What:  Aldi prepares itself for a new law on waste in Luxembourg, effective January 2024

Why it is important:  This is an example of a sustainable practice that could at the same time contribute to the top line, by increasing sale thanks to marketing, and the bottom one, by saving a few productivity points too.

Aldi Luxembourg is set to distribute its promotional leaflets via WhatsApp as part of a digitization process and in response to a new waste law in Luxembourg.

This law, effective from 1 January 2024, requires consumers to expressly state if they wish to receive physical mailings. Aldi has been promoting its digital leaflet via QR codes on various products, and now customers can also request the leaflet through WhatsApp, receiving a weekly message with a link to the new leaflet.

This move is reportedly a first for Luxembourg.

Aldi distributes leaflets via WhatsApp in Luxembourg 

What: Falabella has reported a negative performance for the first quarter of 2023.

Why it is important: The retailer is focusing on its efficiency plans and the digitization of its processes in aim to see significant improvements for the remainder of the year.

Falabella reported revenues of USD 3,476 million for the first quarter, a 6% decrease compared to the same period last year. The company’s sales also fell 9% and online sales were down 11%.

Despite the decline in online sales, the sales of its vendors increased by 23% to USD 173 million.

Gross profit contracted by 17%, which the company attributed to a 36% decrease in its department store division and a 24% decrease in its home improvement format.

Losses for the retailer reached USD 76 million, plummeting its triple-digit net income by 186%. Additionally, Ebitda fell 57%.

Falabella’s CEO stated that the company plans to continue to work on the transformation of its business, as it is advancing its efficiency plans and the digitization of its processes.

Falabella posts USD 76 million loss, plummeting 186%

What:  Shein is going around Indian regulation by making a deal with Reliance, which in turns earns the capability to both supply Shein worldwide and sell the products in India

Why it is important:  In spite of some protests against Shein, it seems that its growth cycle is not over yet.

Reliance Industries, India's largest company, is partnering with Chinese retailer Shein in an attempt to dominate India's $10 billion online domestic fashion market. This partnership comes three years after Shein was banned in India as part of a broader crackdown on Chinese companies following border clashes between the two countries.

Under the recently approved license agreement, Shein will receive a percentage of profits from its fast fashion sales in India, while Reliance will assist Shein in establishing a supply chain within India's garment industry for global exports12. The partnership could also enable Shein to shift about 25% of its sourcing to India, a significant move given that Shein currently sources 93% of its products from China.

The Shein partnership will allow Reliance to cater to younger consumers at lower price points, which is important given that many online shoppers in India are young adults from smaller cities. On the other hand, Shein is expected to benefit from access to India's online market, which is the world's third largest e-commerce market and worth an estimated $50 billion in 20221. This move comes as Shein's expansion in Europe and the US begins to slow, and the company expects its gross merchandise value to almost triple by 2025 to $80.6 billion.

In the fashion ecommerce space, Reliance lags behind Myntra, a company that merged with Walmart-backed Flipkart in 2014 and accounts for around half of the online fashion market in India. Reliance's ecommerce fashion business Ajio holds about 4% of the market share.

Reliance seeks retail dominance in India with deal for Shein 

What:  Discounter chain is heavily penalized for increasing theft in store

Why it is important:  Theft starts to be a theme in US press, which suggests that the phenomenon is growing, all the more that investors notice and penalize retailers hit by this wave.

Dollar Tree reported a 44% decline in net income despite strong sales growth, largely due to a shift towards lower-margin essentials and a significant increase in losses from theft, termed as "shrink" in the retail industry. This theft has contributed to the shrinking of gross margins by 3.4 percentage points to 30.5%, leading Dollar Tree to cut its profit forecast for the year.

The company is in the midst of a turnaround, showing positive signs such as increased store traffic, but it needs to address this issue of theft and convince investors about its profit improvement strategy.

