What: Zalando is launching a beta version of a fashion assistant powered by ChatGPT.

Why it is important: The technology will make navigating the website easier and help customers find items that meet their specific needs.

The assistant will allow customers to ask questions in their own fashion terms and words, making the website’s large assortment easier to navigate and sort through.

Customers can ask the fashion assistant what to wear for a specific event in a specific location, and the bot will understand what the weather is like and what kind of event it is and provide a written explanation with recommendations.

In the future, this may be combined with customers’ preferences, like brands they follow and products that are available in their size to deliver a more personalized selection.

Zalando launches ChatGPT assistant in Germany, Austria, UK, and Ireland

What: Nordstrom’s off-price division is in expansion mode, rebranding, and correcting past mistakes.

Why it is important: The retailer will be opening 20 new locations that are more conveniently located to its customers while also rebranding to better communicate its value proposition and better meet customers’ expectations.

The Rack’s Q4 sales were down 8.1% compared to the previous year, but 2022 sales were up 1.1% to USD 4.8 billion from USD 4.76 billion in 2021. Nearly two years ago, the retailer took some strategic bets that didn’t yield successful results and is now looking to correct those mistakes.

Nordstrom Rack is now focusing its strategy on its value proposition, “great brands at great prices” as they learned that customers come to stores for great brands with a ‘price first’ mentality. The retailer is rebranding with a new logo, ads, and messaging that better communicate the value proposition and connect to the upscale Nordstrom name.

Additionally, the Rack is resetting its merchandise mix by prioritizing 50 well-known and productive brands that are already sold at the full-price stores. 90% of the top 50 brands at full-line stores are also carried at the Rack, making up 60% of what’s been ordered for the first half of this year.

The retailer is also focusing on its “Closer to You” strategy which advocates bringing conveniences to customers, through the opening of 20 Rack stores in nine states this year. Nordstrom found that customers won’t drive more than 15 minutes in the off-price world, making location extremely important.

Inside Nordstrom's strategy for Nordstrom Rack

What: ThredUp released is 11th resale report, revealing that the global secondhand market is set to nearly double by 2027, reaching USD 350 billion.

Why it is important: The report’s global findings prove that resale is a mainstay of consumer retail and consumers are increasingly seeking out and participating in the secondhand market.

For retailers, resale often drives ROI and investor approval in many cases. Around 58% of retail executives consider resale “table stakes”, a six-point increase from 2021.

Additionally, 86% of retail executives state their customers are already participating in resale, up 8 percentage points from 2021.

In 2022, 88 brands launched dedicated resale programs, a 244% increase from 2021.

Global Secondhand Market to reach USD 350 billion by 2027, ThredUp says

What: The Chilean retailer has appointed Enrique Ostalé as its new president.

Why it is important: This is a historic milestone for the company, as Ostalé will be the company’s first president outside of the owner’s family.

Ostalé will replace Carlo Solari, who led the company for nearly a decade and will now become the director of the retailer.

Previously, Ostale held the position of CEO for Walmart International and will hold his new position with Falabella from 2023 to 2026.

The company has also announced Juan Carlos Cortés as Vice President.

Falabella announces Enrique Ostalé as new president

What: Luxury brands have been looking to Europe with renewed interest as some key cities move up the luxury agenda while smaller but fast-growing gateway markets are on the rise.

Why it is important: While new store activity has typically followed Chinese luxury consumers, luxury brands are looking towards emerging markets with redevelopment opportunities and global cities with prime rents.

In 2022, there was an 11% increase in new luxury store openings compared to the previous year.

Europe saw a 77% increase in luxury store openings and now accounts for 23% of all new openings globally. Cities such as Amsterdam, Madrid, and Milan benefitted from domestic and international tourist figures, with London being one of the most active luxury markets in Europe and maintaining the top spot for new store openings.

In Asia (excluding China), the global share of new store openings increased to 12%, the Middle East rose to 6%, and North America remained flat at 14%.

China saw the most significant decline in new openings with 41% of the global share compared to 55% in 2021. While brands agree that it remains an important market, they have also realized the need to diversify their portfolios.

While there may be fewer store openings in 2023, demand is expected to remain sturdy as reduced rents in key luxury destinations offer brands the opportunity to secure new, more attractive spaces.

