What: Surprising number of consumers purchased items in metaverse virtual store shopping.

Why is it important: Brands are racing to partner up, develop strategies and spearhead divisions in the metaverse.

The virtual e-commerce platform Obsess enlisted Kantar research firm to find out how people feel about e-commerce in the virtual worlds. Out of 1,001 U.S. consumers, Kantar found that this kind of shopping experience inspired a significant amount of enthusiasm and high rate of repeat customers.

Millennials topped the list, at 77 percent, then Gen Z at 69 percent and 67 percent of Gen X shoppers.

Nearly 74 percent of Gen Z participants purchased digital items in games (accessories, skins or garments for their avatar). 60 percent of these young consumers believe selling on metaverse platforms is a must for brands. 54 percent said they want to be able to shop anywhere they go online; 45 percent think virtual stores should work like online shopping malls, and 41 percent want brands to set up metaverse stores because it would be convenient for buying both physical products and digital goods like NFTs.

40 percent of Gen Zers and 40 percent of Millennials, want to shop for real or virtual products in the metaverse.

The enthusiasm goes beyond shopping and transactions. When researchers asked participants about exploring virtual experiences from their favorite brands in video games, 51 percent of Gen Zers and 44 percent of Millennials said they would be very interested.

Other companies launch their own virtual e-commerce stores, relying on tech partners to build them. These immersive environments can feel more familiar to shoppers.

Although skeptics remain uncertain about the metaverse, the fashion sector seems sold. Retailers and brands will need to hone their metaverse messaging and make the appeal clear. Many, including brands such as Gucci, Nike, OTB Group, Rebecca Minkoff and numerous others, have already started.

70 percent of Metaverse virtual store visitors purchased items

What: The shop, unifying “fitness,” “health & nutrition,” "rest & relaxation” and “sexual wellness" goods.

Why it is important: As Sephora and Ulta Beauty duke it out for dominance in the specialty beauty sector, department stores are increasingly devoting more space and money to wellness in a bid to differentiate themselves and increase their relevance. The shift comes at a critical time for department stores, whose market share in many key areas of beauty has been eroding for the last years.

Data shows that the bet is well-placed. According to the Global Wellness Institute’s 2021 “Global Wellness Economy” report, wellness grew to be an estimated USD 4.4 trillion market in 2020. The sector is due to grow by 8.2% annual growth through 2025, to reach USD 1.4 trillion.

Wellness at Saks

Found under the newly added “wellness” category at the very top of the homepage (listed alongside options like clothing, beauty and home), the drop-down menu includes “fitness,” “health & nutrition,” “rest & relaxation” and “sexual wellness.” With over 1,000 products and 50 new brands, the online wellness shop combines categories and goods — traditionally merchandised separately — dedicated to self-care. So far, among the consumers that are shopping wellness, about 25% are new customers to Saks. Depending on the results online, the wellness store could become an in-person experience.

From bath products to a range of home goods, apparel and accessories including aroma diffusers, humidifiers and sound machines, the “Rest and Relaxation” section is a “favorite” with the highest traffic, with new customers penetrating around 30%. But to date, fitness has done “incredibly well,” as the largest area of product growth.

To showcase some of their new products, Saks has been hosting live digital events: fitness classes with a celebrity trainer and choreographer, online seminars with brands to discuss crystal charging and “energetic” fragrances for instance.

US department stores’ take on wellness

Bloomingdale’s, too, which kicked off the new year by partnering with digital fitness platform Obé for series as part of the retailer’s virtual “On Screen” events. Bloomingdale’s began selling workout related tools like the Theragun, the handheld massager, while also expanding clean beauty with the “Wellchemist”. Now, Bloomingdale’s latest focus is on “sexual wellness,” a largely online-only selection (found under “beauty”).

At nordstrom.com, “wellness” can be found under the “beauty” category, with items like silk pillowcases by Slip and body products by Nécessaire. But they also sell both female sexual wellness and menstrual health goods.

Macy’s strategy has been on unifying gadgets under what it calls “wellness at home” online, bringing together massagers, aromatherapy, men’s grooming, dental care, hair care and air purifiers at different price points.

Bergdorf Goodman is offering highly curated, luxe wellness.

JCPenney is unveiling its full beauty rollout (which currently includes the Thirteen Lune partnership — an online platform focused on Black and brown-owned beauty products) this fall. The chain (which currently has an “active & wellness” category online for activewear, healthy sleep and eating) is exploring how to restructure wellness merchandise online and in stores.