Theft and Thrift squeeze Dollar Tree 

What: Frasers Group's CEO Michael Murray explains the success of the Flannels chain, targeting "new luxury, aspirational" customers, via the fast-growing 60 Flannels UK stores.

Why it is important: The article highlights how Flannels, a high-end retail chain, has succeeded in the midst of a cost-of-living crisis by targeting young, aspirational customers. This insight is valuable for retailers looking to adapt to changing consumer behaviors and preferences.

Fraser Group's CEO Michael Murray has attributed the success of the company's Flannels chain to its ability to target young, aspirational customers who are willing to spend money on luxury goods despite a cost-of-living crisis.

Flannels' success has contributed significantly to the Group's "premium lifestyle" brands, which saw revenues of just over GBP 530 million in the six months to the end of last October, up nearly 25% on the year.

Murray has targeted 18-30-year-olds, who aspire to expensive products after exposure on social media, as the Flannels' key demographic. Many of these young people are still living at home and have been sheltered from rising interest rates, rents, or high energy bills.

Murray has stated that he is reinventing the company, targeting "new luxury, aspirational" customers with the fast-growing 60 Flannels UK stores. He is looking to transform the business from a discount sports retailer to Europe's biggest, most aspirational retailer.

Frasers' CEO on the chain’s ongoing success

What: In the US, retailers replaced technology firms in cutting the most number of jobs in April.

Why it is important: The retail sector has cut 36,000 jobs this year and companies are preparing for consumers to tighten their spending as interest rates increase in an uncertain economy.

With higher interest rates to control inflation and a potential recession, retailers in America are preparing for consumers to start spending less and taking measures to protect themselves from the fallout.

US retailers cut most number of jobs in April 

What: John Lewis has partnered with an online safety organization to train its staff in 34 stores to become experts in family technology.

Why it is important: The retailer has become the first department store in the UK to offer specialist advice to families on internet safety.

The retailer recently conducted a survey of 1,000 parents which showed that over two-thirds were concerned about internet safety when their child uses an electronic device. As a result, the department store is equipping its partners with specialist knowledge, tools, and skills to support parents and caregivers in internet safety.

The John Lewis staff will support parents and caregivers with the safe and secure set up and use of electronic devices. This will include in-person advice on new and previous purchases, developing healthy gaming habits, balancing screen time, creating a positive digital footprint, and using tech to support digital wellbeing.

John Lewis to offer specialist advice to families on internet safety 

What: The retailer is expanding its off-price division with 10 new stores scheduled to be open within the next two months.

Why it is important: The move comes as the off-price segment is performing well as consumers become more conscious of their spending due to inflation and economic uncertainty.

With the expansion, Backstage will now have 319 locations, with 310 of them being located inside Macy’s department stores and nine being freestanding locations.

In its Q4 earnings report, Macy’s reported that Backstage store-within-a-store locations outperformed full lines stores by 2 percentage points. Additionally, 18% of customers at the store-in-store locations cross-shopped and Backstage customers drove 32% of the building sales.

Customers who shopped both Backstage and full line shop 6.6 times a year in comparison to 3.2 times a year for all shoppers.

Based on data from selected off-price chains, the overall off-price category was up 5.7% during the first quarter of this year.

In January, foot traffic to these chains had also increased by double digits according to analytics from Placer.ai, who also reported that Macy’s with Backstage locations are outperforming stores without the off-price offering.

The off-price offering gives the retailer the opportunity to create a unique space where customers can shop the fullness of its brand, from treasure hunting for bargains to a full-scale department store with luxury brands.

Macy’s adds 10 Backstage locations as off-price sector takes off

What: Frasers Group will be bringing Guilio, Choice, and Base Childrenswear under its Flannels umbrella.

Why it is important: The group has been on an acquisition spree, with JD brands being the latest in its string of deals.

The group acquired the three chains along with 12 others from JD Sports for GBP 47.5 million in December of 2022.