Rental costs are at least 10% lower than levels seen in 2019 in a number of key luxury cities such as Toronto, Hong Kong, and London.

Ultra-luxury brands accounted for 68% of all new store openings in 2022, while the three biggest luxury groups, LVMH, Kering, and Richemont, prioritized relocating and upsizing existing sites. This was driven by increased availability and rebased rent due to the pandemic.

Thanks to elevated hospitality offerings and modern retail developments, smaller “alpha” cities such as Amsterdam, Milan, Madrid, and Toronto are seeing success.

In North America, New York, LA, and Miami are still a priority, but luxury brands are increasingly looking towards regional cities that are experiencing significant growth in wealthy households.

Southeast Asia has drawn the attention of luxury brands over the past year with standout markets including Singapore, Thailand, and Vietnam as they all are experiencing growing economies and expanding HNWI populations.

Where to next? Mapping luxury’s retail hotspots in 2023

What: 19 Galeria stores are on strike but remain open, in order to yield on the collective negotiations affecting 4,000 employees.

Why it is important: The Verdi service union’s approach brings significant pressure on the negotiations with a retailer in a hurry to engage in closing sales, while at the same time keeping a positive image (and, by mirroring effect, putting the blame on GKK).

Employees at 19 department stores of the insolvent Galeria Karstadt Kaufhof group participated in all-day warning strikes across three German states: Hamburg, Baden-Württemberg, and Hesse. Despite the strikes, the shops remained open.

The Verdi services union called for the work stoppages in response to deadlocked collective bargaining for the approximately 17,000 employees, demanding recognition of regional retail trade agreements.

The company's restructuring plan, approved by creditors, aims to close 47 of the 129 branches nationwide, resulting in a loss of around 4,000 jobs.

Galeria Karstadt Kaufhoh stores are on strike in 3 German federal states 

What: The iconic homeware retailer has begun to close down locations.

Why it is important: The strategy initiated in 2019 came straight from the playbook, including heavily relying on private labels, but this did not allow being competitive enough in front of e-commerce players fast enough.

Bed Bath & Beyond filed for Chapter 11 bankruptcy protection after years of losses and failed turnaround efforts left the company short of cash.

The retailer plans to close all 360 Bed Bath & Beyond and 120 Buybuy Baby stores eventually. Top lender Sixth Street Partners provided $240 million in financing to keep the company operating during liquidation. Bankruptcy offers Bed Bath & Beyond the chance to conduct going-out-of-business sales and seek potential buyers for remaining assets. The company may pivot from liquidation plans to a sale if a bidder emerges.

The store closures will impact retail landlords, but big-box retailers like Barnes & Noble and Burlington have shown signs of expanding after years of reducing their real estate footprints.

Bed, Bath and Beyond started to be unprofitable only in 2019, with ecommerce players starting to eat the pie. Activist investors forced the founders, then at the board, out, and replaced them with a CEO coming from Target. Noncore businesses were sold, real estate was sold and leased, and name brands were replaced by private labels. However, both the pandemic, its consequences and the e-commerce competition prevented the new strategy to be working.

Bed, Bath and Beyond files for bankruptcy 

What: American Eagle launches a second-hand store in partnership with ThredUp, which will be heavily supported by marketing activations on Snapchat.

Why it is important: Properly marketing second-hand now also goes with a social dimension, to make sure it is visible from the younger digital clientele, and not in stores and traditional channels only.

American Eagle has partnered with ThredUp to launch RE/AE, an online resale shop offering vintage and secondhand items to cater to environmentally-conscious Gen Z consumers. To promote the 200-piece collection, American Eagle collaborated with Snapchat to create a shoppable augmented reality lens.

The RE/AE shop, powered by ThredUp's Resale-as-a-Service, allows users to filter items by pre-owned or vintage status and offers affordable prices.

The Snapchat AR lens lets users virtually browse items and educates them on sustainability.

This initiative aligns with American Eagle's goal of becoming carbon neutral by 2030 and continues the brand's efforts to engage Gen Z through targeted marketing campaigns and partnerships.

American Eagle brings secondhand clothing shop to Snapchat 

What: The former subsidiary of Finnish Stockmann department store in Russia, now fully independent, is planning to open 16 new stores this year.

