What: US discounters are heavily investing in their stores to make them more competitive in inflation times.

Why it is important: There is a US middle-income customers flight to these stores, which at some stage might also impact US department stores.

Dollar stores like Dollar General and Dollar Tree are remodelling their stores to cater to middle-income consumers as inflation drives demand for low-priced groceries.

Both chains are investing in freezers and coolers for groceries, with Dollar General expanding its food offering to more than 8,000 stores. Although dollar stores primarily cater to lower-income customers, middle-income consumers increasingly contribute to their grocery sales growth.

The remodelling and expansion efforts come as other retailers cut costs and close outlets, with UBS predicting that 50,000 US stores may close by 2027.

US dollar stores adapt to inflation 

What: L’Institut Français de la Mode’s (IFM) report details the disparities among different fashion retailers in France for the month of March.

Why it is important: The strongest growth in March was attributable to department stores and popular stores with a 4.8% increase.

While the level of sales of all fashion retailers remained stable in March 2023 compared to March 2022, some retailers saw more success than others.

In addition to department stores and popular stores, mass-market chains also saw an increase of 1.6% in sales as well as multi-brand independents with a slight increase of 0.3%.

Specialized chains saw a 0.8% decrease while the fashion departments of hyper-supermarkets saw the sharpest decline with a decrease of 9.4% in sales.

The textile-clothing market as a whole remained in line with the March 2022 level of activity. However, by pre-pandemic standards, sales in March 2023 were significantly down, seeing a decrease of 10.2% in comparison to March 2019.

The balance sheet for the first quarter of 2023 shows an increase in activity of 5.6% compared to Q1 in 2022.

French department stores celebrate and supermarkets lag behind in March

What: China’s luxury retail is off to an excellent start this year as the main luxury conglomerate saw success in the country in their first quarter results.

Why it is important: According to PwC, China’s luxury market will account for more than 25% of the global market and is set to reach USD 118.3 billion by 2025.

LVMH saw double digit growth its fashion and leather goods division in the Chinese market with business in mainland China remaining a key focus for the brand.

Hermès sees momentum in China with sales in Asia increasing by 23% in the first quarter.

At Brunello Cucinelli, revenues in Asia grew 56% in Q1, with expectations of a positive year ahead in the Chinese market as the country represented 12% of sales in 2022.

Kering is holding several events in China to boost its presence and Cartier has also been hosting major exhibitions to educate the audience while also selling big ticket items.

According to Bain & Co., China is estimated to return to 2021 sales levels between the first and second half of 2023.

As China aims to keep spending within the country, Hainan, a duty-free island, is growing in importance with major luxury players already setting up their retail presence through wholesale channels.

High-net-worth individuals are ready to engage with new categories such as fashion jewelry and homeware as they look towards revenge spending post-pandemic.

Brands are focusing on clienteling to attract customers, including exclusive events and trunk shows to make clients feel appreciated and unique. Pop-ups have also been successful in testing new locations, and childrenswear is becoming the category with the fastest growth in the market.

Will 2023 be another ‘Golden Year’ for luxury retail in China?

What: The retailer’s new CEO has told staff that transformations will be happening quickly, without disclosing details.

Why it is important: John Lewis Partnership has GBP 1.7 billion in debt and faces increasing competition from its competitors, M&S and Next.

The UK retailer will be moving quickly to reform its business model after the newly appointed CEO stated that the way the Partnership does business needs to change in order to be more efficient and affordable.

The CEO’s comments come days after the partnership denied reports of partial demutualization in an attempt to raise between GBP 1 billion and GBP 2 billion of new investment.

John Lewis CEO tells staff business model needs fast reform

What: The retailer will be charging a fee to customers who make returns at the UPS store if a free option is within the same distance or closer to the customer’s delivery address.

Why it is important: Amazon is finding ways to cut costs across its organization and adjusting many of its established strategies as it adapts to a slowdown in demand.

While a free option for customers to return their item will always be offered, customers who prefer to make a return at UPS stores may be charged a USD 1 fee if an Amazon Fresh, Whole Foods, or Kohl’s location is closer or within the same distance of their delivery address.

UPS has 4,768 locations in the US, outnumbering Kohl’s with 1,170, Whole Foods with 524, and Amazon Fresh with 44.