Choice and Guilio will be brought under the Flannels brand, while Base Childrenswear will be rebranded as Flannels Junior in the coming months.

Closing down sales have begun and Frasers will close the stores permanently in areas with existing Flannels outlets.

Frasers brings former JD-owned brands under Flannels umbrella

What: Brick-and-mortar stores remain important in the post-pandemic era as they offer many benefits that e-commerce pure players can’t match.

Why it is important: Despite the growth of e-commerce, physical retail has been proven to drive sales and customer growth.

Brick-and-mortar stores remain a vital backbone to the retail industry as they help drive customer acquisition and complement online brands.

The International Council of Shopping Centers found that if a store opened in a market, their online sales in that market would increase by 37% and if a store closed in a market, their online sales decreased by 33%. These figures prove that a physical retail space can act as a billboard for retailers because if a brand is out of sight, it’s out of mind for customers.

Having a physical presence also helps with customer acquisition costs as customers are coming in-store but also visiting the store’s website. E-commerce companies with pop-up locations have seen online growth, including one brand which saw growth of around 40% in their market.

Building the case for brick-and-mortar stores

What: The e-commerce giant is offering customers USD 10 to pick up a purchase rather than have it shipped to their home.

Why it is important: Amazon joins many other retailers who are working to reduce costs for delivery and returns as consumers demand slacks.

Amazon has been emailing customers an offer of USD 10 to retrieve their orders of USD 25 or more at company pickup points.

While the retailer has trained customers to expect fast, no-fee deliveries and returns, the company has recently made several moves to reduce delivery-related costs across the organization.

A USD 1 fee was introduced earlier this year for packages retuned via UPS where a pickup point was located closer. Additionally, its annual Prime subscription that includes free shipping benefits increased by USD 20, orders under USD 25 now incur a fee for same-day delivery, customers are encouraged to have packages delivered on a designated day of the week, and the minimum order thresholds for free grocery delivery were raised.

Amazon offers shoppers USD 10 to pick up purchases as it targets delivery costs 

What: The Belgian chain of department stores recorded a profit of EUR 2.78 million in the last financial year and its turnover increased by more than EUR 50 million to EUR 285 million.

Why it is important: After suffering a loss of more than EUR 12 million in 2021, the department store had returned to profitability by the end of 2022 and its strategic repositioning is seeing success.

Inno is continuing its transformation by focusing on its luxury offer and has announced the makeover of two of its stores in Brussels to evolve towards the premium range.

The turnover of Inno climbs by EUR 50 million

What: Nordstrom is betting on its off-price stores with plans to open 20 new stores this year as consumers become more value-conscious.

Why it is important: The brand has remained a weak spot in the company’s portfolio, and its success or failure could shape the company’s future.

In FY 2022, Nordstrom Rack reported sales below pre-pandemic levels and in the holiday quarter, its sales dropped 8%. Despite these numbers, Nordstrom is looking to turn the brand into a growth driver as discretionary merchandise is under pressure as a result of inflation.

Nordstrom Rack has formed a dedicated leadership team and also focused on its best-selling brands as part of its strategy. The off-price retailer’s competitors, such as T.J. Maxx, Ross Stores, and Burlington stores, have seen success in opening more stores and driving higher foot traffic, while also seeing higher sales in comparison to the Rack.

The retailer plans to open nearly 30 new locations within the next two years as it hopes to turn the chain around during a “golden moment” for off-price as many retailers and brand have excess inventory.

As shoppers look for savings, Nordstrom hopes Rack stores can fuel its revival

What: Lidl is advocating for change in kids consumer habits and hopes the industry will follow suit.

Why it is important:  low cost retailers are usually not the ones calling for industry-wide change, and department stores should take note.

Supermarket chain Lidl is urging other retailers to make fruit and vegetable packaging more appealing to children, following the success of its own Oaklands Funsize range.