Saks opens a digital wellness shop 

Department Stores Ride the Wellness Wave

What: Inno is reinventing itself to remain central in the Belgian retail panorama

Why it is important:  New logo, new concept, new offer and new systems: it is a complete reinvention of the company that CEO Armin Devender, who joined in 2019, has led since his arrival.

Inno (a founding former member of the IADS and part of Karstadt Kaufhof) has been working on a new concept to better fit in today’s Belgian retail panorama, which has been revealed in 4 of its 16 points of sales (Liège, Louvain, Sint-Niklaas and the pilot project in Schoten).

The company also launched its marketplace and implemented a new ERP system, in addition to revamping its logo (new colours) and proposing new services.

It is reported that Inno went through a -25% loss in 2020 in terms of sales.

Belgian department store company Inno is upgrading itself (French)

What: Selfridges was hit hard by the pandemic due to the store closures, Brexit and lack of tourism.

Why it is important: The extent of the losses gives also an idea of what is going on for the rest of the London-based department stores (Harrods, Liberty, Harvey Nichols) and one can wonder if the shopping spree is over in the UK.

Selfridges filed its full accounts for the year 2020 until 31st of January 2021 and it was a tough year: revenue fell -40% to £508.5m due to the 8 month closure of stores in the UK during the year. As a consequence operating result was negative, at -£136.7m compared to a result of £113.8m the year before (leading to a net loss of -£163.2m compared to a profit of +£20.6m in 2019).

This led to a net cut of 500 jobs during 2021, prior to being sold to Central Group and Sigma at the end of the year.

Selfridges UK stores saw revenues falling 40% in first pandemic year

What: Next is to open a department store in all but name as it transforms its existing sites in the Atria centre in Watford in the UK.

Why it is important: The company will bring together its fashion, beauty and home ranges in a single store for the first time as it merges two locations in the Hertfordshire mall. It's unknown yet whether it will replicate this model elsewhere.

Opening in April, the new store will cover almost 95,000 sq ft across three floors. And next door, there will be a 4,500 sq ft Victoria's Secret branch that will be accessed from the Next location as well as having its own entrance.

Clearly, the converted and extended space will feature many categories found in a traditional department store. The retailer has developed and expanded on its business model in recent years to become a major seller of third-party brands, added categories and become an operator of stores for other labels, both physical and digital.

The evolution comes as M&S has also been pivoting to sell more third-party brands and to offer more categories in its existing stores. Such changes make good commercial sense for both businesses.

Next creates a 'department store' 

What: The Korean conglomerate double downs on local convenience stores in the country

Why it is important: The convenience store channels take a new meaning in the times of omnichannel operations and ultra-fast delivery when you are a department store company.

Lotte Group, the Korean conglomerate which also operates Lotte department stores and malls and 7-Eleven in the country, has acquired the Korean division of Ministop from its Japanese owners, for an amount of $263m.

Ministop represents 2,600 POS in the country as well as 12 logistic centres, and those stores will add to the 11,750 7-Eleven stores Lotte already owns and operate.

The Japanese mother company, Ministop, will also sell its stake in Robinsons Convenience Stores, the operator of 460 Ministop stores in the Philippines.

Lotte Group acquires Ministop Korea

What: Despite the Covid situation, retailers managed to break new sales records in 2021, with $1.14 trillion online worldwide and $257 billion in the U.S.

Why it’s important: As we enter a new year, retailers must push their brands to platforms such as social, gaming, messaging and the metaverse to engage shoppers where they discover and purchase products. They must also double their efforts to reimagine physical stores to support ever-changing digital experiences

Global online sales exceed $1 trillion during the holidays: Salesforce

What: A New York coalition made waves last week with the proposal of the Fashion Act, which aims to hold all major brands accountable for their environmental and social impacts.

Why it’s important: The Fashion Sustainability and Social Accountability Act would require all fashion companies that do business in New York and generate more than $100 million in revenue to map at least 50% of their supply chains and disclose impacts such as greenhouse gas emissions, water footprint and chemical use.

The bill does not specify who these 50% are, but calls on brands to focus on areas of greatest social and environmental risk. Brands would be required to report the total volumes of materials they produce, a notable measure that will highlight the overall impact of the sector that is typically hidden; most brands boast about reducing the impact of individual materials while increasing their production and total footprint.

On the labour side, brands will also be required to disclose median worker wages and measures in place to integrate responsible conduct into policies and management systems.

This ambition could reshape the way fashion behaves given that it would affect virtually every recognizable fashion brand, from American companies such as Gap, Ralph Lauren and Tapestry to international mass market and luxury players such as Shein and H&M, Prada and LVMH.