Handling returns is not cheap and reducing the expense on Amazon’s operations comes in addition to other cost-cutting measures that the retailer has taken recently, including layoffs and the closure of warehouses.

Amazon begins charging for some returns made to the UPS Store

What: Tiffany & Co. is reopening the doors to its most famous location, now called the Landmark, revealing a major facelift and the first full view of LVMH’s vision for the brand.

Why it is important: The Landmark is one of the largest single-brand luxury stores in the world across accessories, apparel, and jewelry and LVMH’s most expensive single-brand real estate investment ever made by LVMH.

Spanning 110,000 square feet, the store is not only the largest jewelry store, but is also a cultural destination. Prior to its renovation, the Fifth Avenue store was New York City’s fifth-largest tourist attraction and was at one point the world’s top-grossing single-brand luxury store.

While the brand has declined to reveal how much they spent on the store, it’s estimated to be well into the nine-figure range. The store is expected to receive more than 2 million visitors annually.

LVMH started with a clean state as the store had already been empty for two years, leaving the architect, Marino, with the opportunity to change everything. Inspired by the frivolity of the jewelry world and how it was portrayed in “Breakfast at Tiffany’s”,  he wanted to create a bright new world, remove the intimidating factor, and make the experience of buying jewelry fun and cheerful.

Previously having an Old New York feel, the store is now more representative of today’s world, with gold, glitz and pinkish baselines giving a more homey and warm feel. With eight floors, a spiral staircase helps create consistency and carry shoppers throughout the store with mirrored walls along the way.

The first floor has been labeled “The World of Tiffany” featuring floor to ceiling archways filled with CGI footage of Manhattan instead of windows, mega diamonds on display, and an assortment of jewelry from the brand’s most popular collections.

On the third level, visitors can find the love and engagement floor, which features a central corridor of case lines in rose gold and copper tones. Private shopping rooms can also be found in this department with mirrors covering the walls and ceilings. Taking inspiration from Warhol, the ceiling has aluminum foil glued to it, which Marino said felt like a very Audrey Hepburn thing to do.

Many of the elements of the Landmark were designed to be interactive to attract and capture the new generation of shoppers. On the fifth floor, shoppers can find “The Audrey Experience” which offers an immersive experience into “Breakfast at Tiffany’s.”

The store also features a breakout room for Elsa Peretti jewelry and a stand-alone salon for Paloma Picasso on the fourth floor, emphasizing Tiffany’s history of working with global artists.

Guests can enjoy a new iteration of the Tiffany Blue Box Café and the “Diamond on the Roof” three-story addition that will serve as the center for brand history activations. The eighth and ninth floors of the building will be used as special exhibition space.

The store arrives at a pivotal time as jewelry and specifically high jewelry are experiencing the highest relevancy in nearly two centuries. It is also expected to bring even more success to Tiffany’s as the company’s high jewelry sales doubled last year.

LVMH unveils Tiffany’s renovated Fifth Avenue flagship

What: Saks’ invite-only loyalty program will be hosting an exclusive shopping experience for clients in Dallas.

Why it is important: The retailer is deepening its relationship with digital clients while also showing its commitment to the Dallas art and fashion community through a partnership with Dallas Contemporary, allowing them to connect with clients in a unique and impactful way.

The event will allow customers to shop a range of Saks.com designer merchandise, including men’s and women’s ready-to-wear, shoes, bags, and accessories, inside a private rooftop penthouse suite.

Saks is also partnering with Dallas Contemporary as a major sponsor for its spring exhibitions, which will be celebrated with a special dinner. Saks Live will be hosting an event to discuss the intersection of art and fashion as well as the best in spring fashion.

The loyalty program includes more than 5,000 top clients across the Saks Fifth Avenue ecosystem. Members can benefit from digital and in-person styling, personal shopping services, early access to new designer launches and the latest runway collections, and access to exclusive experiences and events around the world.

Saks Limitless, the Invite-only loyalty program, to host pop-up in Dallas

What: John Lewis has unveiled new partnerships with customer loyalty and marketing experts, dunnhumby and Eagle Eye, as well as appointed its first pan-Partnership head of loyalty, Emily Wells.

