What: The department store will be hosting a pop-up with a London-based tattoo studio, to offer tattoos and piercings in a trusted and inclusive environment.

Why it is important: The initiative shows that high-end retailers are increasingly prepared to embrace products and services that might not have been on their radar previously.

The pop-up will be open for two months in the store’s beauty department and will feature a full line-up of artists from Debut Studios.

Harvey Nichols Manchester to host piercing and tattoo artists

What: Galeries Lafayette’s Indian partner enters a new product category.

Why it is important: Jewellery is a booming market, and this could provide Galeries Lafayette with the access to a very profitable new category too.

The Aditya Birla Group is investing about US$605 million to enter the retail jewellery business with a new venture called 'Novel Jewels'. This move is part of their strategy to tap into the growing Indian jewellery market, projected to reach $90 billion by 2025.

Additionally, the group's fashion business recently acquired a 51% stake in TCNS Clothing, which owns ethnic brands W, Aurelia, Wishful, Folksong, and Elleven, for $202 million. The deal marked one of the country’s largest acquisitions in the Indian fashion industry.

Aditya Birla Group enters jewellery 

What: Generative AI is growing in popularity in retail and companies are racing to supply the tools as the technology is set to super-charge the industry.

Why it is important: Generative AI has the potential to revolutionize the industry and transform customers’ shopping experience, from customer service to marketing and personalization.

Retail is facing an abundance of AI platforms that use machine learning, neural networks, deep learning, generative adversarial networks, and stable diffusion.

Generative AI is an obvious fit for retail, as shopping is a uniquely human experience that often relies on warmth and relationships. This version of AI has traits that are closely humanistic in how it communicates, serves up information, presents analysis, and creates or edits content.

ChatGPT is one of the most obvious examples, which is OpenAI’s generative responsible for setting off the current momentum.

Since OpenAI released software development tools in March, an explosion of new services and feature updates erupted, as well as competitors.

Google is targeting retail with its technology such as its Google Cloud partnership with Shopify and other offerings such as using AI to develop an apparel try on functionality for fashion search or its code generation and completion tool for creating chatbots.

Companies can also use AI models like Imagen and Chirp to create studio-quality visuals and support speech-to-text conversion in multiple languages

AI also has the potential to revolutionize e-commerce by creating personalized and curated shopping experiences, reducing operating expenses, and increasing speed to market for new products. However, challenges such as data quality, security risks, and the lack of industry-wide standards need to addressed in order to ensure a trusted and effective customer experience.

Researchers at IHL Group estimate that the impact of generative AI on the retail sector will boom over the next several years, hitting USD 9.2 trillion by 2029.

Rise of the retail bots

What: A post-modern review of what it took for department stores to go through the pandemic.

Why it is important: While this article is not ground-breaking, it is a nice reminder of the extent of transformation department stores went through because of this event.

Department stores, which have faced challenges due to the rise of online retail and the decline of malls, adopted various strategies during the COVID-19 pandemic to stay afloat. These strategies include:

1. **Curbside Pickup**: This enabled customers to order online and collect purchases from the store's parking area. While this existed pre-pandemic, its use significantly increased during lockdowns, highlighting the importance of customer safety.
2. **Extended Product Return Windows**: By giving customers more time to return products, stores ensured customer satisfaction and loyalty.
3. **Virtual Try-On Technology**: This allowed customers to virtually try on products from home, reducing the need for physical store visits. It gained popularity during the pandemic and is likely to continue being valuable post-pandemic.

The success of department stores in navigating the pandemic was largely due to their ability to adapt and innovate. By restructuring operations, enhancing efficiency, and reducing business risks, stores that were adaptable retained customer trust and loyalty. Moving forward, department stores can capitalize on their strengths, such as a wide range of products and brand history, and stay attuned to consumer trends to reclaim their relevance in the evolving retail landscape.

Department stores survived the pandemic thanks to adaptation and innovation 

What: Property developers in China are set to build 8 million square meters of retail space, a sign of long-term confidence in the currently troubled but increasingly competitive market.

Why it is important: Despite a property slump and low consumer sentiment in the mainland, a higher-than-usual volume of new retail space is set to launch this year.

Due to a regulatory tightening on mainland Chinese developers, Hong Kong firms are jumping on the opportunity to expand further into the mainland.

