What: Amazon is increasingly trying to cancel the notion of free delivery due to logistical costs.

Why it is important: This is a blessing in disguise for other retailers as Amazon has been the one disrupter forcing the rest of the market to propose free delivery as a norm. The fact that it changes its strategy might allow other retailers to finally find the adequate solutions to make e-commerce profitable.

In the US, Amazon.com is offering customers USD 10 (about EUR 9) to pick up their orders instead of opting for home delivery. This move aligns with other retailers aiming to reduce delivery and return costs amid a challenging consumer demand slowdown.

Amazon has emailed numerous Prime subscribers, offering them USD 10 to collect their orders of USD 25 (EUR 23) or more from designated pickup points, such as Whole Foods, Amazon Fresh, or Kohl's stores. Increasing the use of Amazon pickup points could help the company avoid costly parcel deliveries and reduce delivery costs. It also trains consumers to make returns directly to the company. Amazon has started charging some customers USD 1 (EUR 0.91) fees if they return parcels through UPS pickup points when an Amazon collection or return centre is closer to their delivery address.

Amazon has taken various measures to reduce delivery costs across the company after years of promoting quick and free deliveries and returns.

Amazon subsidizes customers who accept to pick up orders instead of receiving them at home (French)

What: Macy’s will open five more off-mall formats as its closes more of its giant mall anchors this year.

Why it is important: In a pivotal time for the retailer’s expansion strategy, its 10 off-mall stores have outperformed the rest of the company.

The department store group is focusing on off-mall expansion with mini-versions of its stores, Market by Macy’s and Bloomie’s, which are about one-fifth of the size of the retailer’s typical stores.

The company is targeting customers in fast-growing suburbs and busy shopping centers as it exits dying malls. The new and smaller stores feature a smaller assortment of popular brands with displays that change frequently to stay on-trend.

At the end of this year, the retailer will finish the test and learn phase of the stores and decide on expansion plans. For now, the CEO states that the size and locations are working and the retailer is hopeful to be able to scale the concept more aggressively in 2024.

The off-mall stores have performed better than the rest of the company, with comparable sales at the stores that have been open over a year grew 8% and 12% in the holiday quarter compared to a decline of 3.3% at Macy’s and 0.6% growth at Bloomingdale’s.

The new store formats have also drawn in younger and more diverse consumers, some of which are first time shoppers.

So far this year, Macy’s shares have dropped almost 26%, underperforming the nearly 7% rise of the S&P 500 and the roughly flat year-to-date performance of the retail-focused XRT.

In 2020, the retailer announced plans to close 125 stores over three years and lay off about 2,000 corporate employees. Currently, 80 Macy’s locations have been closed and the retailer has plans to close five more this year.

The off-mall shops have worked best so far in shopping centers with grocery anchors or stores such as off-mall retailers that draw traffic.

The retailer has found that shoppers at Market by Macy’s tend to be shopping for gifts or occasions and skew a little more towards men than other locations.

Bloomie’s stores have performed well in shopping centers with popular and higher-end retailers. The smaller format has been a way for the retailer to reach new markets and even features a restaurant concept and concierge-like service desk.

While these smaller off-mall formats look to be an opportunity for the retailer, challenges will still linger for the company as discretionary spending is expected to remain under pressure in the US and net sales are expected to decline by 1% to 3% in 2023.

Macy’s opens more strip mall stores as expansion strategy faces pivotal test 

What: The retailer is introducing more than 800 self-checkout tills and furthering developments to scan and pay as it looks to cut costs and make stores more efficient.

Why it is important: M&S has saved GBP 150 million in costs this year by investing in technology to increase retail efficiency.

The retailer is looking to cut costs by more than GBP 400 million over the next five years with many store initiatives including rolling out hundreds more self-service tills.

While around 70% of food sales at some stores are made through self-service checkouts or the retailer’s mobile app, M&S may face some challenges as evidence has shown that shoppers still prefer using traditional checkouts.

M&S stated that it’s monitoring customer reaction and feedback to self-checkout and stressed that traditional checkouts will still be available.

M&S to press ahead with self-service till rollout

What:  SM store muscles up its omnichannel and fulfilment capabilities with a new Distributed Order management system

Why it is important: the Philippines is a specific market but due its specificities in terms of customer behaviour, it could be very well an interesting example for other retailers in terms of approach to omnichannel business.

SM Retail, the largest retail chain in the Philippines, has launched its new Distributed Order Management System (DOM) with the help of Fluent Commerce, a cloud-distributed Order Management System (OMS), and Merkle, Dentsu’s customer experience company. This new system is designed to improve the customer shopping experience and streamline operations across SM Retail's network of stores.