Sales of this range, which features fun names and cartoon characters, increased by over a third after its launch in 2017. To promote healthier eating among children, Lidl also plans to remove cartoon characters from unhealthy products by next spring. This decision, affecting at least 30 products across 14 categories, follows a similar move in 2020 when Lidl removed cartoon characters from cereal packaging.

Peter de Roos, Chief Commercial Officer at Lidl GB, highlighted the positive impact of these small changes and expressed hope that other supermarkets would follow suit.

Lidl is calling other supermarkets to make fruit and veg packaging appealing to children 

What: Manor interviewed the director of the Swiss Retail Federation to discuss the current state of retail.

Why it is important: According to the director, department stores have the opportunity capitalize on the changes happening within the industry.

The start to 2023 has been bumpy, as retailers announce store closures, layoffs, and a decrease in profit. Digitization and the pandemic have changed the retail landscape, however many retailers are adapting and thriving.

While some have reported that department stores have missed the change, Dagmar disagrees with this statement. The director stated that department stores have the advantage of having everything in one place, giving them the best conditions for innovative store concepts.

With constant change, competitive pressure increasing, and customer needs being more demanding, retailers can no longer rely on traditional concepts. Dagmar suggests that to survive in the market, retailers should have excellent curation and brand selection, an atmospheric experience, and integrate digital media and elements in stores.

Retail trade – where opportunities and risks are close together

What: Burlington High School in the US (Vermont) was condemned and is currently being demolished.

Why it is important: After 10 weeks of adaptation works, a former Macy’s department store found a new purpose to become a new temporary school which will run until 2026. Brand names such as Levi’s and Michael Kors are still visible.

A school in a former department store

What: The US’ largest manager and developer of shopping centers recorded positive first-quarter results.

Why it is important: The results have led to the group raising its quarterly dividend and increasing the midpoint of our its full-year 2023 guidance.

Net income attributable to common stockholders was USD 451.8 million compared to USD 426.6 million in 2022 and funds from operations were USD 1.03 billion compared to USD 1.02 billion last year.

The group is seeing strong demand from the retail sector across many categories in terms of leasing despite economic uncertainty.

Simon’s Other Platform Investments (OPI) group, JCPenney, and SPARC joint venture all remain profitable, with an expectation to remain profitable in the next two quarters, but seeing a majority of the profit in Q4.

JCPenney is also making a comeback according to the group as they bring better brands into the store, fix up stores, and improve beauty floors.

Domestic property net operating income increased 4% and portfolio net operating income increased 3.9% compared to the same period last year.

Occupancy at Simon’s US malls and premium outlet centers increased 1.1 percent to 94.4%. Base minimum rent per square foot was USD 54.84 compared to USD 54.14 in Q1 of the previous year.

Reported retailer sales per square foot also saw a 3.3% increase to USD 759 per square foot.

Simon Property Group posts healthy first quarter

What: Richard Price, MD of Clothing and Home at M&S is joing Fabacus as a member of its advisory board.

Why it is important: As one of UK retail’s highest-profile executives, Price is joining the board at a pivotal time for licensing and retail as reporting regulations come into effect.

Fabacus is a data management and bureau service for the licensing industry founded by entrepreneur Andrew Xeni.

With mandated reporting regulations coming into effect, there is a need for more visibility and transparency across the sector.

With over three decades of experience working for the UK’s biggest retailers, Price’s appointment to the board brings invaluable retail experience to the company.

M&S clothing chief Price to join Fabacus board

What: The Swiss duty-free specialist exceeded its Q1 sales targets thanks to the strong recovery in tourism.

Why it is important: Thanks to the loosening of travel restrictions in China, the retailer saw sales jump 276.9% in the first quarter in the Asia-Pacific region.

With more than 2,300 stores in tourist locations around the world, the retailer saw turnover increase by 113.4% to CHF 2.35 billion (EUR 2.41 billion) compared to 1.12 billion last year and its quarterly sales beat estimates by 10%.

