What:  A testimony from Zalora CEO on how AI is transforming the business.

Why it is important: The article is down to earth and provides a set of examples on how department stores could address AI in their operations, if this is not yet the case.

Zalora, a leading e-commerce platform in Southeast Asia, has integrated advanced artificial intelligence (AI) capabilities from OpenAI into its proprietary platform, Titan. This move aims to redefine online shopping experiences, streamline business operations, and elevate industry efficiency standards.

Key insights from the integration:

1. Purpose of Titan: Developed by Zalora, Titan integrates OpenAI to address e-commerce challenges and bolster innovation. It automates production, refines search precision, minimizes manual work, and facilitates smarter, AI-driven customer service, according to Sumit Jain, Zalora's CTO.
2. AI in E-commerce: Jain perceives AI as transformative for e-commerce. It can reduce operational expenses, solve intricate business problems, and augment human roles. Examples include using AI for crafting product descriptions, refining search functionality, assisting customers post-purchase, and lowering production costs.
3. Search Enhancements: One practical outcome of Titan has been the "Did you mean?" suggestions for users, optimizing their product search. This has led to a 4-6% conversion rate uplift since the system's inception.
4. Operational Benefits: Titan improves operational efficiency, as demonstrated by a 30-50% increase in forecasting accuracy, enabling Zalora to scale effectively. Additionally, the system aids in enriching product descriptions and optimizing product imagery processes.
5. Automation: Generative AI is used for automatic attribute tagging (like color, style, and occasion) based on product images, leading to auto-generated SKUs and product descriptions. This streamlines search functionality, ensures quality, and reduces manual labor.
6. Business Intelligence: Zalora is leveraging AI for business intelligence chatbots, which mine stored data to provide quick and precise key findings. This expedites insight retrieval, enabling staff to focus on high-impact activities. Furthermore, AI-powered Slack chatbots have been employed for customer service and system troubleshooting.
7. Future Prospects: Beyond these applications, Zalora envisions using chatbots for other internal processes, such as handling expense claims. Jain emphasizes that the integration of OpenAI is just the beginning of their AI-focused evolution. One significant advantage of this technology is its cost-effective in-house innovation, striking a balance between developing internally and collaborating with third parties.

In conclusion, Zalora is harnessing the power of AI, through its Titan platform, to innovate its e-commerce operations, enhance customer experience, and set new industry standards.

AI in Retail: the use case of Zalora

What: Walmart goes frontal with Amazon and offers a subscription service for everyday products.

Why it is important: This emphasizes even more if needed the fact that department stores are pushed out of the everyday product for everybody positioning, and need to define their positioning and target with great precision.

Walmart has introduced a new subscription service allowing customers to receive regular shipments of items like food, paper products, and pet supplies. This move competes with Amazon's Subscribe & Save program, which has been operational since 2007 and offers up to 15% discounts on bulk subscriptions. Unlike Amazon, Walmart offers products at its "Every Day Low Prices." The service was developed in response to observing customers frequently repurchasing the same items. The subscription covers a wide range of products, with pet-related items being particularly popular. In line with this, Walmart has also opened its first Pet Services centre in Dallas, Georgia. Other retailers, like Chewy, also have similar subscription offerings for pet products.

Walmart debuts subscription services

What: Walmart recently hosted its first-ever Walmart Marketplace Seller Summit in Las Vegas where the company announced to extend its Marketplace to Chile.

Why it is important: The expansion provides additional growth opportunities for third-party sellers, allowing them to reach new markets and increase their sales potential.

The event featured prominent Walmart leaders, including CEO Doug McMillon and Chief eCommerce Officer Tom Ward, who emphasized the potential of Walmart Marketplace to connect businesses with new markets and customer segments.

Walmart aims to enhance fulfillment services by scaling local pickup and delivery, expanding options for big and bulky items, and launching digital brand shops and shelves on its website. They also revealed that Walmart Fulfillment Services will waive peak season storage fees for sellers who inbound by October 1.

To further support sellers, Walmart has introduced features such as Inventory Transfer Services and Walmart Restored for improved inventory availability and refurbished goods options.

Walmart aims to grow its third-party marketplace at first seller summit

What: Mukesh Ambani's new Mumbai mall, Jio World Plaza, is attracting luxury brands such as Gucci, Cartier, and Louis Vuitton, who have signed leases to open stores there.

Why it is important: The signing of leases by luxury brands in Mukesh Ambani's new Mumbai mall highlights the growing importance of the Indian market and its potential for luxury retail growth.