Why it is important: The department store retailer is accelerating its investment in customer loyalty to deepen relationships with customers and provide them with even more benefits.

The retailer’s five year strategic agreements with the customer insights and media firm and marketing technology company will give customers greater personalization and loyalty experiences.

The group’s loyalty programs, My Waitrose and My John Lewis, have over 9 million and 5 million members respectively.

Emily Wells will also be joining the Partnership in June as head of loyalty, leading and developing the loyalty programs and teams across the organization as well as launching a new pan-Partnership proposition in 2024.

John Lewis appoints first pan-partnership head of loyalty as it ramps up rewards

What: Amazon reported USD 127.4 billion in revenue and USD 3.2 billion in income for the first quarter, pushing shares up 10%.

Why it is important: The retailer’s cost-cutting is paying off as its first quarter results beat analysts’ estimates.

While revenue increasing by 9% compared to last year may be a sign that the company is on track for a strong comeback, it doesn’t make up for the growth that the e-tail giant is used to seeing as it reported a net loss of USD 3.8 billion in the first quarter of 2022.

Analysts estimated a revenue of USD 124.55 billion in revenue and earnings of 21 cents.

Amazon Web Services saw slow growth, reporting 16% growth for a total of USD 21.4 billion.

Machine learning investments are also driving growth in Amazon’s ad business, which saw revenue increase by 23% to USD 9.51 billion. With the application of AI, customers are seeing relevant information when they engage with the retailer, resulting in strong results for brands.

The retailer is continuing to lay off thousands of workers to improve its bottom line, with a total of 27,000 layoffs since January.

Amazon’s cost cutting-fueled comeback is underway

What: Even though innovation is everywhere, some players are focusing on a seemingly simple tool: the barcode.

Why it is important: Tweaking the approach to be able to embed more information into a barcode could be a great and cheap way for retailers to improve their operations with low changes in their organisations.

The retail industry is embracing new technologies such as automation, VR, and AR, but behind the scenes, barcode technology is changing for the benefit of businesses and customers.

For instance, the 2D barcode, developed by GS1, looks like a QR code and can hold more information than traditional barcodes, allowing for custom web pages to deliver information about the product in question. Woolworths has integrated 2D barcoding into its fresh food and point-of-sale technology, which alerts cashiers when produce has expired or is subject to a recall. The barcode can be scanned by customers, providing valuable information on provenance, quality, and sustainability, and differentiating one product from another.

QR code adoption was low before Covid but increased quickly, and companies such as Haleon are working on integrating QR codes into their marketing moving forward.

Are barcodes the new big thing in retail tech? 

What: While 2023 looks promising for Kohl’s, its past quarter performances led to a S&P downgrade.

Why it is important: For now, financial ratings are still based on financial performance. It is highly probable that, in the future, environmental efforts will also become a standard way of gauging businesses.

Standard & Poor's (S&P) downgraded Kohl's Corp. to a junk rating of "BB" from "BB+" due to weaker-than-expected Q4 results, lower margins, increased clearance activity, and muted demand. The downgrade suggests heightened vulnerability to default risk amid business or economic changes.

However, S&P expects improved metrics in 2023 as Kohl's enhances merchandising execution, reduces inventory levels, experiences lower freight costs, and continues its Sephora shop rollouts. S&P also noted reduced capital expenditures and favourable market trends in beauty, as well as the potential for revenue growth in 2024. Kohl's off-mall locations are considered advantageous for their lower cost structure and customer accessibility.

Despite these positives, S&P believes Kohl's operating margins will remain below historic levels at around 4%. The ratings agency expressed concerns about the company's free operating cash flow, leverage, recent management changes, and the competitive pressures faced by department stores.

Kohl’s downgraded from BB+ to BB by Standard & Poor’s 

What: Apple is moving into banking services through partnerships with third parties.

Why it is important: Who controls customers’ means of payments influence their future purchases.

In the US, Apple and Goldman Sachs have partnered to offer a new savings account with a 4.15% annual interest rate, over 10 times the national average rate of 0.37%. This move aims to attract US depositors and outperforms competitors like American Express and Goldman's Marcus brand.

