD (diluted earnings of 0.99 USD per share) from 345 million USD a year ago (1.08 USD per share).

The company has said it is well positioned to navigate the uncertain landscape as they have gained new customers and have continued strength in its luxury offer. The Q2 results still beat expectations.

Macy’s lowers guidance

What: Through shop-in-shops and a Zellers e-commerce site, Hudson Bay is looking to revive the former mass merchant retailer.

Why it is important: Similarly to Saks Fifth Avenue reviving the iconic retailer turned brand Barney’s, Hudson Bay will bring Zellers into select locations by debuting limited shop-in-shops, with plans to turn the once defunct retailer into a private brand.

The launch will include housewares, home décor, furniture, small appliances, toys and pet accessories. There are plans to add apparel and other categories to the assortment later in the year. The aim is to target the nostalgia of consumers who once looked to Zellers as more than a retail destination but a source of support in community building with its affordable pricing. Hudson Bay will turn Zellers into a private brand that is “design-led, value-driven” to maintain its original appeal to consumers.

Hudson Bay will place shop-in-shops in select locations in addition to a dedicated e-commerce site, however, no plans for stand-alone Zellers stores have been announced.

Hudson Bay revives Zellers

What: Multisearch allows users to combine photos and keywords to optimize their shopping searches.

Why it is important: Competition is likely to increase as Google’s visual search function connects users to alternative products and may facilitate a rise in counterfeit products and dupes. SEO strategies will need to change as image search surpasses the reliance on keywords.

Google’s ‘Multisearch’ allows users to search for products by combining images with text keywords that can refine their search for products. Consumers no longer have to memorize product names or request information from influencers or pedestrians who are wearing garments they wish to purchase. Simply uploading a photograph or screenshot and typing preferred colours and retailers will allow consumers to optimize their shopping searches.

Google reported that 68% have taken a screenshot of a product they were interested in, and 70% of these then proceeded to purchase it. However, 66% reported a desire for finding more variations of colour or print.

Experts warn that consumers may become reliant on advanced search functions that prioritise the appearance of a product over the brand or quality of the material leading to an increased demand for fast fashion imitations.

Successful brands and retailers will be investing in product imagery and training merchandising teams in order to create robust and compelling product visuals for the different SKUs they sell.

Google’s Multisearch function alters SEO

What: Korea’s top three local luxury department stores are expecting continued “revenge spending” after enjoying notable sales growth over the past three months.

Why it is important: Local department stores in Korea have seen strong growth post-pandemic guiding plans to build up the luxury and furniture offer expected to grow to 20 trillion won.

Lotte, Shinsegae and Hyundai Department Store achieved all-time high business performances in the second half of this year, thanks to increased sales in various sectors, including sports, domestic fashion and kids. Growth in sales of luxury goods and furniture has also contributed significantly to the major department stores’ all-time-high figures.

The three department stores have been focusing on building their furniture offer through their own furniture brands. The goal is to prepare for the growth of the local market expected to reach the size of 20 trillion won by 2024.

Last year, Lott took over the local interior and furniture brand Hassem, while Shinsegae has Casamia and Hyundai Department Store acquired e-commerce mattress company Zinus in March.

Korean department stores see positive growth in Q2

What: Walmart and remote vacation company Getaway are launching mini-retail shops called the General Store by Walmart at select outpost locations.

Why it is important: The collaboration demonstrates Walmart’s mission of expanding its reach to more remote places through a retail format it has historically disrupted.

Despite criticism from its core audience, Getaway is moving forward with this partnership to offer necessary goods and seasonal products sourced by Walmart. Getaway will curate the assortment, selling hiking gear, leisure activities, film cameras, and iron skillets, among other products that guests might need on their remote vacation.

The selection will also be available online at a Getaway shopping page, and guests over the next six months will receive Welcome Kits from the partnership to make s’mores. The company is also offering extra benefits to extend the relationship it starts with Getaway Outpost guests, giving a complimentary Walmart+ trial to any guests over the next year.

Walmart’s partnership with Getaway follows its warning last week that profits are at risk as consumers focus spending on essentials instead of discretionary items. The retailer expects operating income to fall 13% to 14% for the second quarter, but raised that quarter’s net sales estimate to 7.5% growth from its 5% estimate in May.