The mall is expected to open this year, and Reliance Industries, Ambani's company, will share monthly net revenue with the tenants. The desire for quality retail spaces has driven luxury brands to establish a presence in the mall, as they previously had to open their first outlets in luxury hotels. Now, they seek to have a meaningful presence in India where the market is growing. Rental agreements include clauses to maintain the luxury appeal of the mall. With India having over 800,000 millionaires and the economy projected to strengthen, leading to a rise in millionaires, the luxury spending market in India is expected to expand by nearly 12% annually according to Euromonitor.

LVMH, Gucci to expand in India with new outlets in Reliance’s luxury mall

What: Sephora announces the first-ever European Sephoria event to be held in Paris on October 6-7.

Why it is important: The immersive experience will offer customers a chance to consult with experts in the beauty industry.

The event will take place at 150 rue de Rivoli in central Paris across three floors. Sephora will showcase its makeup, skincare, haircare, and perfumery brands, as well as special offerings for Christmas 2023. Around 40 brands, including Fenty Beauty, Rare Beauty, Drunk Elephant, Manucurist, and GHD, will be featured at the event.

Visitors to Sephoria will have the opportunity to enjoy beauty treatments and attend masterclasses led by cosmetics brand founders and industry experts. Additionally, a café with DJ sets will be available for guests.

On October 6, admission will be limited to Sephora's Gold loyalty club members and the press, replacing their traditional pre-Christmas press presentation. On October 7, the event will be open to the general public from 9 am to 9 pm. Tickets, priced at €35 for Gold Club members and €45 for the general public, will include a free gift pack containing products from Sephora's featured brands. Tickets will go on sale to the general public on September 7 on Sephora’s ad hoc website.

Sephora’s immersive Sephoria event scheduled in Paris on October 6-7

What: Nordstrom has made executive leadership appointments in its merchandising and store organizations.

Why it is important: These appointments aim to strengthen Nordstrom's focus on delivering exceptional customer service and expanding its reach in key markets.

Jamie Nordstrom has been appointed as the Chief Merchandising Officer, bringing his 28 years of experience to the position. He will report to Pete Nordstrom, President, and Chief Brand Officer. Additionally, two other executives, Fanya Chandler and Gemma Lionello, have been appointed as President, Stores, and President, Rack, respectively, to oversee the strategy and execution of the company's stores.

Nordstrom announces executive leadership appointments 

What: OpenAI is expanding ChatGPT's capabilities, introducing voice and image-based interactions.

Why it is important: The new voice technology — capable of crafting realistic synthetic voices from just a few seconds of real speech — opens doors to many creative and accessibility-focused applications, as well as risks for malicious actors.

Users can engage in voice conversations with the chatbot, make voice requests like bedtime stories, and ask questions, receiving responses in spoken form. Additionally, ChatGPT will support image-based queries, where users can upload images and ask for explanations or instructions. The voice feature relies on a text-to-speech model, offering five different voices. Spotify is partnering with OpenAI to allow podcasters to translate their shows into other languages while retaining their original voice. These new features will roll out to paying subscribers, initially on Android and iOS for voice conversations.

OpenAI gives ChatGPT a voice for verbal conversations

What: Kroger has been involved in a legal action claiming it has contributed to the US opioid crisis.

Why it is important: The more involved department stores will be in health and wellness, the more they will ahve to be cautious with the implication of their actions.

Kroger, a major grocery chain, has agreed to a $1.2 billion settlement with states, local governments, and Native American tribes over claims that its retail pharmacies contributed to the opioid crisis by inadequately monitoring opioid prescriptions. The settlement will be paid over 11 years, starting in December, with an additional $177 million for legal fees to be paid over six years. Although Kroger did not admit any wrongdoing, it joins other pharmacy chains like Walgreens, CVS Health, and Walmart, who have made similar settlements totaling about $13 billion. The funds from these settlements are being used to support opioid abuse victims and purchase opioid overdose reversal drugs. Despite the settlement, Kroger intends to proceed with its merger with Albertsons and plans to divest over 400 stores to address antitrust regulator concerns.

Kroger pays USD 1.2bn to settle opioid claims

What: Flannels opens its second store front in Ireland.

Why it is important: The opening of the new store indicates both Flannels and its owner, Frasers Group’s dedication to the growth of physical retail and introducing luxury destinations to untapped markets.

The 15,000 sq ft. store is locates on St Patrick’s Street and spans across three floors. The store offers a curated selection of menswear, womenswear, and junior luxury designer clothing and accessories including Off-White, Stone Island, and Valentino.

The Cork store location is expected to generate around 6 million customers annually as well as create over 40 new jobs in the local area.