The account is available to Apple credit card users and requires no fees or minimum deposit, with a maximum balance of $250,000. As Apple expands its financial services, some speculate that it is becoming a bank, but its focus remains on hardware sales and non-banking services, leveraging partnerships with institutions like Goldman Sachs.

Apple teams up with Goldman Sachs to offer saving accounts in the US 

What: The online fast fashion retailer is set to invest 750 million reais (USD 148.85 million) in Brazil to establish a network with thousands of textile manufacturers in the country.

Why it is important: The company intends to partner with 2,000 manufacturers which should generate around 100,000 jobs over the next three years.

Shein to invest nearly USD 150 million in local production in Brazil

What: IA Interior Architects has released a report that shows the benefits and barriers to adopting extended reality in stores.

Why it is important: The report found that female consumers aged 55 and older could be the key to driving adoption of extended realty (XR) technology in retail, with in-store associates playing a critical role for stores promoting extended reality.

Retailers should take a moderate approach to adoption and consumption as they question whether or not an investment in reality technologies will be profitable.

The report found that 80% of 1,012 US adults had experienced a form of extended reality and 71% use it daily or weekly. Almost seven in ten respondents had made purchases in XR, mainly for gaming products. Additionally, more than half of the respondents reported previous experiences using extended reality in a physical retail environment, with 95% having positive experiences.

While teenage males are assumed to be the target demographic, IA’s report found that female consumers aged 55 and older appear to be a key driver of future adoption and are eager to learn and willing to spend as they are part of the highest income group.

To encourage the use of XR devices in a retail environment, IA advises retailers to provide in-store associates to guide consumers, ensure easy and secure payment methods, provide opportunities for groups to shop within the XR realm together, customize familiar products using XR, and supply equipment access for those with impairments.

Retailers whose products or services can be customized are the ones most suited for the metaverse. Home goods, furnishing stores, and design centers that sell larger products can use XR to their advantage to help with the design and visualization process. Soft goods still have some way to go before the metaverse becomes more than a brand awareness vehicle.

The top barriers to XR purchases in store and online are: concerns about security of personal information, lack of access or expense of technology, not having the right product or service, the inability to touch, feel, test, or try products, and difficulty or unsecure payment options.

The top motivators to make an XR purchase include: in store associates to guide customers, easier and secure payment methods, the ability to shop with groups, and accommodations for impairments.

What retailers need to know about the metaverse

What: Mytheresa is one of the few e-commerce players that has remained consistently profitable in the past years.

Why it is important: Their success suggests that e-commerce multibrand retail can deliver profits only with high-margin products such as luxury goods.

German luxury retailer Mytheresa announced preliminary Q3 results with net sales between EUR 196- EUR 199 million, up from EUR 169.5 million in the prior-year quarter.

Gross merchandise value (GMV) is expected to be between EUR 218- EUR 221 million, compared to EUR 186.6 million last year. Adjusted EBITDA is estimated to be between EUR 34- EUR 43 million, up from EUR 10.2 million. The company updated its 2023 guidance, expecting GMV growth of 13%-15% and net sales growth of 9%-11%.

The retailer also recently launched its China Designer Program, focusing on growing its business in China and promoting Chinese fashion designers.

Mytheresa’s sales are growing in spite of the general slowdown 

What: The resale platform has launched its own ChatGPT-driven shopping bot.

Why it is important: Offering technology such as ChatGPT to assist in finding products can be extremely valuable, especially in the second-hand market as individualized offers can change rapidly depending on availability and what's being sold.

Mercari, a peer-to-peer selling platform, has launched a beta test for Merchat AI, a conversational shopping assistant based on OpenAI’s ChatGPT.

As a second-hand selling platform, the retailer has deep inventory that can’t always be covered by a general search as products can be hidden in the variety of categories offered.

Merchat AI can offer gift suggestions, recommend items that fit the latest trends, search collectibles that are difficult to find, and offer styling tips.

The company has launched the shopping bot as a test feature, acknowledging that some flaws may appear, and full features won’t be available. A cautious release will help set reasonable expectations and allow the retailer to test new features.

Inside Mercari’s new Merchat AI shopping bot

What: Macy’s modernization strategies have received approval from J.P. Morgan’s managing director of equity research and retailing.