Hongkong Land, the developer behind the Landmark mall and other global brands, plans to invest USD 8 billion in a luxury retail mixed-use scheme in Shanghai. It also plans to build ten malls in six other cities across the mainland and two new mall concepts within the next five years.

China is heavily mall-based, with 78% of first stores opened by retailers being located in shopping centres. This means that relationships with mall landlords can make or break a brand’s business.

Around 8 million square meters of new retail space will launch in China this year, an increased number due to the delays caused by the pandemic.

Despite lower consumer sentiment, many businesses are confident that the mainland Chinese consumer growth story remains intact for the long-term and middle-class consumption is still set to rise.

Swire Properties will also invest HKD 50 billion (USD 6.4 billion) to grow its Taikoo Li and Taikoo Hui mall brands in tier-one and emerging tier-one cities and some mainland firms are in expansion mode despite the regulatory tightening on debt levels.

Hong Kong developers increasingly find themselves pitted against developers from Asian countries: Malaysia’s Kerry Properties and Singapore’s CapitaLand are two examples. Newer developers like Urban Revitalization Force, which is constructing half a dozen TX malls in the country, are taking a different approach by carving out a niche: youth culture and investing in local brands.

China’s fashion mall developers in turf war

What: Carrefour is multiplying use cases with ChatGPT, including a new bot helping customers to do their groceries.

Why it is important: Many options are explored: product management, procurement process, but this new way of interacting with customers while actually helping them to save time might be a breakthrough in the use of AI in retail.

Carrefour has introduced a new AI chatbot, Hopla, on its website to assist customers with their shopping. The chatbot, based on OpenAI's GPT-4 technology, can suggest recipe ideas and shopping baskets based on user inputs such as budget, dietary requirements, and menu ideas.

The retailer is also using AI to improve its product sheets and support internal procurement processes. Such AI initiatives, developed in partnership with Bain & Company and Microsoft, are part of Carrefour's strategy to enrich customer experience and transform its operations.

How Carrefour is working with ChatGPT 

What: Walmart aims to become a destination for fashion customers.

Why it is important: Low prices strategy is not sustainable on the long term in a digital world. More is expected by customers in physical locations.

Walmart is undergoing a transformation to attract higher-spending customers by adding pricier merchandise, including collaborations with celebrities like Drew Barrymore and Sofia Vergara.

The retailer is shifting from its traditional image as a discount store to becoming a destination for fashionable home goods and clothing. As part of its “Stores of the Future” initiative, Walmart is renovating 700 stores and introducing national brands like Reebok and Justice, with most goods priced between USD 15 and USD 50.

The company aims to convert its price-conscious customer base into style-conscious shoppers. However, Walmart's earlier attempts to branch into fashion have been unsuccessful, and the new strategy presents risks and challenges in the highly fragmented markets for home decor and apparel.

Walmart is using its grocery activity to draw customers, and keeps them with a new brand assortment 

What: Unified Commerce presents an opportunity for retailers to simplify and reduce complexity while maximising efficiencies by removing all barriers between offline and online commerce.

Why it is important: Studies have shown that successful implementation of Unified Commerce results in companies experiencing higher organic sales growth than their peers. Additionally, experts agree that investing in Unified Commerce is crucial to delivering a holistic seamless customer experience.

Unified Commerce remains somewhat of an emerging concept for retailers and the fashion industry remains largely unprepared for it.

However, a recent survey conducted by Bain & Company found that retailers are enthusiastic about Unified Commerce and 75% of respondents stated that it was a very or extremely important element of CRM. The majority also agreed that it would benefit profitability, employee experience, and inventory management.

Unified Commerce connects omnichannel’s customer-facing focus with the myriad of backend systems associated with running a retail business; it allows retailers to have one promo engine that serves all channels.

Successful implementation of Unified Commerce can result in organic sales growth and aid in creating a seamless customer experience. This is more important than ever as customers expect the same level of personalised experience online as they would in-store.

Ease of deployment and ability to integrate are important for the successful implementation of Unified Commerce. UC can’t be exclusively an IT responsibility and companies must check with store operations to ensure that the technology is easy to use and making their jobs easier.

According to the Bain survey, POS and inventory management are the areas of business retailers believe would be most impacted by Unified Commerce, followed by marketing and order service management.