Why it is important:  This is a perfect case of potentially dangerous PR case in terms of media exposure, as general public might not be aware that Stockmann in Finland is not related to the Russia operations anymore.

Stockmann Russia plans to open 16 new department stores across the country in 2023, capitalizing on the availability of high-quality real estate left vacant by foreign companies after Russia's invasion of Ukraine.

CEO Gennady Levkin revealed that the expansion will include cities such as Moscow, Sochi, St. Petersburg, Krasnoyarsk, and Perm, with a total investment of approximately RUB3 billion ($36.7 million).

Despite past political turmoil, Stockmann has remained a symbol of Russia's embrace of the West since opening its first store outside Finland in Moscow in 1989. Originally founded in Helsinki, the company now has 12 locations in Russia, primarily in Moscow and Saint Petersburg, and is owned by Reviva Holdings.

Stockmann Russia plans 16 new stores in 2023 

What: John Lewis teams up with the Open University to offer undergraduate scholarship to young people in care.

Why it is important: Even thought the company is going through difficulties, it keeps an eye on its social commitment and keeps on working towards more inclusion.

The Care Experienced Scholarship, launching for the first time in 2023/24, offers four full undergraduate scholarships to young people aged 25 and under who have spent time in care and faced significant barriers to higher education.

The scheme is linked to the John Lewis Partnership's "Building Happier Futures" program and is part of a series of scholarships offered by The Open University (OU), worth £3 million in total. The scholarships aim to provide equal educational opportunities for young people in care, allowing them to pursue their passions and unlock brighter futures.

With flexible study options, the OU helps care-experienced students succeed in higher education. Since 2014, the OU has awarded over 434 scholarships and hundreds of bursaries worth over £10 million.

John Lewis Partnership invests in education for the young people in care 

What: The retailer launched its Worn Again event to encourage customers to rethink their wardrobes and extend the life of their favorite things.

Why it is important: The initiative highlights old products rather than new ones, urging customers to shop secondhand, embrace repairs, and upcycle.

In September 2022, Selfridges accelerated its net-zero carbon-emissions goal, moving the deadline up to 2040 from 2050 as a promise to the Climate Pledge. The department store also set a target of ensuring that at least 45% of its transactions come from recycled products or circular services by 2030.

The Worn Again event will run for three months online and at its London, Birmingham, and Manchester stores.

There will be Swap Shops, a charity sale, and a “stock market” where items can be valued, traded, repaired, or upcycled. Customers will also be able to book services for repairs and customizations.

Selfridges will also be launching subscription and rent-to-buy services, welcoming the pre-owned furniture marketplace, Vinterior, as well as expanding its partnership with OOTO London, a luxury vintage clothing store.

Selfridges celebrates circularity with storewide event 

What: Grey market resellers are increasing their cross-border shopping services as significant price gaps remain and pandemic-era travel restrictions come to an end.

Why it is important: The health of the daigou trade is a revealing indicator to how the luxury Chinese market is recovering during its reopening phase.

During the pandemic, travel restrictions put a pause a halt to much of the daigou trade, as reseller had to use mail services instead of personally carrying products. This resulted in increased costs and decreased margins which led to many resellers leaving the market.

Now, with international travel reopening, there are signs that the overseas trade could be making a big comeback. Daigou ads on WeChat and Taobao have increased and are running in great numbers.

Major luxury brands will be monitoring the daigou trade as the results affect their performance in the China market.

In 2019, the annual daigou trade was estimated to have reached around USD 57 billion, an impressive amount considering luxury sales in China were worth USD 60 billion in 2021.

95% of South Korean duty-free sales were from daigou when China’s borders were shut and last year, duty-free sales remained at approximately 70% of 2019 levels despite visits being 90% lower than in 2019, implying that daigou traders contributed to the volumes.

The daigou trade can be controversial as it can be damaging to a brand’s image but also generate huge sales.

While the brand ultimately profits from the original daigou purchase, brands’ reputations can be damaged as consumers become informed of the price gap. Additionally, it gives the brands less control of how they are presented in the market and also gives them less access to customer data. On the other hand, the trade is a way to assess popularity and market opportunity./nbsp]

According to Morgan Stanley, a Louis Vuitton handbag in China was 34% more expensive than in Europe, while a Gucci handbag was 42% more and a Moncler down-jacket was 57%. Bain also found a price gap range of 25 to 45 percent between China and Europe in the luxury leather goods segment.