The Fluent Order Management system has been deployed with the potential to be used by more than 50 brands nationwide, starting with ShopSM. The new system introduces features like click-and-collect and home delivery, providing customers with more convenient shopping, pickup, and delivery options. It also gives SM Retail a unified view of inventory, improving efficiency in managing stock in both stores and warehouses.

A significant benefit of the new system is its flexibility, allowing customers to pay online and pick up in-store, or vice versa. This adaptability caters to the changing needs and preferences of shoppers. The system also includes a dynamic logic to handle unique logistical challenges, such as sourcing and routing items from different locations during emergencies. This feature will be particularly useful in the Philippines, which frequently experiences adverse weather conditions, like earthquakes and typhoons.

SM Retail’s new system will enable it to seamlessly connect its online and in-store channels, offering its customers unprecedented flexibility in payments and fulfillment.

SM Stores revamps its Distributed Order Management System

What: A recent report has identified new payment consumer behavior trends for the next five to seven years.

Why it is important: Businesses need to adapt to the changing needs of consumers as they become more conscious of their consumerism, value new currencies and expect heightened experiences.

The report by Mastercard Signals focuses on three major trends: reimagining money, creating intelligent experiences, and sustainable futures.

Consumers are valuing new currencies and shifting towards the usage of non-traditional assets such as cryptocurrency, digital goods, and loyalty points. Because there are issues when these exchanges are made between the physical and digital world, programmable payments and new types of tokens such as stocks and digital assets could be solutions for the future.

The report also cites connected finance as a way to create more personalized and tailored consumer experiences. Customers are using third-party financial institutions for new banking and payment solutions such as Klarna (buy now, pay later). In the future, borderless payment rails will also create intelligent experiences as they look to solve the cash flow and commerce issue of exchanging goods, services and data across geographic borders.

Societal and environmental issues will impact companies as conscious consumerism becomes increasingly popular. The implementation of environmental, social, and governance strategies will be key as consumers expect brands to change alongside them and vote with their wallets.

The future of payment: upcoming trends

What: El Puerto de Liverpool’s 2 day or less delivery service accelerated to 35% in the first quarter in comparison to the previous year.

Why it is important: The Mexican department store group continues to see advances in its digital channel with figures that reflect the progress in its omnichannel approach.

Its Click & Collect option also saw an increase of 4% in comparison to 2022’s first quarter, reaching 36% of digital sales in Q1.

Liverpool Pocket, the retailer’s app, registered 16% more downloads than in Q1 of 2022, reaching an increase of almost 27% in active users.

In the first quarter of this year, the company raised its total revenue to 16.5% and its gross profit grew 17%, while net profit recorded a 4% decline.

El Puerto de Liverpool accelerates its express deliveries by more than 30%

What: Chinese tourists start to travel abroad in increasing numbers.

Why it is important: In spite of the length of visa processing and the scarce number of flights, many European operators expect Chinese tourists to come back in numbers within the summer 2023. It will be interesting to see if this is the case, or if S.E. Asia remains more attractive for now.

China's outbound tourism has surged during the May Day holiday, with mainland outbound travel bookings for the holiday multiplying by 18 times YoY, according to data from Chinese travel agency Trip.com Group.

The outbound group travel market was suspended in early 2020 due to the COVID-19 pandemic but resumed in February 2021. Hong Kong, Thailand, Japan, and Malaysia were the top travel destinations, and businesses abroad have warmly welcomed Chinese tourists as significant contributors to the international travel market.

The growth of outbound tourism also drives the recovery of the airline industry, and Dai Bin, president of China Tourism Academy, expects a sustained and accelerated recovery throughout 2023.

China’s outbound tourism booms during May Day holiday 

What: M&S unveiled growing food and clothing sales as it plans to modernize the business seems to be paying off.

Why it is important: The retailer’s profits beat expectations despite inflation.

M&S recorded a successful quarter with food sales jumping 8.7% to GBP 7.22 billion and clothing sales growing by 11.5% to GBP 3.72 billion.

The retailer’s pre-tax profit surged 23% on a statutory basis while group sales jumped 9.9% to GBP 11.98 billion. Like-for-like sales in clothing and home increased 11.2% and online and in store sales also reported increases. However, its Ocado Retail joint venture recorded a GBP 29.5 million loss for the business.

M&S has plans to protect its magic, exceptional product, trusted brand, and strong values while also modernizing the rest of the business.