California had passed a legislation that would hold brands accountable for wage violations occurring in their California-based supply chains. And while a growing number of fashion companies are setting science-based targets to align their emissions with the Paris agreement goals, this remains voluntary and lacks industry-wide participation, and comes with little oversight or enforcement to ensure compliance.

In whole, these laws need further refinement and strengthening. Much of the bill’s criticism stems from who was at the table when it was created.

Deconstructing New York’s Fashion Act 

What: The UK department store is now part of the luxury department stores collection led by Central and Signa

Why it is important:  Canadian operations remain in the Weston family portfolio.

Central Group and Signa Holding have teamed up again to acquire Selfridges for a non-confirmed amount of GBP 4 bn. They already jointly own and operate la Rinascente, KaDeWe, Illum or Globus in Europe.

The agreement includes 18 stores out of the 25 stores owned by the Weston family, including Oxford Street, Manchester, Birmingham, the De Bijenkorf, Brown Thomas and Arnotts locations. Holt Renfrew, however, will remain the property of the Weston family.

The current leadership teams will remain in place and the consortium will represent a cumulated turnover estimated to €7 bn within 2024.

Central and Signa win Selfridges, Holt Renfrew not included

What: Lotte department store's new CEO Jung Jun-ho is striving to change the company culture. To that end, Jung first introduced his "ABCD" policy, for "Agility," "Being proactive," "Creative" and "Design is everything, everywhere." The new chief asked for quick decision-making and horizontal communication between all employees.

Why it is important: Lotte is well-known for its authoritarian leadership style. Jung wants to establish a work culture and environment where people freely share their ideas, but the existing system is not used to it.

It will take time as the company is struggling to break down its vertically oriented corporate culture. Jung has been throwing out topics for discussion consistently on the company's intranet, but most employees only compliment his opinions, rather than actually sharing theirs.

Lotte Department Store employees are accustomed to following the "check-and-confirm" method, in which all details need to be confirmed with various levels of management, even when making minor decisions. This system has dropped Lotte into second place behind Shinsegae in sales since 2016.

Lotte department store CEO to change company culture

What: A selection of 10 brands (usually DTC) increasing their retail footprint in the US in 2022.

Why it is important:  For these brands, more stores mean more business and profit, through the right articulation with their online and digital offering and customer processing.

Placer Labs, an analytic firm that tracks customer foot traffic for retailers, hospitality groups and real estate companies, compiled a selection of top 10 US retail brands which are growing their retail footprints. In their specific case, brick & mortar expansion goers hand in hand with rising performances and profitability. The list includes several categories of varying importance for IADS:

• F&B businesses (Raising Cane’s chicken Fingers, Dutch Bros. Coffee,
• Health-related businesses (Blink Fitness clubs) or Sephora inside Kohl’s shop in shops.
• Retail: Warby Parker, which has pioneered into going from DTC to brick & mortar, and shows an impressive +70% September 21 to September 20 foot traffic increase, Allbirds (shoes), Arhaus (home improvement retailer), Burlington,
• Convenience stores : Gopuff, which operates on average 1,200 sqm stores,  pOpshelf (from Dollar General).

For all those players, it is all about raising the right stores footprint and adapting it to their online business so that they can provide a coherent and holistic experience to customers.

Top 10 US retail brands increasing traffic and performance in 2022 

What: Walmart is testing new features in their prototype store to improve the customer experience.

Why it is important:  Given their firepower (the first phase of tests and experiences is already being rolled over in 1,000 stores), any innovation made by Walmart has all chances to become a staple in their stores and therefore to become a bottom line expectation.

Walmart introduces a new in-store experience with an interactive approach allowing customers to touch, feel and try new items, through its innovation incubator called “Time well spent”. This project is the second phase of Walmart’s store redesign project, after a first phase which focused on navigation and wayfinding, now currently rolled over in 1,000 stores.

The Time Well Spent store (in Arkansas) includes the following features:

• Activated corners that can help customers feel products, such as pillows or blankets that can be touched and squeezed and then directly added to cart,
• Elevated brand stores including the possibility to test in real conditions the products for categories where it was not the case before (strollers, car seats, men’s cosmetics..),
• Digital touchpoints also helping to sell additional products and services such as insurance or delivery options.

In short, Walmart is testing new ways to elevate their stores and design them as destinations rather than competing solely on the price point.

Walmart brings the interactive store 

What: The Bay, Hudson Bay’s e-commerce business, names Alexander Meyer as their Chief Customer Officer.

Why is it important: Alexander Meyer will oversee the brand strategy and other responsibilities such as customer insights, marketing and creative as well as loyalty and communications. Meyer’s focus is on high growth, brand and personalization.