Now that travel has returned for Chinese consumers, shopping overseas has also resumed in nearby destinations. Though it’s unclear what proportion of duty-free sales come from daigou, pent-up demand for travel has made all consumers aware of the current price gaps.

As the retail landscape has changed, the daigou trade has been challenged. Brands have invested more in the mainland experience and cross-border e-commerce, narrowing the space for daigou resellers as the advantage of getting a product immediately can offset the mild price gap. Speed of delivery is also no longer an advantage of daigou as brands can store cross-border inventory in a free trade zone warehouse.

Chinese authorities have issued directives to crack down on daigou activity in Hainan and elsewhere but have been unclear on how controls would be implemented. Sales on the island are expected to reach USD 47 billion by 2025 which also the year the entire island’s retail sector will become duty-free.

Luxury braces for the return of the “Daigou”

What: Customers can now virtually try on 23 different pairs of jeans using Zalando’s virtual fitting rooms.

Why it is important: The retailer is simplifying and easing the experience of purchasing jeans online with this technology.

Customers can create their own 3D avatar by entering their height, weight, and gender then use the avatar to try on different sizes and check the fit. Different colors on the avatar show where the jeans are more fitted or loose.

More than 30,000 customers have already tested this technology in pilot projects with Puma and Zalando’s own brand.

The pilot project is part of the retailer’s Size & Fit initiatives, with one of the main objectives being to avoid returns. According to the VP of engineering, the retailer is the only European fashion and lifestyle e-commerce platform to have a team dedicated to Size & Fit.

The team uses models, machine learning, computer vision and other technologies to predict whether items are too big or small. Customers also receive personalized sizing recommendations based on their purchase and return history in addition to reference items that can be added to their sizing profile.

Zalando tests a virtual fitting room in its 25 markets

What: The retailer is considering hundreds of job cuts as part of its cost-cutting drive.

Why it is important: M&S is back in growth mode after years of decline due to more competitive pricing and improvements in its e-commerce operation.

M&S is reducing teams across the board, largely through natural attrition, however, a spokeswoman for the company has stated that this figure was “simply inaccurate” and the retailer has dismissed the report.

The retailer currently employs around 4,000 employees at its head office in London and is also weighing the option of ditching its headquarters altogether when the lease comes up for renewal in 2028.

Sales rose by 8.6% on clothing and 6.3% on food in the 13 weeks to December 31, and M&S reported interim pre-tax profits of GBP 205.5 million.

M&S eyes ‘hundreds of job cuts’ with head office roles at risk

What: The luxury market is expected to see a sharp slowdown in Latin America this year as inflation and slow economic growth hit sales of high-end products.

Why it is important: Mexico is expected to continue to lead the region, with multiple global luxury brands entering the market and opening new stores.

Mexico is expected to gain 10% as a result of its strong tourism industry and rising Chinese foreign direct investment (FDI) which will bolster employment and consumption. With the US imposing restrictions on China’s imports, many firms are investing in border-town factories to service the market.

Additionally, brands such as Fendi and Dolce & Gabbana have opened new flagship stores in Mexico, stating that the Mexican market has grown both qualitatively and quantitatively in recent years.

Business is not looking as positive in the rest of Latin America, as Brazil’s growth is forecast to increase by only 3% until 2025 and retail sales only rose 1% in 2022. Luxury brands in Argentina have been struggling for years and all the top brands have exited the country.

Premium labels are selling well in Colombia as the US dollar is currently strong against the peso, encouraging foreign investment and tourism. However, the luxury market won’t be able to sutain that growth for much longer as import taxes are increasing and wealthy Colombians shop internationally.

Latin America’s luxury sales drop after two-year boom

What: The Mexican department store group ended the first quarter with a total income of MXN 37,569 million while its profit fell to MXN 2,235 million.

Why it is important:  The Port of Liverpool has started the year off in growth as they saw revenue increase by 16.5%.

The group’s total revenues reached MXN 37,659 million, with MXN 32,953 million coming from the commercial segment, which increased its turnover by 15.4% compared to 2022’s first quarter. The company has also earned interest, lease, and cost of sales income.

