What:  The largest Beauty Hall in the world opens in Hainan

Why it is important: Such an opening clearly shows that for DFS and LVMH, the market is shifting, and Hainan is now a gravitational point in the international touristic economy.

DFS has teamed up with Shenzhen Duty Free Group to launch the world’s largest Beauty Hall, in Hainan, on 6,300 sqm and 2 floors. It will be home to 80 brands, and 20 will join them at the end of next year.

Such a location shows the importance given by DFS to the Chinese market and completes the experience with a WeChat e-shop which already includes 70 brands on offer.

DFS launches its largest Beauty Hall in Hainan, China 

What: Amazon is to open a physical clothing store called Amazon Style, where they will sell clothing, shoes and accessories in Los Angeles, next to Nordstrom and JC Penney.

Why is it important: Although Amazon has become the largest clothing retailer in America, they have decided to expand to a physical store since in-store purchases make up more than 85% of US retail sales.

Amazon Style, which is expected to span over 3,000 sqm, will allow their shoppers to physically see how clothes look, feel and fit before they buy. With a mix of hundreds of well-known brands (although the list is not disclosed yet) and its own private-label brands, Amazon will be able to reach customers who want to shop in person and also drive growth of Amazon's more profitable, lesser-known private labels.

Amazon hopes this will make shopping quicker and more personalized for customers. The clothing will be kept in the back of the store and a sample of each item will be displayed on the sales floor. To purchase items, customers can scan a QR code using a mobile Amazon shopping app and then pick them up at a special counter. If they want to try it on first, they can get it sent to a fitting room, which has touchscreens where customers can request different sizes or colors.

Concretely, this means that customers will be able to scan a QR code whenever they see a product in store, which will give them the sizes, colours, ratings and additional product details. This also means that the racks will not be displaying all sizes of the same clothes. Once the QR code is clicked, customers will have the possibility to try the selected item in the fitting room or pick it up directly at the sales counter for purchase.

Of course, this will also allow Amazon to gather even more data in terms of customers’ preferences and tastes, and therefore make more personalized recommendations, as Amazon's algorithms will recommend other items customers may be interested in as they browse the store and scan items.

Other advantages to the physical store are that customers can drop off their Amazon returns at the store, or order online and pick them up there.

This is not Amazon’s first venture in physical retail as they already operate brick and mortar stores, 4-star stores and Amazon Go convenience stores in the US and other markets. Analysts are cautious about this venture: even thought this will for sure alter customers’ behaviour and bring new technologies and new usages, the difficulty for Amazon will not lie in execution but in getting the right line up in terms of brands.

Amazon is opening a clothing store next to Nordstrom and JC Penney 

Amazon Style 

What: Walmart is reportedly considering launching its own cryptocurrency and NFT collection.

Why it is important: More than the move, which is bold (but with a ROI and scalability that remain to be verified), Walmart is also patenting names that could very well become extremely lucrative in the events these new brands become everyday words.

Walmart is preparing the launch of its own cryptocurrency and NFT collection, as shown by its recent filling of new trademarks patents. This follows a strategic initiative launched in August 2021 to explore the possibilities offered by the Metaverse, and which could, according to Bloomberg, lead into initiatives called “Verse to Store”, “Verse to Curb”, “Verse to Home”, which are self-explanatory.

It also follows prior, and lower-scale initiatives, such as the pilot program launched in October 21, allowing customers to buy Bitcoins at Coinstar counters located into Walmart stores.

Walmart Filings Reveal Plans to Create Cryptocurrency, NFTs

What: Macy’s will temporarily shorten its store hours on some days at all of its stores for the rest of January. Hours are reduced to 11 am to 8 pm from Monday to Thursday, compared with 10 am to 9 pm earlier.

Why it is important: Walmart, which has more than 4,700 US locations, temporarily shut almost 60 stores in Covid hotspots in December to sanitise them against the virus. Apple also announced they will close their NYC locations.

Amid omicron surge, Apple closes all New York stores to retail customers

Macy’s Shortens Store Hours as COVID-19 Cases Surge 

What: Saks Stylist is a complimentary personal stylist and shopping service that combines proprietary technology and real-life styling expertise.