What is Unified Commerce and why is it so important for fashion retailers? 

What: The Dallas-based luxury retailer reported a 9% drop in revenues and a 25% decline in earnings before EBITDA to USD 124 million.

Why it is important: Luxury US consumers are starting to spend less on fashion and more on travel and services, impacting luxury retailers such as Saks and Neiman’s.

Despite the decline, results indicated a normalizing of sales since the summer and were also consistent with the company’s expectations.

The group saw strength with its most valuable customers as they are less impacted by the macro environment and continue to buy with strength, especially in shoes, jewellery, and men’s.

While NMG’s inventory is up compared to last year, the retailer is looking to reduce expenses and ensure that its inventory matches demand for the next fiscal year as it is also impacting margins.

Gross margins continue to be pressured by the highly promotional environment and negative year-over-year comparisons are attributed to last year’s pent-up demand and record full-price selling across the luxury industry.

The group believes that it’s growing in the right places amid the difficult economic environment, thanks to its business model and focused strategies that put it in a strong position to deliver long-term, sustainable, and profitable growth.

In its last fiscal year ended July 31, NMG recorded USD 5 billion in revenues on a gross merchandise value basis and generated USD 495 million in adjusted EBITDA. According to the company, liquidity remains above USD 1 billion.

Neiman Marcus posts challenging quarter

What: Walmart’s CFO and head of investor relations outline how supply chain automation, in-store technology and remodels are impacting labour, sales, and consumer behaviour.

Why it is important: Walmart is investing in digital innovation which is allowing the retailer to increase productivity, reduce costs, and provide a better experience for customers.

The executives shared that customers who have a good experience on e-commerce are more likely to come back, as they become more accustomed to online shopping for groceries, they add in more general merchandise to their baskets.

Digital upgrades for its supply chain and stores is changing how employees do their jobs, for example,  investments in electronic shelf labels are saving workers from hours of work.

Walmart is also looking to make stores more efficient by using micro-fulfilment centres and automated storage and retrieval systems in its facilities. Additionally, they are outfitting existing distribution centers with automated storage and retrieval systems.

Their efforts to make an automated supply chain are making it more efficient and enabling them to better serve customers with reduced wait times and more accuracy in selecting items.

Once the supply chain transformation is complete, Walmart is expecting its unit economics around fulfilment to improve by 20%.

Some of the remodelled stores are seeing a 20% uplift in sales. The refreshed locations include wider aisles, improved signage, displays around apparel, and more brands. While the retailer notes that its is typical to see an increase in sales after a remodel, the uplift they have seen around this remodel has been much higher than usual.

Despite 65% of the stores being served by automation in the future to create a better experience and lower unit costs, the retailer doesn’t expect to make major changes to its associate headcount. They plan to redeploy individuals to do different jobs as well as upskill the workforce into positions that are serving the customer more or contributing to the overall technology.

With Walmart+, the retailer’s membership program, more digital engagement is possible with customers, allowing Walmart to better understand and tailor their offerings. Subscribers of the membership program tend to be younger, tech-savvy, more affluent and come through the grocery delivery or pickup channels. These members tend to shop more frequently and spend more than nonmembers.

While Walmart is focusing on digital innovation, convenience is an important part of where the retailer is headed as consumers highly value grocery pickup and delivery.

5 takeaways on digital innovation from top Walmart execs

What: Generative AI is all across retail now but should not be reduced to ChatGPT only.

Why it is important:  There are many use cases currently in use, but the future is not yet written and there remains many to be built.

Generative AI (GenAI) is revolutionising various industries, including retail, by offering an array of applications and solutions:

1. **Improved Personalisation**: GenAI enables hyper-personalisation by creating content that resonates with individual consumers, based on their behaviour and preferences. It allows for dynamic pricing, targeted products, and personalised incentives.
2. **Visual Search**: GenAI facilitates visual search where customers can find products by simply using an image. For example, Louis Vuitton's mobile app allows users to take photos of a bag and guides them on how to purchase it. GenAI can also analyse social media and fashion magazines to identify emerging trends.
3. **Product Demo Videos**: GenAI assists in creating product demo videos by generating scripting, storyboarding, video content, and voiceovers. It can also enable virtual try-ons and analyse user-created videos for feedback.
4. **Customer Service Enhancement**: GenAI helps in reducing the time-to-resolution for customer service queries by equipping call-centre agents with information and optimised conversation scripts. It can also assess a customer's mood during a call and adapt responses accordingly.
5. **Price Optimization**: By analyzing market data, competitive pricing, and consumer behavior, GenAI enables dynamic pricing strategies that help retailers increase revenue and remain competitive.
6. **Supply Chain Optimisation**: GenAI can streamline supply chains by generating efficient transport plans with optimised routes, minimising expenses, and ensuring timely deliveries. It can adapt to disruptions and manage risks.
7. **Inventory Management**: GenAI transforms inventory management by forecasting demand through analysis of historical sales data, market trends, and customer reviews. This helps in optimizing inventory levels. GenAI can also generate negotiation strategies with suppliers based on past data and market conditions.

However, there are challenges associated with the use of GenAI:

-    **Content Verification**: The source of GenAI-generated content might not always be verifiable, leading to potential plagiarism and legal risks.

-    **Bias and Discrimination**: GenAI systems might inherit biases, which could lead to unfair or discriminatory outcomes.

-    **Data Privacy**: Retailers must handle customer data responsibly to comply with security, data protection, and privacy laws.

It is crucial for retailers to adopt a human-centric approach when employing GenAI, beginning with small-scale applications to understand its functionalities before expanding to high-stakes business operations.

Beyond the hype, what retailers can do with AI 

What: Neiman Marcus executives are expected to discuss the possible selling of Bergdorf Goodman and the entire company this week.

Why it is important: The speculation is representative of the current state of the luxury market in the US and the potential sell could decrease the overall value of Neiman Marcus.

According to sources close to the situation, Neiman Marcus is set to meet with potential buyers this week.

With profitability decreasing, sources state that Neiman’s minority owners are looking to exit while its majority owner wants to maintain control and is optimistic about a turnaround.

The speculation comes as Bergdorf’s financials were leaked earlier in the month, showing that profitability had decreased, and revenue dropped 9% to USD 1 billion.

Neiman Marcus weighs possible sale of Bergdorf Goodman

What: The Australian department store’s difficulties have increased since its purchase by Anchorage Capital Partners.

Why it is important: The situation of department stores in Australia is very dire and different from the rest of Asia. Opportunities for new entrants might arise as real estate is going to free up with store closures.

David Jones, one of Australia's largest department stores, is facing uncertainty as it records a significant decline in sales revenue. The downturn is seen across its urban, rural, and suburban stores as consumers shift to online shopping and tighten their budgets due to repeated interest rate hikes and soaring inflation.

The store chain has struggled to meet its June targets following interest rate increases by the Reserve Bank of Australia in May and June. Sales have dropped by about 10% compared to the same period in 2022.

The decline in sales comes just months after David Jones was sold to Anchorage Capital Partners for $100 million. Despite the challenges, reinvestment in the stores is planned, with a focus on both in-store and online shopping experiences.

David Jones woes are not over 

What: Google is utilising AI to allow US-based users to view clothing on a selection of models in a virtual fitting room.

Why it is important: Google is rolling out this feature as a response to the increasing demand for hybrid ways to shop online, as Google reported that 59 percent of shoppers felt dissatisfied with an item they shopped for online because it looked different on them than expected.

Now, through the feature, customers can select models that range in sizes XXS to 4XL and represent different skin tones, body shapes, ethnicities and hair types.

Google said that the generative AI model also has the ability to take an item of clothing and accurately reflect how it would drape, fold, cling, stretch and form wrinkles on the body.

Alongside this, the platform’s new guided refinements can help shoppers fine-tune products, with machine learning and visual matching algorithms in place to refine inputs like colour and style.

Google unveils AI-powered try-on feature for clothing 

retail dive article

What: Harbour City, Hong Kong’s largest mall, is focusing on luxury to attract consumers.

Why it is important: Having an exclusive product offering and providing luxury experiences are key in attracting customers as consumer behavior changes during the post-pandemic era.

While Hong Kong is seeing a return of tourists, its retail property owners and tenants are being threatened by the prevalence of e-commerce and competition from other Chinese locations.

Harbour City has long been a destination for high-spending Chinese tourists, however, sales are being hindered by limited flight capacity and product supply issues for brands. While these issues are expected to be resolved and Harbour City has seen sales and foot traffic return to more than 70% of its 2019 peaks, the mall is having to work harder than before to attract customers and get them to spend as they previously did.