EBITDA increased by 5.3% to 5,189 million and the commercial margin stood at 32.2%, fourth tenths less than the previous year which the company attributes to the normalization of promotional activity related to sales in autumn and winter.

Liverpool stores saw an increase in sales by 15% while Suburbia saw a 3.1% increase. The digital channel made up 24.5% of the share, increasing 280 points compared to last year.  In terms of gross merchandising value, the digital channel saw increase of 33% and the marketplace’s increased by 62%.

The chain also recorded a 21% increase in inventory in comparison to last year when the company faced shortages due to supply chain issues.

The department store group also opened one Liverpool location and two Suburbia locations, and closed one Liverpool store all within the first quarter of the year.

In FY 2022, the group saw an annual growth of 16.6% in its revenues and 35% increase in profit. As one of the largest distribution operations in Latin America, the company invoiced MXN 176,033 million in 2022 and net profit stood at MXN 17,937 million.

El Puerto de Liverpool grows by 16.5% in the first quarter, but reduces its profit by 4%

What: Prada has opened a café on the ground floor of Harrods in Knightsbridge.

Why it is important: The café encompasses the Prada brand with sage green walls, black-and-white checkered floors, and branded plates that will drive more traffic to the department store.

The Prada Caffé takes inspiration from the Italian luxury house’s boutique in Galleria Vittorio Emanuele II in Milan and its international flagship stores. Pastries will also be served for eat-in and takeaway, taking inspiration from Bar Luce, the brand’s Milanese café designed by Wes Anderson.

The café will be open until January 7th with a menu that includes breakfast, light lunch bites, evening cocktails, and will soon feature an outdoor stall serving ice cream.

High fashion tea: Prada opens Caffè at Harrods

What: The furniture and homewares retailer has partnered with Lane Crawford to open its first pop-ups in Greater China.

Why it is important: The pop-ups are the designer’s first venture into China and the installations extend Lane Crawford’s lifestyle category with an infusion of modern ideas.

Three pop-ups will be open until May 8, with two locations in Hong Kong and one in Shanghai.

The installations include furniture and home decor, including the brand’s bedroom products and local furniture classics, with all items reflecting the workmanship, innovation, legacy, and sustainability of The Conran Shop.

Lane Crawford stated that they are always looking for exciting partnerships and The Conran Shop is an embodiment of visual beauty and practicality.

Is showrooming an option for retail? 

What: The luxury conglomerate reported revenues increasing 17% in the first quarter, attributed to a strong demand for leather goods, sharp increases at Sephora and DFS, and a strong rebound in Chinese demand.

Why it is important: The numbers were double analysts’ expectations for 8% growth and represent an acceleration from Q4 in 2022.

Revenues at LVMH totaled EUR 21.04 billion for the three months ending March 31, making an acceleration from the fourth quarter, when sales gained 15%.

All business divisions except wines and spirits reported double digit growth, with strong momentum in Europe and Japan and a steady performance in the US.

The company registered significant pick-up in China following the lifting of health restrictions, boding well for the rest of the year, and putting the company back where it was prior to the complicated period of 2022. There is sustained interest in fashion, leather goods, and jewelry especially, with cosmetics being the only category remaining a little under pressure in mainland China.

Overall, revenues in the fashion and leather goods division rose 18%, with Louis Vuittion and Dior being the top performers, in addition to Celine, Loewe, Loro Piana, Rimowa, and Berluti also performing well.

Japan improved 34%, followed by 24% in Europe, 14% in Asia excluding Japan, and 8% in the US. Growth is normalizing in Europe, while the US is “good but softer.”

In selective retailing, revenues jumped 28% in organic terms, with Sephora seeing excellent performance in North America, Europe, and the Middle East.

The duty-free operator, DFS, benefitted from the recovery of international travel and gradual return of travelers to flagship destinations of Hong Kong and Macau and could return to breakeven after a difficult 2022.

Watches and jewelry grew 11% with a very good performance in high jewelry. Chaumet and Tiffany & Co. saw an excellent start to the year and the conglomerate’s watchmaking maisons reported excellent progress.

Perfumes and cosmetics saw a 10% increase in organic revenue growth, with fragrances performing very well, followed by makeup and the skin care business being flattish.

LVMH proclaims ‘excellent’ start to 2023 as Q1 sales rise 17%

What: Katie Mullen has become J.C. Penney’s chief customer officer.