Walmart partners with Getaway to open small general stores

What: Ryan Ross is appointed as Neiman Marcus Brand president to help accelerate growth strategy.

Why it is important: Ryan Ross, former president of William Sonoma with extensive omnichannel retail experience, is filling this new dedicated brand role.

Representative of Neiman Marcus Group’s ‘Revolutionizing Luxury Experiences’ strategy, Ryan’s contribution is expected to further the group’s positioning for sustainable growth. His experience optimizing customer-centric experiences and achieving rapid growth will be beneficial for accelerating growth.

Despite the new role, there will be no change to how Neiman Marcus operates or manages relationships with brand partners. However, David Goubert, Chief Customer Officer, Neiman Marcus, will depart the company for personal pursuits.

Neiman Marcus appoints new brand president

What: Balenciaga partners with Reliance Brands to enter the Indian market.

Why it is important: Luxury brand Balenciaga has signed a deal with Reliance Brands Limited to tap into the developing luxury fashion market in India.

This is the second franchise deal with a Kering-owned brand for RBL, making them an exclusive partner to Balenciaga.

RBL believes Balenciaga is at the forefront of the digital realm with an international cult following. With India’s luxury fashion consumer having shifted to a move expressive use of fashion, Balenciaga’s ability to adapt and reinvent itself through collaboration is the source of the deal’s potential success.

Balenciaga plans to bring the brand to India

What: The strength of the Gen Z Chinese luxury consumer is threatened by the rising youth unemployment rates while in the US inflation is slowing sales for younger generations.

Why it is important: Many luxury companies had adjusted their product offer to appeal to the growing Gen Z influence on sales; but, with inflation and rising unemployment, their contribution to the overall financial growth for the sector is in question.

Focusing on core Gen Z luxury consumers less likely to be impacted by inflation or unemployment seems like a logical move. But the concern is over those would-be buyers that had factored into reports that a fifth of all luxury spending by 2025 would be made by Gen Z.

Some brands have chosen to adapt by focusing on entry-level products and digital garments which have seen continued success despite the unfavourable economic conditions. However, real and virtual entry-level products call for high levels of creative investment at an affordable price point that do not dilute the brand.

Finding success in offering the right assortment of entry-level products at the right price will help mitigate the potential economic restrictions imposed on Gen Z consumers today.

Uncertain future for Gen Z’s luxury industry contribution

What: The beauty industry is beginning to find its place in web3 through experiential spaces and experimentation with virtual reality, DAOs, blockchain CRM and other community-building strategies.

Why it is important: Until recently, beauty brands relied on partnerships with esports and games to enter the metaverse, but now they are establishing their own virtual communities with growing sales.

According to a 2022 global survey by Accenture, 48% of respondents are interested in purchasing virtual makeup looks in the next 12 months, and 38% have already purchased virtual makeup. Some brands have released NFTs that grant access to physical products, while others have focused on virtual storefronts to connect and encourage shopping for physical products online or booking virtual consultations.

Brands are building on these experiential strategies to build communities in the metaverse and encourage connections through DAOs and Discord servers. Nyx Professional Makeup will release a whitepaper on its DAO later this month with the hopes that its transparency will encourage other beauty brands to reference it for their roadmaps.

Other applications of metaverse beauty include digital makeup for video calls, inclusive and fantastical beauty filters or beauty looks for avatars. Roblox’s head of fashion and beauty partnerships states that beauty plays a major role in identity and self-expression on the platform.

Virtual spaces are a key method of community engagement which can take place in stores or through experiences that promote the brands’ products. YSL is going beyond community-building and leveraging blockchain technology to directly message NFT holders about new offers and exclusive purchase opportunities.

Metaverse beauty expansion

What: New Concepts@Nordstrom is continuing a partnership between the retailer and the late designer Virgil Abloh, bringing a new concept store with exclusive products in-store.

Why it is important: Nordstrom’s latest upcoming New Concepts pop-up is a continuation of celebrating Virgil Abloh’s life and mission. The company continues to support the Fashion Scholarship Fund’s Virgil Abloh™ “PostModern” Scholarship Fund and the Brooklyn Museum’s celebration of his life through the creation of the Concept 018 pop-up.