With growing signs of consumer spending on the mainland and the weakening economy putting pressure on consumers, the mall is focusing on its exclusive offerings and strengthening its relationships with popular brands.

As a result of this changing consumer behavior, landlords and retailers in Hong Kong have to offer more than just space. Harbour City has 530 meters of high fashion frontage that includes all the big names such as Chanel, Louis Vuitton, and Prada. The flagship stores offer exclusive or limited products to attract customers to visit these specific locations.

Hong Kong’s biggest mall amps up luxury appeal to compete for shoppers

What: A new retail media company has born in Europe.

Why it is important: The goal is to federate as many retailers as possible, and Unlimitail include for now Galeries Lafayette and Luisa Via Roma, alongside Rakuten, Kingfisher France of Showroomprivé, for instance.

Carrefour and Publicis have launched a joint venture called Unlimitail to exploit retail media in Europe and South America.

Unlimitail aims to meet the growing demand for retail media by combining Publicis' advanced technologies with Carrefour's expertise in the field. The platform has already partnered with 13 entities, encompassing over 120 million customers and 1.5 billion monthly page views globally.

Retail media, which allows advertisers to target shoppers with personalized promotions based on consumer data, is a rapidly expanding industry. Through Unlimitail, Carrefour and Publicis aspire to become major players in the retail media sector, which is currently dominated by Amazon.

Carrefour and Publicis create retail media giant 

What: Luxury is set to pursue its growth in 2023 in spite of uncertainty.

Why it is important:  Luxury brands are key contributors to department stores’ growth, and should continue contributing to it again this year.

Bain & Company's Luxury Goods Worldwide Market Study - Spring 2023 reports a record year for the personal luxury goods market in 2022, reaching €345 billion.

Despite geopolitical and economic uncertainty, growth of 9-11% continued into Q1 2023. Factors contributing to this growth include hyperinflation decrease, local consumer confidence recovery in Europe, China's reopening and easing of zero-Covid policy restrictions, and positive momentum in Japan and Southeast Asia. A slowdown is expected in the US due to fears of a potential recession.

For brands to succeed, the study suggests focusing on consumers, balancing exposure across geographies, offering high-value propositions, and promoting iconic, timeless pieces.

By 2030, the luxury goods market is predicted to be 2.5 times the size of the 2020 market, reaching between €530 and €570 billion.

We will upload the full report as soon as possible.

The 2023 Bain – Altagamma report on luxury is out 

What: Galeria has closed 19 stores as part of its restructuring efforts, with a further 22 stores expected to close by January next year.

Why it is important: Germany’s largest department store group is undergoing major changes after the completion of its insolvency proceedings, with plans to close around 129 of its branches.

Following the completion of the group’s insolvency proceedings, Galeria has closed 19 stores this month.

Despite the closures, one branch in Dusseldorf was able to come to an agreement with its landlord and will remain open.

At the end of the restructuring process, Galeria will have 88 branches remaining according to previous plans.

Galeria closed numerous department stores this month

What: The retailer reported a first quarter net loss of USD 205 million and loss per diluted share of USD 1.27.

Why it is important: Nordstrom was impacted by declining revenues and charges associated with its withdrawal from Canada, however, the retailer still beat market estimates for first quarter sales.

Nordstrom has recorded a net loss of $205m in Q1, due to declining revenues and charges linked to its withdrawal from Canada.

Its first quarter 2023 results contained a pre-tax charge of $309m correlated with drawing down Canadian operations, which is still in progress. The shutdown of Canadian operations, which includes 6 department stores, seven Rack stores and e-commerce, is expected to be finalized in June.

Revenues for Nordstrom fell 11.6% from Q1 2022, including 175 basis points negative impact related to the Canadian withdrawal.

Digital sales decreased 17.4% year-over-year, adjusting for the effect of lower supply resulting from the pandemic.

Most categories in the US were down versus 2022. Activewear was the strongest category while beauty and men’s apparel performed above average.

Designer sales were the toughest category for the retailer as post-pandemic trends slowed, with men’s dresswear being the biggest contributor to sales.

The company anticipates revenues will drop by 4 to 6% this year.