He will lead the marketing at both The Bay e-commerce website and the Hudson’s Bay brick-and-mortar store chain.

The Bay hires a Chief Customer Officer

What: Pete Nordstrom discusses the latest developments and partnerships in evolving Nordstrom’s assortment and appeal.

Why is it important: Nordstrom’s merchandising strategy combines a mix of curiosity, openness to new types of vendor partnerships and expanding their assortment online. Along with those, there is 10% turnover of labels carried by the retailer that helps keep the assortments fresh.

Nordstrom strives to become more important to brands, particularly those desired by Nordstrom guests. They are doing this by extending the offer by merchandising more online.

With Nordstrom’s broadening online assortment, the search function, personalization, and data become even more important, so the experience for shoppers isn’t overwhelming.

Pete Nordstrom on Nordstrom Inc.’s Merchandising Philosophy 

What: Buy Now Pay Later (BNPL) finance platform Klarna has launched its own payments card in the UK.

Why it is important: The new physical card is set to bring a BNPL solution to in-store payments. Klarna claims there’s a waitlist of 400,000 consumers in the UK showing BNPL is still very appealing, especially with physical commerce rising again.

It launches with its ‘Pay in 30’ scheme, which allows consumers to pay any time up to 30 days after purchase, with plans to add additional payment options in the future.

It's an interesting development as some consumers hold back from using traditional credit cards that can be expensive in favour of the BNPL method that helps them spread out payments. And as footfall is stores is rising, it's clear that consumers are also seeking physical solutions similar to those that they have online.

Klarna launches physical payment card in UK

What: The new owners of Selfridges are all about upgrading the food hall and making the most of the real estate by opening a new hotel in disused building

Why it is important:  It is all about creating an experiential hub, thought as an ecosystem, with a luxury hotel connected to a top end delicatessen and food hall, surrounded by a carefully curated selection of brands and luxury products.

Within the framework of the revamp of the flagship store in Oxford Street, Sigma and Central Group plan to upgrade the food hall, which is according to them underexploited so far (all the more that the consortium excels in this part of the business in KadeWe and Globus) and to open an hotel and apartments in a portion of the building that has not been in use since 2008.

Selfridges’ new owners plan to open a luxury hotel in the flagship location 

What:  A new app uses AR to guide customers to the items they want to purchase, in a pilot store located in London.

Why it is important:  This is a good example of reasonable usage of tech to improve the customer journey and bring them a true valuable service.

Marks&Spencer has launched a new app, “List & Go” which allows customers to know exactly where the items they plan to purchase are located in the White City (London) store. A real time navigation system guides them to the item and then proposes the fastest route to the next one.

This is an example of “test and learn” approach as the goal is to learn from this initiative in the White City store to then expand it to the rest of the “10x digital” stores network, i.e. stores fitted and equipped with adequate systems to support such services.

 Marks & Spencer trials in-store AR app 

What: Macellum Advisors sent a letter to shareholders criticizing Kohl’s market share loss, for failing to grow 2021 revenue versus their 2019 levels. They were also criticized for having insufficient expertise on their board, and describing 2021 as “a lost year” for the retailer. In addition, Macellum is pushing Kohl’s to consider splitting up its brick-and-mortar stores and e-commerce businesses into separate companies.

Why it is important: While the separation strategy is controversial, with some experts thinking it’s only good for short-term profits, Kohl’s has some strong words for the activist shareholders pressuring them.

Macellum Advisors, which owns nearly 5% of Kohl’s shares, called for Kohl’s to add more retail expertise to its board, explore strategic alternatives including selling to a financial sponsor, or cashing in on much of the USD 7 to 8 billion in its real estate assets with sale-leasebacks.

Kohl’s responded quickly, stating that its board has the right mix of expertise and fresh perspectives; that its strategy to be the leading omnichannel destination for the active and casual lifestyle continues to gain traction, and that Macellum’s letter is “filled with unfounded speculation.”

Last December, Engine Capital LP, which owns about 1% of Kohl’s stock, sent a letter to the Kohl’s board contending that a stand-alone e-commerce business could be “conservatively” valued at USD 12.4 billion or more, compared to the retailer’s market cap of about USD 6.7 billion. As an alternative to separating the dot-com and stores businesses, Engine Capital urged Kohl’s to consider a “market test” to see how much the company could be sold for to “well capitalized” financial sponsors.

Pressure for Change Mounting at Kohl’s

What:  A Mexican retailer accepts payments in Bitcoins and grants 20% discounts when purchases are paid via this cryptocurrency

Why it is important:  Whatever their opinion on Crypto, retailers need to look at what is going on and adapt, including by seeing this method of payment as the latest one needed in the rooster of payment methods they offer to their customers.