Why it is important: The department store group’s succession plan and rebranding are going over well on Wall Street with Macy’s stock price up 7.5 to USD 18.78 and an overweight rating, suggesting the stock price should perform better in the future.

The managing director reported clear confidence in Macy’s FY23 top/bottom-line plan, foundational change, and a clean balance sheet with no material debt maturities until 2027.

Macy’s has also rebranded its website, logo, and ticker symbol as part of its modernization strategy, moving the department store’s signature star from the apostrophe to the lowercase ‘i’ and the stock ticker symbol now featuring a small star on the top left side of the ‘m.’

J.P. Morgan upgrades Macy’s Inc. 

What: The continued use of plastic throughout the retailing and distribution process is adding to fashion’s waste problem.

Why it is important: While retailers are making greater sustainability efforts, the plastic problem in retail persists as there is no clear way to eliminate plastic from the retail system.

From mailers, hangers, to pallet wraps, polybags, tags, and more, retail uses a large amount of plastic.

In Europe, 18 countries have banned single-use plastic bags, while there are several US states with similar laws, in the US, 100 billion single-use plastic shopping bags are used each year in addition to billions of hangers and plastic polybags. Globally, less than 14% of all plastic packaging used is recycled.

While greater efforts towards sustainability are being made, there is no clear way to eliminate plastic from retail in the near term as the current plastic solutions are convenient and cost-effective and every major retailer requires individual bagging.

Some businesses have turned to biodegradable polybags but still run into issues with complying to shipping requirements from bigger companies such as using plastic hangers or buying specific mailers.

Nordstrom is one of the retailers finding solutions on how to handle its plastic waste with a goal to reduce single-use plastic in its value chain by 50%. In 2022, the company replaced its Nordstrom Rack plastic shopping bags with paper bags, reducing its plastic use by 853 tons. The department store group also sourced half of its new bags from a domestic supplier to reduce carbon emissions.

Through its BeautyCycle program, Nordstrom has reported 25 tons of beauty products being recycled. Additionally, the retailer trains employees on packaging reduction efforts and also has a hanger reuptake program. Despite these widespread efforts, the retailer still relies on polybags and requires brands to send items in individual bags.

Innovation may be necessary in order for retailers to reach their plastic reduction goals and reduce their plastic reliance as there are no scalable solutions.

One potential outlet for retailer and brand plastics is companies like Trex, a billion-dollar company who pays retailers for their trash and then uses the postconsumer waste to make its products. This is a win-win situation as the retailers get paid for recycling but also don’t have to pay for their waste.

Inside retail’s plastic bag problem – and efforts to curb it 

What: Bergdorf Goodman has begun offering a wider assortment in its home category through its website.

Why it is important: The retailer’s home department is a rarity in US retail as it offers a specialty and extensive range of unique products.

The retailer’s home category consists of 200 to 400-square foot shops or rooms that line the corridors of its seventh level. While having this high touch operation comes with higher costs, the productivity is said to be decent considering the category is located on a higher level.

BG’s home department offers a select and extensive range of unique artwork, tabletop, glassware, books, jewelry, furniture, and more, in addition to being luxurious and not entirely expensive. It’s a kind of specialty luxury that few other retailers try to do with any degree of scale.

Bergdorf Goodman’s focuses on rotating exhibits to provide newness and keep enticing its client base in addition to the permanent selection that is offered across all categories. The department store’s home business is a mix of big, well-known brands and smaller artisans with a focus on being artisan-driven to offer unique products for its clientele.

The retailer claims that the right balance between the two is the secret sauce, and the rotating exhibits allow them to bring in brands and products they wouldn’t normally have.

The home floor features The Hallway, which runs the length of the floor and features artwork that ties together the various shops and rooms. Within the hallway of shops, there’s a space called the Loft which spans 1,000-square-feet and houses different presentations from artisans. Both of these spaces’ presentations change about every three months.

Additionally, growing the e-commerce business has allowed the retailer to expand its range and story by offering more categories. During the pandemic, a lot of Bergdorf’s fashion customers transitioned to the home category and the retailer has seen success in the category since with this past Christmas being their best ever.

At home with Bergdorf Goodman

What: The owner of Westfield mall chains has acquired the outstanding share of the Croyden Partnership from UK property giant Hammerson.