In the food sector, M&S is focusing on value, reducing the number of promotions, and offering cheaper opening price points.

The company is also reducing the number of options in clothing and investing in categories that drive style perceptions.

The retailer is focusing on digital, with a goal to increase online sales and achieve a better margin for online.

M&S also has plans to invest in new stores with 20 “bigger and better stores” opening by 2024;

The company has set a target of 1% growth in market share in both clothing and food, and aims to bring its operating margin up to 4% in food and 10% in clothing over the next five years.

M&S clothing and food sales jump as profits edge up 

How M&S plans on protecting its magic while mondernizing its business

What: Lotte, Shinsegae, and Hyundai department stores have reported profits declining in the first quarter of the year.

Why it is important: The country’s top department stores are suffering from a slowdown in the economy and weak consumption.

The operator of the second largest department store in Korea, Shinsegae Inc., saw its operating profit decline 6.8% to KRW 152.4 billion in the first quarter. Sales at its department store unit grew 6.1% to KRW 620.9 billion however sales volume was unlikely to have risen as the prices continue to increase amid inflation.

Hyundai Department Store Co. also reported a decline in its operating profit, dropping 12.4% to KRW 77.9 billion. Its sales rose 17.5% to KRW 1.09 trillion and its earnings still exceeded analysts’ estimates which stood at KRW 42.7 billion.

On its side, Lotte Shopping Co.’s net profit fell 16.4% to KRW 57.8 million however its operating profit increased 63.7% to KRW 112.5 billion. Additionally, its department store unit saw sales increase by 7% to KRW 796 billion and operating profit increased 21.1% to KRW 131 billion in the first quarter.

All three department stores were estimated to have seen only single-digit growth in sales of luxury goods as wealthy consumers began to spend abroad and pulled back on their spending due to inflation and rising interest rates. In comparison, an increase of more than 30% in sales was reported for the first quarter of 2022.

Slowing economy slams South Korean retailers

Hyundai Department store Q1 results

Lotte Shopping Q1 results

Shinsegae Inc. Q1 results

What: The London department store is opening a 3,500 square foot beauty hall dedicated to haircare.

Why it is important: The “Beauty Workshop” will almost triple the department store’s hair care offering, including new services for a full range of hair types and textures.

Selfridges will become a one stop shop for haircare as it opens its new beauty hall, “Beauty Workshop.”

With a focus on expanding its offering for Black and textured hair types, the retailer has brought on new brands and services that cater to a full range of hair textures.

To attract customers into the space, Selfridges is offering a variety of services. Brands such as Ruka, Living Proof, and Aveda will have exclusive services and piercing services will also be available.

Selfridges’ beauty offering will also include a hair accessories edit including a variety of products from clips to beaded wigs as well as a jewelry edit and a weekly rotating pop-up space.

In the UK, the haircare space is booming as consumers spent GBP 6.2 billion on hair services and GBP 2 billion on hair products with the premium end of the market performing particularly well, seeing an increase of 80% in prestige hair product sales.

With new beauty hall, Selfridges bets on hair inclusivity

What: A war between new-gen fast-fashion players is taking place in the world.

Why it is important: Both Shein and Temu are expanding in the world, outside of China, which might suggest renewed competition on many markets where department stores are present.

Chinese online fast-fashion retailer Shein has established a regional headquarters in Dublin to manage its operations in Europe, the Middle East, and Africa (EMEA). This move comes shortly after Chinese competitor PDD Holdings made a similar decision.

The Dublin office will also serve as Shein's IT hub for the EMEA market. The new office is expected to create 30 jobs by the end of the year in areas such as data analytics, security, finance, and law.

This expansion comes as Shein faces competition from Temu, a global budget shopping platform launched by PDD, which has been rapidly entering new markets.

Shein opens regional HQ in Dublin 

What: A poll revealed that US executives expect the current inflationary cycle to end soon, with more respondents optimistic about the post-inflation period than in previous surveys.

Why it is important: In the US, inflation seems to be evolving into more of a short-term problem rather than a long-term problem.

A survey conducted by Kearney of more than 350 US executives across multiple sectors found that 40% of respondents were confident that the current inflation cycle is positive.

Kearney identified two types of inflation: demand-driven and cost-driven, with positive outcomes including a reset of stagnant categories, innovation cycles, and flexible pricing.

Despite ongoing impacts to supply chains, executives feel that the end is in sight.

Industry executives: Inflation is nearing its end

What: The American cosmetics group is creating Coty Campus, a digital space where employees will be able to communicate and receive awards.