Why it is important: Mullen will be tasked with improving the customer experience online and in-store as the department store looks to get back on track as it continues to struggle financially.

J.C. Penney’s has continued to struggle following its bankruptcy filing in 2020. The company has had to configure another transformation plan under another set of leaders. The department store has seen chronic sales declines and struggled filling space left vacant by Sephora.

Mullen’s focus on the digital enablement of the organization has been key to the company’s turnaround. In her new role, she will link the company’s digital technology, customer insights, and personalization capabilities to create an integrated, end-to-end customer experience.

The department store has seen encouraging signs that they are on the right track as the company saw an increase in customer frequency for the first time in five years with customers spending more as well.

J.C. Penney’s head of e-commerce pivots to chief customer officer

What: After the success of the theatre play based on Zola’s Au Bonheur des Dames last year, Le Bon Marché will host a new experience starting September 1st 2023.

Why it is important: Department stores increasingly develop unprecedented and successful experiences.

After the success of the immersive play "Au Bonheur des Dames", Le Bon Marché invites Cirque Le Roux for a new co-production on Thursday, Friday and Saturday nights from September to December 2023.

Le Bon Marché to launch a new theatre experience

What: Brand and consumer product companies are planning to invest more in technology to align operations with sustainability goals while also driving business growth.

Why it is important: The report found that more than 60% of consumer goods executives are now aligning sustainability and operational goals, with 70% of respondents agreeing that sustainability investments will accelerate growth.

The report is based on the responses of 1,800 consumer goods executives across 23 countries.

The top technologies that will play a role in aligning sustainable practices with operations were automation at 71%, followed by analytics at 69%, IoT at 62%, AI at 55%, and intelligent workflows at 44%. To improve inventory management and eliminate excess stock, 67% cited using predictive and prescriptive analytics as well as AI-powered demand sensing (69%).

Sustainability integration is an important differentiator for consumer goods businesses and the retailers they service as consumers are increasingly seeking out brands that reflect their values. Being successful in this investment requires full integration, commitment, and collaboration. The report cites brands like Levi’s, Pandora, Unilever, and Walmart as companies who have successfully executed leveraging technology to align sustainability goals with operations.

Brand executives plan to invest in tech to reach sustainability goals

What: Falabella placed ninth in the Merco Responsibility ESG Chile ranking, improving three places from last year.

Why it is important: The list highlights the most responsible companies in regard to the environment, employees, clients, and society at a technical and governance level.

The company launched its sustainability strategy one year ago and has four pillars that the operation is built on: the Verde+ initiative, commitment to innovation in the business model , local development, and talent and agile culture.

The retailer stated that it incorporates sustainability into its business model by creating actions that add value to its different stakeholders. This can be seen through the company’s initiatives such as Taller F and Feria Trueque which give clothes a second life and Talento Local which generates space for collaboration within the community through education and cultural initiatives.

Falabella Retail debuts in the top 10 of the Merco ESG Chile ranking

What: H&M Beauty is set to open two 3,230-square-foot beauty locations in Oslo in May.

Why it is important: The locations signify the launch of H&M Beauty and could each generate an estimated EUR 2.5 million to EUR 3.5 million in yearly sales.

Both locations have about two more times floorspace than the retailers current beauty departments and will carry H&M-branded beauty products in addition to more than 80 external beauty brands, featuring Scandinavian beauty labels and some brands that are exclusive to Norway.

The retailer is wanting to build credibility within the beauty industry, with the ultimate goal being that customers can shop their entire look at H&M.

Making sure they have an elevated look and feel in everything they do, the retailer has introduced a new logotype and is reworking all its aesthetics. The in-house design team has created a space that is integrated with fashion but feels like a beauty space.

Entering the stores, shoppers are greeted by an inspiration table where the coolest products are displayed alongside the latest fashion. In the first room, more prestigious beauty labels are given prominent retail spaces to create their own brand universe. Further in, smaller brands have their own shelves lining categorized zones.

Taking inspiration from a cocktail bar and spa environment, the beauty bar features merchandising units with curved tubes and vibrant colors where shoppers can interact, get nail, lash and brow services, and experience a mask bar.

H&M Beauty opening first global flagships in Oslo