Flannels’ second Ireland flagship lands in Cork 

What: Falabella announced its 2023 H1 results.

Why it is important: The financial performance of Falabella can give insight into the retail industry, particularly in the Latin American region.

The company ended the first half of the year with a loss of CLP 5,153 million (16.9% drop). Their H1 turnover was CLP 5,435,960 million which is 9.6% lower than that of the same period last year. The worst performing division was the home stores in Chile with a decrease in turnover by 23%, department stores in Chile down 18%, and those in Colombia down by 30.9%.

Falabella decreased its business in all of its markets, including declines of 4.2% in Peru, 16.6% in Colombia, 21.4% in Argentina, and 16.2% in Brazil. The company currently operates with a network of 526 establishments distributed between Chile, Peru, Colombia, Argentina, Brazil, Uruguay and Mexico.

Falabella reduces its income and enters losses in the first semester

What: Olivier Bron has been made official by the Macy’s Group as the new general manager of Bloomingdale's stores starting in November.

Why it is important: Bron has experience with Galeries Lafayette Group, Central, and Robinson department stores and will now report to Macy's CEO, Tony Spring.

Olivier Bron has been appointed as the new general manager of Bloomingdale's stores by the Macy's Group. He will assume his role in November and will report to Tony Spring, who has been the president and CEO of Macy's since March. Previously, Bron served as the director of operations for the Galeries Lafayette group and later moved to Thailand to manage the Central and Robinson department stores.

Tony Spring praised Bron in a statement, highlighting his charismatic leadership, understanding of Bloomingdale's culture, and deep knowledge of the luxury market. Bron will oversee a network of 34 Bloomingdale's department stores and 20 Outlets in the U.S., with the brand also having a presence in Kuwait and Dubai

Olivier Bron expressed his honor at being named the next CEO of Bloomingdale's and showed admiration for the brand's 150-year history and its premium product assortment. He also expressed eagerness to continue the momentum of the team, including new store formats and ongoing digital expansion.

For the first half of its 2023 fiscal year ending in July, Macy's group saw its revenue decline from $11.4 billion the previous year to $10.5 billion this year, with Macy's sales dropping by 8.9% and Bloomingdale's by 3.3%.

Bloomingdale's entrusted to Olivier Bron

What: Indonesia makes a drastic move to safeguard traditional retail

Why it is important: It is the first country to ban sales on Tiktok. Who will be next?

Indonesia has prohibited e-commerce transactions on social media platforms to safeguard traditional retail, a move primarily affecting TikTok and its shopping feature. The ban aims to defend offline businesses in the region from predatory pricing on social platforms, which threatens small to medium enterprises. The Trade Minister  emphasized the regulation ensures a level playing field in business competition and user data protection. Furthermore, e-commerce platforms in Indonesia must set a minimum price of $100 for certain directly imported items and ensure products comply with local standards.

TikTok is the primary business affected by this ban. TikTok has over six million local sellers and 125 million users in Indonesia. The country recorded e-commerce transactions worth nearly $52 billion last year, with 5% occurring on TikTok, primarily via live-streaming. TikTok is owned by ByteDance, a Chinese tech firm.

Indonesia bans e-commerce on social media

What: Shein has entered the luxury fashion market by allowing third-party sellers on its platform to list high-end products.

Why it is important: The unauthorized luxury listings on Shein have the potential to negatively impact the company's reputation, hinder its efforts to adopt a marketplace model like Amazon and Alibaba, and strain its relationship with well-known luxury brands, making it important to consider the implications.

Listings for luxury goods on Shein include brands like Stuart Weitzman, Coach, Lanvin, and Paul Smith. It is unclear whether these items are authentic or how they ended up for sale on Shein as luxury brands typically choose their retailers carefully and may not have authorized Shein to sell their products. However, legally, the brands have limited recourse as long as the third-party sellers acquired the merchandise legitimately.

While selling luxury goods can help Shein attract wealthier and older customers, it may pose challenges as the company aims to adopt a marketplace model like Amazon and Alibaba. The unauthorized luxury listings on Shein could adversely affect the company's reputation and relationship with well-known brands.

Dumping unsold merchandise with Shein may be one way that brands end up on the platform, but they are unlikely to talk about it due to Shein's association with low prices and criticism on social media. There is a "grey market" of new goods that were never authorized for resale, and tourists often take advantage of regional price differences and fluctuations to purchase these items.

How Shein wound up in the luxury fashion business 

What: Several major retailers, including Walmart, Target, and Best Buy, are launching early holiday sales to coincide with Amazon's fall Prime member sale.