Dufry: the return of Chinese tourists is boosting the travel-retail business

What: Major department stores in Korea are spending over KRW 1 trillion (USD 755 million) this year on renovations.

Why it is important: The amount invested on renovations is up 32.8% year on year as customers are increasingly viewing department stores as places to gain new experiences.

Three department stores, Lotte, Shinsegae, and Hyundai, are spending a total of KRW 1.24 trillion to renovate their facilities to create experiential spaces in hopes of attracting young consumers.

Lotte is investing KRW 388.9 billion this year and KRW 432 billion next year in renovations. Its Suwon branch is going through a large-scale renewal to acquire more foreign brands and expand fashion stores and its Young Plaza location will be transitioned into a food and beverage space.

Shinsegae will invest KRW 586.8 billion as it renovates existing branches and opens new branches. Its Hermes store in its central Seoul branch will be turned into two stories and the sporting goods section of its Gangnam branch is currently under renovation.

Hyundai is spending KRW 260 billion to upgrade or open new branches. The Apgujeoung branch and Pangyo branch will be completely transformed, with the former’s food court being converted into a premium dining hall and the latter recently opening a section for foreign brands.

Department stores renovate their way to the future

What: Sharon White, Chairman of John Lewis Partnership, narrowly won the support of staff in a confidence vote.

Why it is important: While White isn’t in imminent danger of losing her job, the results indicate that she remains under pressure to improve the retailer’s performance.

The council didn’t support last year’s performance, where it reported a full-year loss and no bonus, but voted in support of the chairman to progress the partnership in relation to its purpose, principles, and rules.

John Lewis Chief survives confidence vote

What: H&M is consolidating its brands to remain competitive.

Why it is important: While every operator suffers from the competition with Shein, brand consolidation in the fast-fashion sector might be at the same time good news for department stores (if they manage to attract them) or bad news if this creates more powerful competitors.

Swedish fashion group H&M is merging its Monki and Weekday brands to create a major youth destination and better compete with arch rival Inditex.

The company hopes to address changing customer behaviour and will also bring back the jeans label Cheap Monday with a smaller product line. While the brands will initially continue to co-exist, H&M is exploring options for "combined customer experiences" and the addition of other brands and partners.

Administrative and operational costs will be reduced as Monki's headquarters are closed.

H&M merges Weekday and Monki 

What: A series of NFTs are launched in order to generate excitement among Hyundi customers.

Why it is important: The metaverse and web3 craze is not over, but simply morphing into lower sized operations. However, the bridge to the digital world is still important to build.

Hyundai Department Store Duty Free is leveraging NFT marketing to enhance customer interaction via novel experiences and activities. They recently created digital characters and launched online/offline pop-up stores.

The pop-up store located in the Hyundai Department Store Duty Free Trade Center exhibits and sells digital art/goods featuring the characters Newnique Traveler and Banana Noma. A special sale of 100 credit card-shaped gold bars featuring character logos is available, and customers who purchase these receive a free digital character NFT. A virtual pop-up store named 'The Lost Cosmos' has also been set up where customers can buy a range of items including gold bars and apparel.

Through these ventures, Hyundai aims to expand its sales channels via virtual spaces, offer unique experiences, and take the lead in the digital trends of the Korean duty-free market.

Hyundai Duty Free expands NDT Marketing 

What: Cencosud’s corporate venture capital unit has invested in the Brazilian platform Mimo Live Sales which specializes in live shopping.

Why it is important: The integration of the live shopping platform into its digital sales channels will allow Cencosud to offer an agile and interactive shopping experience.

The online sales strategy allows customers to buy audience in real time as influencers show products and services through the brand’s e-commerce site.

The investment will accelerate Cencosud’s digital and cultural evolution, allowing the company to optimize its e-commerce platforms and improve the shopping experience of its customers.

Cencosud Ventures invests in the Brazilian Mimo Live Sales to boost its digital sales channels