Why it is important: The online platform will enable more collaboration and co-creation while also allowing the company to upskill its workforce.

Coty is the first beauty company to launch this type of project, leveraging Web3 and partnering with Spatial to create immersive experiences and interactive solutions for employees.

Each employee will have a customizable avatar and will be able to carry out traditional operations such as screen or document sharing and be informed about the group’s news and brands.

Coty also plans to set up a rewards system to encourage employees to use the new platform.

Coty launches an internal metaverse for its 11,000 employees

What: The Seattle-based department store has appointed Cathy Smith to succeed Michael Maher as chief financial officer.

Why it is important: With her extensive financial leadership, Smith is expected to help the retailer achieve its growth priorities.

Cathy Smith joins Nordstrom from Bright Health Group where she was serving as chief financial and administrative officer since 2020. She has held five senior-level positions at other major companies including Target and Walmart International.

Smith will replace Maher, who was serving as interim CFO and was instrumental in guiding the retailer through periods of transformation throughout his time with the company.

Nordstrom names a new chief financial officer

What: Through its Haciendo Escuela program, Falabella will train five students in front end web development.

Why it is important: The program adds to the retailer’s commitment to promote education and opportunities for young people in Colombia.

Through the support of Tiendas Falabella, Programate School, EducMas, and Fundcion Brillas, five students will be trained in front end web development to become creative programmers.

This initiative will allow students to develop skills that are highly valued in the labor market and contribute to their future, giving them opportunities for growth and career development.

In Colombia, 28 schools currently participate in Haciendo Escuela, the program in which Falabella stores fully support educational institutions in their area.

Falabella presents its new educational sponsorship program in Colombia

What: The Malaysian department company Parkson is facing financial difficulties in many countries where it operates.

Why it is important: While Vietnam is deemed as a strategic market for Central, Parkson is exiting it and files for bankruptcy. The article depicts an incorrect view regarding the state of department stores, as it seems that Parkson’s situation is more due to mismanagement than to a general context supposedly applying to all department stores in the world.

Parkson Holdings Bhd, a retail giant, is a significant casualty of this changing retail landscape, having filed for bankruptcy in Vietnam and dealing with ongoing debt issues at home. Its financial difficulties started before the Covid-19 pandemic, with losses for the financial year ending in December 2022 at RM119 million.

An early entrant in the Malaysian retail market, Parkson has downsized from 102 stores to around 80 since 2020, suffering significant losses due to decreased demand for premium items post-pandemic and the rise of e-commerce. While Parkson has ventured into e-commerce, there are concerns that this may negatively impact in-store sales. However, others believe that e-commerce could boost the growth of large retail chains by driving customers to brick-and-mortar stores.

Parkson faces difficulties in Vietnam and Malaysia 

What: UK-based JD Sport is unexpectedly healthy financially speaking in spite of financial adjustments.

Why it is important:  As it is currently eyeing Courir in France and other businesses in Spain, this might become a new regional player European department stores might have to count with.

JD Sports reported a nearly one-third drop in full-year profit due to a GBP 550 million charge related to the sale of smaller sports brands and the cleanup of previous acquisitions. Pre-tax profits for the 12 months to January 28 fell to GBP 440 million, down from GBP 654 million the previous year. However, when adjusted for these items, the company's profit before tax was GBP 991 million, up from GBP 947 million the previous year.

CEO Régis Schultz attributed the company's success to the shift from formal wear to leisurewear, particularly sneakers. Schultz, who took over in September, plans to open 1,750 stores over the next five years with an investment of nearly GBP 3 billion. Despite the profit drop, JD Sports expects to surpass the GBP 1 billion profit mark for the first time this year.

JD Sport profit falls after GBP 550mn charge 

What: The CEO-powered Fashion Pact is losing its high-profile members and so far delivered little more than a handful of pilot projects.

Why it is important: Fashion Pact was designed to bring together the industry’s decision makers to tackle an increasingly urgent and shared challenge: fashion’s negative environmental footprint.

So far, its impactrests on a handful of pilot projects. High-profile signatories, including Hermès, Selfridges and Stella McCartney have quietly left.

The initiative says fluctuations in membership are normal and after spending the last three years laying the foundations, it’s gearing up for swifter action.

Going forward, it plans to increase focus on tackling emissions in the industry’s supply chain, where most environmental impact takes place. Its efforts rest on a combination of resource and knowledge building and joint projects to test-drive potential solutions.