Why it is important: These early holiday sales come as retailers are looking to meet consumer expectations for convenience and savings.

Walmart's "Walmart Deals - Holiday Kickoff" event will run from October 9th to October 12th, featuring online deals on electronics, home, fashion, and toys. Target is bringing back "Target Circle Week" from October 1st to October 7th, offering deep discounts on thousands of items, with up to 40% off for Target Circle members. Best Buy is planning a 48-hour flash sale starting on October 10th, with deals on TVs, laptops, headphones, and smartwatches.

Retailers are starting the holiday sales early

What: Luxury brands have understood that experience encompasses many areas of consumption, including food

Why it is important: we are getting to the point where even the most experiential brands, such as Gentle Monster, go the additional mile and open cafés to increase visit duration and customer retention.

Luxury brands are venturing into the restaurant business in Seoul to enhance their brand image and engage younger consumers. Gucci's restaurant in Itaewon boasts Michelin-starred dishes, and despite its premium prices, reservations sold out in minutes. Louis Vuitton and Swiss watchmaker Breitling have also launched eateries, while Korean eyewear brand Gentle Monster opened a dessert cafe. The shift towards offering gastronomic experiences comes as brands recognize the limitations of purely digital interactions. Offering food and beverages allows customers to immerse in the brand without the hefty price tag of luxury goods, effectively broadening the brand's appeal, especially among millennials and Generation Z. This strategy emphasizes experiential luxury and lifestyle over direct profitability.

Gentle Monster opens cafes in Korea

What: Saks Fifth Avenue is marking the third year of its designer accelerator program called "The New Wave" by celebrating the latest class of participants.

Why it is important: The programme is designed to nurture and support independent brands with high potential then showcase the brands. By showcasing these brands through various channels, Saks is helping to elevate and promote emerging talents in the fashion world.

The eight brands selected for the programme will receive extensive exposure through Saks' digital channels and a dedicated window installation at the New York flagship store. The brands chosen for the program were carefully identified by Saks' leadership team, who recognized their potential for remarkable growth. The company aims to provide these selected independent brands with the tools, resources, and visibility needed to thrive in the competitive fashion industry.

The designers include Armando Cabral, Áwet, Bernard James, Elisamama, Interior, June 79, Renowned and Sorellina. The window installations are on display now until September 20th at the Saks Fifth Avenue New York flagship.

Saks highlights designer accelerator program graduates 

What: Zara’s Pre-owned platform will be available in France starting September 7th.

Why it is important: The platform aims to promote sustainability and a circular economy by extending the lifespan of garments, reducing waste, and lowering the consumption of new materials.

The service will offer French customers access to services like garment repair, online buying and selling of used items (online and in-store), and clothing donations. It is part of Zara’s sustainability strategic plan to reduce emissions by 50% by 2030 and achieve carbon neutrality by 2040.

Zara’s second hand platform arrives in France

What: Stockmann commences a strategic assessment; considers changing the Group’s name to Lindex Group and investigates strategic alternatives for the Department Stores business.

Why it is important: This strategy reflects Stockmann’s focus on enhancing shareholder value and optimising its business strategy, particularly by emphasizing the significant contribution of Lindex to the overall performance of the company.

Lindex, which generated over two-thirds of Stockmann Group's revenues in 2022, will remain unaffected by the possible name change. The Department Stores business will evaluate options such as increased independence, ownership changes, strategic partnerships, or continuation under the current structure. The strategic assessment will not impact the daily operations or iconic brand of Stockmann Department Stores.

Any decision regarding the name change would be subject to approval at Stockmann's general meeting, with the assessment expected to be completed by 2024.

Stockmann considers changing its name and alternatives for the Department Stores business

What: Nordstrom has released its 2022 Impact Report, highlighting its progress in environmental, social, and corporate initiatives.

Why it is important: The report highlights significant progress in their ESG initiatives, particularly in environmental sustainability, supporting diverse businesses, and giving back to their communities.

The company expanded its beauty packaging recycling program, Beautycycle, to Nordstrom Rack stores and reclaimed almost 30 tons of packaging in 2022. Nordstrom successfully reduced single-use plastics by 50%, three years ahead of schedule, by replacing plastic shopping bags with paper bags at Nordstrom Rack.