The shop features a range of women’s and men’s ready-to-wear, shoes and accessories including anbexclusive Off-White Capsule, apparel capsules from Denim Tears x Canary Yellow and American skateboarder Sal Barbier and Off-White. Concept 018 also includes Off-White fragrance as well as apparel and accessories for adults and kids from Abloh’s “Figures of Speech” exhibition at the Brooklyn Museum.

Concept 018: Virgil Abloh Securities is available online starting August 11 through the end of October online and at select Nordstrom locations.

Nordstrom partners with Virgil Abloh’s estate

What: Adobe reports price drops for 14 out of 18 tracked categories, year-over-year and month-over-month.

Why it is important: While food prices continue to rise both online and in stores, online prices are dropping in major categories like electronics and apparel. The deflation of online prices is a welcomed relief for consumers who are pulling back on spending in response to the impending recession.

Consumers spent 73.7 billion USD online in July, down from 74.1 billion USD in June. On a year-over-year basis, however, e-commerce spending in July grew 20.9%. Online spending in July also decreased compared to May (78.8 billion USD) and April (77.8 billion USD).

Of Adobe’s observed categories, groceries, tools/home improvement, pet products, and non-prescription drugs experienced inflation last month. On a year-over-year basis, only seven of the 18 categories saw price drops: electronics, jewellery, books, toys, computers, sporting goods and apparel.

The price deflation online has been tied to retailers’ oversupply coupled with the need to address wavering consumer confidence and a pullback in spending.

Online prices drop 

What: Simon Property Group surprised many analysts when it decided to acquire and operate brands since the beginning of the pandemic

Why it is important: A landlord becoming a retailer is not unusual: in the department stores world, NK in Sweden is one of the most recent examples. However, SPG is raising the model to an unprecedented scale.

Simon Property Group has invested recently in J.C. Penney, Authentic Brands Group (Brooks Brothers, Aéropostale, Lucky Brand, Forever 21…). David Simon, the chairman, reports that this is still a small and high profile part of a business otherwise based on real estate.

He stressed that these investments have already paid for themselves. He remains confident that the high-income customer is in good shape, and they want to be in brick-and-mortar stores.

SPG second-quarter net income has slipped from $617m in 2021 to $497m 2022, and occupancy rates rose from 91,8% to 93,9%, with 2,200 leases representing 700,000 sqm signed during the first half of 2022.

Retail pays off for Simon Property Group (WWD)

What: The founding family-run department store has demonstrated a successful approach to retailing that contrasts its competitors such as Macy’s, JCPenney and Kohl’s.

Why it is important: No retailer is immune to the downturn in discretionary spending; however, Dillard’s approach in combination with its older and wealthier customers may help sustain growth despite inflation.

While their customer base may be less affected by inflation, the company also lacks intervention from activist investors pressuring to monetize their real estate, spin off their e-commerce operations, shake up the board or even put the business up for sale as is the case for comparative publicly traded department stores.

In addition, Dillard’s approaches private labels and exclusive partnerships differently. The department store has 52 owned brands or exclusive brand partnerships in women’s, men’s, children’s and home. Strong brands that are difficult to find are a key differentiator for Dillard’s. Traditionally, they believe, most department stores carry the same brands and products leading to a price battle which becomes the only differentiating factor in the customer’s mind. Thus, Dillard’s focuses on limited distribution and higher profile brands to reach customers who value fashion over price.

The department store still needs to balance its traditional values while reaching younger consumers and building its online sales. Some analysts predict Dillard’s will continue to have a soft growth period through the spending downturn.

Dillard’s differentiates through exclusivity not price

What: The Selfridges Corner Shop and over three department store main window displays have been taken over by Casablanca’s aviation-inspired pop-up.

Why it is important: Casablanca and Selfridges team up for a pop-up that further solidifies the trend of luxury conceptual retail and hospitality while also demonstrating the brand’s dedication to global activations that build brand awareness.