In addition to the renewable energy power purchasing project the initiative recently launched, it’s working on a pilot programme to explore ways to incentivise lower-impact cotton cultivation. But the strategy to turn these into impactful collaborations at scale remains vague.

Selfridges, Hermès quietly exit Fashion Pact amid slow progress

What: Von Maur Department Store was named the 2023 Retailer of the Year by the Accessories Council for its exceptional customer service, curated product offerings, and strong industry partnerships.

Why it is important: The department store’s commitment to providing great products and services to its customers as well as its legacy in the retail industry were key factors in receiving the award.

The Accessories Council Excellence Awards were established in 1996 to recognize companies, brands, individuals, and retailers that have made significant contributions to the accessories industry.

The department store joins an impressive list of recipients who have created memorable and history-changing impacts across the accessories industry

Von Maur is known for its selection of brand name and specialty apparel, shoes, accessories, and gifts, its superior customer service, as wells as its above-market wages and benefits.

The retailer, which operates 37 stores across 15 states, was also named the top department store in the US by Newsweek’s “America’s Best Retailers 2022.”

Von Maur named Retailer of the Year by Accessories Council 

What:  Shrinkage is a nationwide issue in the US

Why it is important:  Soon in your city?

New York City is implementing a comprehensive plan to combat a 44% increase in retail theft over the past five years. The strategy involves understanding the causes behind each theft and directing individuals towards appropriate services or the criminal justice system. The city is focusing on both preventing loss and improving the quality of life for store associates, customers, and communities.

The NYPD is particularly targeting repeat offenders, who accounted for a significant portion of retail theft arrests in 2022.

New York City cracks down on retail theft

What:  Attica pre-empts the Athens airport in order to make the most of international tourism resurrection

Why it is important:  Many department stores have tried such a venture in airports in the past, it will be interesting to see how Attica combines this experience with the expected opening of the new Hellenicon store in 2024.

Attica department store is targeting foreign tourists and has opened a 400 sqm space in the Athens International Airport, showing a selection of their products.

Attica’s tax-free sales improved by +52% in Q1 2023, in spite of the longlasting absence of Chinese tourists.

Attica opens a brand in Athens airport 

What: The Korean department store promotes national brands expansion.

Why is that important: This kind of activity boosts the retailer brand name and allows to generate additional revenues.

Shinsegae Group, a South Korean retail conglomerate, has launched a wholesale platform, "Kfashion82," for South Korean fashion brands.

The platform is part of Shinsegae's effort to boost the global K-fashion market and nurture talented designers. Kfashion82, which supports multiple languages and hosts over 100 domestic brands, aims to increase South Korea's fashion exports, which reached $345.6 million in 2022. The platform will officially launch on May 31, partnering with experienced logistics agencies for worldwide distribution.

Depending on sales performance, interest-free funds of up to 100 million won ($75,642) may be available to domestic companies. The platform utilizes an escrow-based payment system for secure transactions.

Shinsegae launches wholesale platform for Korean brands 

What: The department store has started laying off workers in its technology operations.

Why it is important: As technology remains a critical area of business, the retailer is adjusting their team structure and eliminating certain roles to operate more efficiently and remain agile.

The layoffs follow the announcement of the company shutting down its operations in Canada which will result in 2,500 employees losing their jobs.

The company’s new chief technology officer started his position on the same day that the tech layoffs were publicly confirmed.

Nordstrom is working to improve its data technologies to deepen its understanding of customers and is also rolling out radio frequency identification corporate-wide this year.

Nordstrom makes more cuts

What: Research from a customer experience platform has revealed key insights for brands to consider when adopting generative AI technology.

Why it is important: While early skepticism around generative AI is beginning to soften, customers still struggle to trust AI content more than human content.

Diqo, a customer experience platform, has been tracking customer perceptions of generative AI with an initial survey performed last March and another in April of this year to gauge the differences brands should know for successful adoption.

In the first survey, the results showed challenges for the technology, including low-level knowledge, overwhelming distrust, and a call for transparency as customers were worried about how AI will impact the future.

As customers have repeatedly been exposed to generative AI and received transparent communications, early skepticism is starting to soften.

Customers have still reported low knowledge and low usage, however the technology is exploding among certain with Gen Z being the fastest-growing segment.

Trust has improved slightly but remains a challenge in the space as 54% of users stated they trust AI content less than human content.

As a result, customers expect transparency when the technology is used as they also report low confidence in the ability to identify AI-generated content.

Researchers from Disqo stated that consumer buy-in will be a determining factor in whether generative AI sticks around or loses out to the next new technology.

Consumer sentiment around generative AI remains challenging