The company aims to increase purchases from Black-owned or founded businesses by 10 times by the end of 2030. During Black Business Month in 2022, Nordstrom created Buy Black pop-up markets, driving USD 14 million in sales for Black-owned and founded brands in August alone. Nordstrom onboarded 37 new Black, Hispanic, and Latine brands in 2022, bringing the total to 250 brands. The company sold USD 245 million worth of products from Black, Hispanic, or Latine brands last year, surpassing the interim one-year goal by approximately 24%. Nordstrom has affirmed support for the LGBTQIA+ community by signing on to the Human Rights Campaign’s letter in support of the Respect for Marriage Act and its Business Statement on Anti-LGBTQ State Legislation.

In terms of corporate governance, Nordstrom also made donations of over USD 12 million to more than 350 organizations, getting closer to its goal of donating over USD 50 million in the communities it serves by 2025.

Nordstrom’s impact on people, product and planet

What: John Lewis has launched its Christmas shops in stores across the UK.

Why it is important: The early launch of the Christmas shops in stores nationwide meets the growing demand for festive products and offers a range of experiences and personalized options for customers.

The company has seen a surge in demand for festive products since the launch of its online shop last month. Sales of Christmas decorations have increased by 25% compared to last year, and wreath sales have soared by 107%. The store is offering a variety of experiences and personalization options this year, including a pick and mix bauble station and Christmas markets featuring handmade products from local businesses. Santa's Grotto and "Tea with Santa" events will also be available in select stores. The store expects supersized decorations and Christmas lights to be popular this year.

John Lewis unveils new Christmas shops

What: Until recently, Fred Segal has had only five stores, mostly in Southern California. New outposts are opening in California with an eye toward Japan and China. New York and Miami are also considered.

Why it is important: Expanding Fred Segal's retail presence through new store openings is important for the brand's growth and accessibility to customers in different regions.

First up is a 2,100 square-foot store in Marin County near San Francisco followed by a 2,600 square-foot store on a premier shopping avenue in Santa Monica, California.

More locations are in the works. Recently, Fred Segal closed a New York City pop-up store in SoHo neighbourhood. The retailer is now considering a larger permanent location as the city is their second best area for e-commerce.

On the international front, Fred Segal has had a store in Seoul for two years. It was done in partnership with Hanwha Group and is located at the Galleria Luxury Hall. While Japan and China are in the pipe, e-commerce and private labels are still the primary focus.

Fred Segal to expand stores in US and in Asia

What: The Japanese retail market has tremendously evolved in the past 40 years.

Why it is important: Retailers know more than anyone else that past grandeur is not a safety belt for the future. Sogo has gone through its second major issue in less than 40 years.

Shopping mirrors societal shifts and nowhere is this clearer than in Japan’s department stores, which have evolved alongside the nation's capitalism. Tracing its roots back to 1673 with Echigoya, the journey of Japanese department stores is intertwined with the nation’s economic history. These stores, once symbolic of Japan's economic prowess, faced severe challenges during economic downturns, with significant events such as Sogo Co.’s major bankruptcy in 2000, and Sogo & Seibu Co.’s recent sale to a US fund after a historic worker strike. Such moves highlight the evolving business landscape in Japan, where even long-cherished institutions are being sold to foreign entities.

Although the industry experienced restructuring and a focus on domestic over international expansion, the iconic nature of some stores remains. Currently, there's a transition from premium department stores to discount electronics and online shopping, with younger generations favoring online platforms like Shein. However, flagship stores in major cities are surprisingly thriving, indicating a wealth shift to major urban centers. As Japan's societal norms and economic structures evolve, so will its iconic department stores.

How Sogo reflects the evolution of Japan

What: JC Penney is making a comeback after going bankrupt in 2020 and being purchased by SPG and Brookfield.

Why it is important: The brand aims at reinventing itself through a massive investment, but are customers really demanding that?

J.C. Penney is investing over $1 billion in a turnaround effort focused on improving customer experience and operations. This initiative includes a new brand positioning and campaign called "Make It Count," which centers on making fashion accessible, offering a compelling loyalty program, supporting local and cultural communities, and committing to positive change. The company is reviving its classic logo and aims to balance familiarity with forward-looking elements to appeal to shifting consumer shopping habits. J.C. Penney filed for bankruptcy in 2020 and was subsequently acquired by Simon Property Group and Brookfield Asset Management. The "Make It Count" campaign is the result of a year-long effort, including extensive consumer research.

JC Penney to pivot brand with a USD 1bn turnaround plan

What: Frasers Group sells a brand acquired a year ago to Shein.

Why it is important: It might say much more about Shein’s ambitions than Frasers Group’s woes Frasers Group bought Missguided out of adminitration for £20m in June 2022. The brand, founded in 2009, was under pressure with surging supply costs and waning consumer confidence. Details of the deal are to be announced.

Frasers Group to sell Missguided brand to Shein