Grupo Elektra, which retails a variety of goods in Mexico and Latin America including electronics and home appliances, announced last December that they were accepting payments in Bitcoin, through a US-based platform, BitPay.

Any payment made with Bitcoin will generate a 20% discount on the purchase amount.

Mexican-based retail group Grupo Elektra accepts payments in Bitcoin

What: Neiman Marcus has partnered with Balmain to create a special pop-up store displaying the luxury brand's collaboration with Barbie.

Why is it important: The exclusive experience is a celebration of Neiman Marcus' 10-year relationship with Balmain, being the luxury multi-brand retailer with the largest assortment of the French fashion house's collections worldwide.

Neiman Marcus customers will be able to enjoy weekend activities including a live DJ set, a custom cotton candy machine and photo opportunities in a life-sized Barbie doll box at the Neiman Marcus NorthPark location in Dallas, Texas.

The pop-up mimics the iconic Grand Palais in Paris, where customers can sit on Parisian benches and interact with the limited-edition collection in a garden similar to the famous Tuileries gardens.

The limited-edition collection plays with new spins on familiar Balmain signatures, including the house's iconic marinière and mesmerizing Labyrinth pattern. There will also be new takes on iconic designs recently introduced, each slightly adjusted to reflect the modern Barbie aesthetic, while never veering away from Balmain’s atelier standards.

The collection will be available online at Neimanmarcus.com and in select Neiman Marcus stores.

Neiman Marcus launches exclusive Balmain X Barbie pop up experience

What: Hedge funds are urging Kohl’s and Macy’s to consider radical changes to how they operate.

Why it is important: Some investors want to sell department stores in pieces as they see retailers’ true value in the land and buildings they occupy, or their brand name, rather than their ability to sell products.

After Saks split off their website last year and planned on a public offering that could value its e-commerce at USD 6 billion, activist investor Jana Partners took a stake in Macy’s in October and urged the chain to follow suit.

Two investment groups made moves to buy Kohl’s: a consortium of investors backed by hedge fund Starboard Value LP put in a USD 9 billion offer, and private equity firm Sycamore Partners is reportedly plotting a competing bid.

Even before the potential buyers emerged, Kohl’s was already the target of activist investors, Engine Capital and Macellum Advisors, which are pressuring the company to sell off its real estate and spin off e-commerce operations. The idea is that offloading some properties will generate cash flow for the company, and then the retailer would rent its most profitable stores instead. With digital separation, creating an independent online entity is a tactic to attract new capital.

Real estate transactions and e-commerce spin-offs can be lucrative for a retailer’s investors. What it means for the fashion industry is less clear as it might not be a long-term play to “save” the US department stores.

Why activist investors are targeting department stores?

What: After completing the corporate equality index, Neiman Marcus group unlocked a platinum-level membership with the HRC and was recognized as “best place to work for LGBTQ+ equality.”

Why is it important: Due to several newly incorporated benefits and policies, Neiman Marcus Group recently earned a 100 score on the Human Rights Campaign Corporate Equality Index, the United Sates’ leading benchmarking survey and report measuring corporate policies and practices for LGBTQ+ workplace equality.

The recent score was based on several new benefits and capabilities the company has adopted such as, enhanced policies and Code of Conduct to include protections for sexual orientation and gender identity and expression and gender transition guidelines. Also, NMG ensured equivalent benefits for same-and different-sex spouses and domestic partners, including health, dental, and vision insurance, and dependent coverage, as well as relocation/travel assistance, FMLA-like benefits, and employee discounts.

On top of this, NMG partnered with the HRC during Pride Month, implementing a point-of-sale fundraising campaign in Bergdorf Goodman, Neiman Marcus, and Neiman Marcus Last Call stores.

They presented a $250,000 donation to HRC leadership from their $150,000 Platinum membership level and $100,000 from customer donations. They will be used to support the HRC's broad-reaching programs, including Children, Youth & Families Program, Health & Aging Program, HIV & Health Equity Program, Religion & Faith Program, Workplace Equality Program, HRC Project One America, and Transgender Justice Initiative.

At Platinum level membership, NMG will have access to VIP policy briefings covering the latest developments within the community and overall LGBTQ equality movement, including public policy briefings, legislative briefings, and more. The Company will also have access to HRC subject matter experts on transgender inclusion in the workplace, LGBTQ self-identification best practices, being an ally, and much more.

Neiman Marcus new partnership with Human Rights campaign

Neiman Marcus on human rights campaign index