Nordstrom reports first quarter 2023 earnings

Nordstrom reports first quarter 2023 earnings WWD Article

What: The new Yoshiko salon at Bergdorf Goodman never managed to take off and is closing down.

Why it is important: Services and experiences are crucial in today’s retail, however these need to be carefully crafted in order to answer an actual need. Yoshiko never managed to catch up with Barrett, which was a meeting point for the city’s socialites.

Salon Yoshiko, located on the ninth floor of Bergdorf Goodman, will close on July 3rd, 2023. The salon, which occupied a 4,500-square-foot space and offered beauty services, opened in 2019.

The closure, mutually agreed upon by Yoshiko and Bergdorf Goodman, is primarily due to economic reasons. The space previously housed John Barrett’s salon and before that, was a penthouse apartment for the Goodman family.

The closure will affect 52 employees. Salon Yoshiko’s Palm Beach location remains open.

Beauty salon at Bergdorf Goodman to close 

What: La Rinascente doubles down with its local anchoring by inking a partnership with the iconic Florentine fashion fair.

Why it is important:  It is an astute way to at the same time proclaim its attachment to the city of Florence, and benefit from its visibility and positioning.

Italian department store group Rinascente is celebrating the renovation of its Florence store with a two-day 'Be Florentine' event. The event will kick off with a private concert for 250 international guests and continue with a live show at the Purple Gallery.

The renovation of the Florence store, which began in 2018 and ended in 2021, has given the interiors a quintessentially Florentine feel. The store now stocks 800 brands, about 100 more than before, with a focus on fashion and emerging labels.

The event will also showcase the work of an emerging designer selected from the Pitti Uomo competition.

Rinascente's e-tail sales are expected to reach €100 million within three years, and the company plans to exceed its pre-Covid revenue results this year.

La Rinascente teams up with Pitti in Florence 

What: H&M posted slightly weaker-than-expected fiscal second-quarter sales.

Why it is important: Although Q2 sales were flat, the Swedish retailer prospects for a better third quarter after a strong start in June, sent shares in the retailer up by 6 percent.

H&M said sales measured in local currencies for its March-May quarter were “flattish”, compared with the average analyst forecast for a 1 percent gain, according to a Reuters poll. Net sales rose 6 percent to 57.6 billion crowns ($5.36 billion).

H&M reports weaker-than-expected Q2 sales 

What: Mytheresa is opening its newly expanded, 300-square-metre menswear store in Munich.

Why it is important: The luxury multi-brand retailer has expanded and updated its bricks-and-mortar menswear store to grow the men’s business as trends shift.

The retailer looks to seize the growing opportunity in men’s fashion with more space for brands like Loro Piana and Brunello Cucinelli to reflect “what is going on in the market” as  luxury menswear consumers show a growing preference for luxurious basics and design-led styles over ostentatious, logo-heavy fashion.

Mytheresa entered menswear in January 2020 and opened its dedicated physical store in Munich as well as on its e-commerce site. It has since made efforts to gain a stronger foothold in the menswear space and catch up with competitors, after focusing primarily on womenswear.

The category now accounts for 10 per cent of the business, and reported that it shows healthy growth.

Mytheresa opens bigger men’s store with focus on ‘timeless luxury’ 

What: The London department store will feature The Diamond Lab, a lab-grown diamond brand, in its jewelry and luxury watches department.

Why it is important: The development of lab-grown diamonds aligns with Selfridges’ efforts to become more sustainable and reinforce its luxury positioning as lab-grown stones are more ethical and gaining in popularity.

Selfridges is welcoming The Diamond Lab as the first lab-grown diamond brand to appear in its Wonder Room. The department store previously added pieces from Vrai to its online offer however, a presence in-store is a larger endorsement for lab-grown gems targeting the luxury shopper.

The in-store offer will cover three collections with prices ranging from GBP 375 to GBP 350,000. A limited-edition Yellow Diamond line will also be available featuring Selfridges’ signature color, yellow.

To celebrate, Selfridges will be inviting customers to enjoy experiences such as jewelry design workshops to create custom jewelry or design their own pieces from The Diamond Lab.

With the diamond trade facing negative publicity, lab-grown gems are growing in popularity given that they are more ethical and offer superior quality.

Selfridges links with lab-grown diamond brand in-store