Why it is important: With full ownership of the property, Unibail-Rodamco-Westfield (URW) will be able to work with local stakeholders to redevelop and transform the area to meet the future needs of the community.

URW has acquired Hammerson’s 50% stake in the Croydon Partnership, which is a ten hectare parcel of land including high street retail frontage, office blocks, parking garages, as well as the Whitgift and Centrale shopping centres.

Hammerson has been selling off properties to improve its financial performance and focus on its strong core portfolio, giving URW the opportunity to transform and redevelop the area as they now have full ownership of the property.

Westfield owner confirms the purchase of Hammerson’s Croydon development stake

What: In February, retail sales in Germany fell by 1.3% and nominal 0.5% in comparison to January according to the Federal Statistical Office.

Why it is important: Analysts were surprised by the development as a 0.5% increase was expected.

Compared to February 2022, real sales fell by 7.1% and the industry reported a nominal increase of 2.6%. Due to high inflation and sharp price increases, German consumers’ purchasing power has been reduced.

Germany: retail sales are lower

What: The Asian convenience store chain is entering 8 European countries at the time.

Why it is important: Customers will have access to new services and price points, creating an additional benchmark for department stores, especially in terms of proximity services.

7-Eleven is planning to expand into Europe, seeking experienced franchisees from retail, foodservice, or hotel industries.

Initial target markets include France, Germany, Ireland, Italy, Poland, Spain, Turkey, and the UK, with Austria and Switzerland also being considered. The Benelux countries are not part of the current plan.

This expansion follows a similar move by Canadian convenience store giant Couche-Tard, which entered a strategic partnership with Total to operate service stations outside France and potentially offer additional services along European motorways.

7-Eleven to enter Europe 

What: Gucci has launched its first ultra-luxe Salon store concept in LA, open to top-tier clients and by appointment only.

Why it is important: The retailer is focusing on its wealthiest shoppers as part of its turnaround strategy, creating a sense of community and displaying its most elevated and exclusive products at the Salon.

The 4,380-square-foot space is located on the prime corner of Melrose Place and Melrose Avenue, featuring products ranging from EUR 40,000 to more than EUR 3 million.

The Salon is the ultimate playground for Gucci’s top clients to explore the possibilities of the retailer’s Italian craft and interact with the brand creatively. Customers will find made-to-order collections for men and women, accessories, luggage, décor, high jewelry and watches, as well as rare and exclusive vintage pieces that have been restored by Gucci artisans.

Private appointments can be booked from two hours to a whole day and a special menu will be offered for the Gucci Osteria restaurant.

Designed by Gideon Ponte, the Salon is made to feel like an old Hollywood movie set with mirrored columns, stage-like curtains, theatrical dressing rooms with red and purple velvet stripe walls, and chandeliers. The center of the store also features the house’s recent red carpet looks.

The Italian luxury house will be opening nine permanent and temporary salons with locations in New York, Paris, Milan, London, Dubai, Hong Kong, Shanghai, Taipei, and Tokyo, each having their own collection of products.

Gucci is currently in a transition period as Alessandro Michele left the house as creative director in November and in the last three months of 2022, sales fell 14%. The Salons are the latest step in Gucci’s product elevation drive, as its average selling price rose double digits last year.

Gucci Salon ultra-luxe private store concept debuts in LA

What: Loewe’s first store dedicated to cleaning and repairing its leather goods has opened on Hankyu Umeda’s newly renovated Green Age floor.

Why it is important: The new store will join a variety of other brands with sustainable inititaives as the department store reopens its floor dedicated to creating a sustainable future.

Loewe is introducing Loewe ReCraft, a store dedicated to cleaning and repairing its leather goods.

The boutique offers a variety of services from sewing work, restoration, and replacement of handles among others. Customization options are also available as well as a selection of products which are made from surplus materials.

The Green Age floor of the department store has been recently renovated and revamped to accommodate more eco-friendly brands, products and services.

The department store is also offering limited edition products to commemorate the opening of the Green Age space. The floor of the department store features over 90 brands and aims to co-create a sustainable and prosperous future with consumers, brands, and communities.

Hankyu Umeda’s Green Age floor features Loewe ReCraft