Titled ‘Casa Airways’, the pop-up showcases an exclusive 45-piece collection with limited-edition azure-hued bikinis, beach towels, silk scarves, graphic T-shirts, crochet hats, bags, knitwear, and tailoring from the AW22 collection. As well, customers can purchase luggage from the Casablanca collaboration with Globetrotter as part of an exclusive pre-sale.

Champagne branded with the Casablanca name is available in the ‘departure lounge’ designed to include graphic 1990s airport signage, security, and private jet set pieces.

Selfridges hosts Casablanca pop-up

What: Le Bon Marché is addressing the wellness trend with an intimate salon for face and body treatments.

Why it is important: While other luxury department stores are opting for large spaces dedicated to wellness, like Galeries Lafayette’s recent 3000-meters squared space, Le Bon Marché is unveiling a 152-meters squared salon focused on intimacy and services in partnership with their brands.

The new beauty centre, L'Institut, is on the top floor of Le Bon Marché, in the extension of the Salons Particuliers, installed in 2019 in place of former offices to welcome customers during private style advice meetings. Soft colours (beige, water green, etc.) and warm materials (light wood, velvet, carpets, etc.) were favoured.

This new space will be put into service on September 1, while treatment reservations will be possible on the e-shop. The Institute houses six treatment cabins dedicated to beauty and well-being, equipped with heated beds and adjustable lighting, in which teams of experts from partner brands will work throughout the year.

Le Bon Marché beauty salon

What: Due to rising interest fees and service charges for ‘Buy Now, Pay Later’ providers, retailers are questioning the profitability of this payment method for smaller purchases.

Why it is important: The pandemic brought a surge in customers to ‘Buy Now, Pay Later’ services, but a challenging mix of rising interest rates, borrowers missing payments, overcrowding of new players and growing calls for regulation threaten the current model.

Many BNPL companies like Klarna have posted significantly lower valuations compared to last year. BNPL companies, Klarna and Affirm both posted values that dropped by around 40 billion USD compared to last year. Last month, the Australian BNPL company Latitude also rescinded its offer to acquire another company’s BNPL business, citing market conditions. BNPL companies are also starting to lay off staff hinting at growing trouble.

BNPL services are most frequently done for fashion and beauty products making sellers take notice. There is reason to believe BNPL purchases pose a great challenge to the industry. As the BNPL companies profit mainly from charging the merchants, smaller transactions are questionable in terms of profit and new client acquisition.

Regulations could also put capital requirements in place, forcing retailers to put clearer disclosures about the consequences of late payments, inform clients about credit risks at the point of checkout or they may add stricter checks to ensure shoppers can afford to make payments.

BNPL isn’t going to disappear, but theories are appearing regarding the direction of its evolution. Fees might go up, new rules could add more friction to the check-out process, and BNPL providers may use it as a tool to lure customers into other purchases and services.

Inflation threatens the ‘Buy Now, Pay Later’ business

What: Designer department store Liberty is releasing an interactive print newspaper providing news, trends, practical advice, product reviews and recommendations.

Why it is important: Print media is returning with Liberty’s newest publication that targets their knowledge-hungry customer. The department store is engaging readers through printed QR codes, dynamic visuals, crosswords, and even horoscopes that are supported by their social media.

‘The Hall’ is the title of the London retailer’s biannual newspaper that is connecting all content streams into one. This return to a traditional form of media is aimed at engaging customers and providing them with a fun and convenient way to discover products through their trend edits and articles. With QR codes, the publication maintains the ability for customers to access products quickly online without the pressure from oversaturated digital targeting.

The release of Liberty’s newspaper comes after the success of ‘The Book’, the retailer’s collectable coffee table magazine.

Liberty releases biannual newspaper

What: As part of its Polaris strategy, Macy’s is set to open four new off-mall, small-format stores this fall.

Why it is important: Macy’s is repositioning its physical store footprint by delivering specific shopping experiences. Through its brand extensions, Market by Macy’s and Macy’s backstage, customers have the opportunity to discover new products with convenience or hunt for off-price and great value goods.

The innovative new retail format of off-mall, small-format stores plays a huge role in expanding Macy’s presence in current markets, maintaining their market presence by replacing underperforming locations or entering new markets.

The first dual Market by Macy’s and Macy’s Backstage store will open this fall in Chicagoland.

Macy’s small-format strategy