Why is it important: This service focuses on making online luxury shopping exciting and easy. Stylists are from all over the country and work remotely allowing for a wide range of hours. It also helps cut down or eliminate returns. The combination of AI and a personal touch by a real-life stylist really pinpoint what somebody will like which reduces the amount of items a client will want to return.

Customers take a quiz on Saks.com giving details on their personal style and needs, such as favorite designers, colors and their body type. They will then be matched with a personal stylist who will provide curated recommendations within 24 hours. The customer can reengage their stylist for assistance at any time in the future once the initial relationship is established.

Saks Stylist Launches on Saks.com 

What: JD.com opens 100% robotized stores in Europe for the first time.

Why it is important: This experiment might serve as sources of inspiration for other retailers, especially when it comes to the order fulfilment and home delivery. If the experiment proves popular, it might contribute to the quest of better margins, by removing the human component. But would that be accepted at a larger scale by the population?

JD.Com has opened its first physical stores in Europe, in Leiden and Rotterdam (Netherlands), while two more are planned in Amsterdam and Utrech.

All stores are trading under the name “Ochama” and sell fashion ranges for men, women, kids, as well as household goods, furniture, beauty and food.

The specificity of these stores is that they are almost fully robotized, from the online ordering processing, to the order fulfilment and home delivery steps. Robots are visible by customers when they come to stores. Cashdesks are also replaced by QR code payment, allowing to remove the need for cashiers.

JD.com launches new store concept in Europe in The Netherlands, staffed by robots

What:  The German department store is to receive a second time a relief from the German state in order to compensate for the losses due to the Covid-19 restrictions in December.

Why it is important:  On a budget-orthodox country such as Germany, such a support can raise questions and criticism, all the more that Galeria Karstadt Kaufhof was not in particular good shape pre-pandemic.

Galeria Karstadt Kaufhof has received a new German state aid of €220m, in addition to €30m towards the partial repayment of the financial aid that the group already received last year (for a total amount of €460m).

The group suffered from most of the German Covid measures, such as the cancellation of the Christmas markets, and this help raises questions and criticism from observers. So far, no one linked the fact that, while the German group is receiving state aid, its parent company, Signa, has teamed up with Thai-based Central Group to acquire Selfridges in the UK.

Galeria Karstadt Kaufhof receives €220m in aids from the German government 

What: Aldi is testing a new technology, different from facial recognition, to estimate the age of customers willing to buy restricted products.

Why it is important:  If such a new usage becomes widespread and accepted, especially by the younger generations, other usages, especially on cosmetics, might be coming soon.

The German grocery chain Aldi is testing a new technology in its no-checkout Greenwich store in the UK. In this store, called Shop&Go, which is app-assisted, customers can pick up products and walk-out without going through a cashier. A novelty compared to similar Amazon’s just-walk-out stores is the introduction of an age recognition technology to help sell alcohol and cigarettes.

It is based on a machine-learning algorithm scanning photos of faces to estimate their age, and is not based on facial recognition. Images are deleted straight after the process. According to Yoti, the start-up behind the technology, the age estimation has an accuracy of 2.2 years.

Aldi uses age-estimation to sell alcohol 

What: LVMH net profit soared 156% year-on-year in 2021, as a better-than-expected fourth quarter (+51% vs 2019) confirmed strong demand for its luxury products.

Why it is important: The luxury conglomerate net profit totaled EUR 12 billion last year, up 68% compared to 2019, beating a FactSet consensus estimate of EUR 10.9 billion.

The growth is reflecting the strength of Louis Vuitton and Dior, as well as a record year for Celine and Fendi.

LVMH net profit jumps 156% in 2021

What: Harrods has confirmed that 2 new stores of its H Beauty chain will open in the spring of 2022.

Why is it important: Two new stores will open, one in Bristol and one in Newcastle's Gateshead Metrocentre in the former House of Fraser store.

Harrods will now account for 5 H Beauty stores up and running including those in the Lakeside mall, Essex, Milton Keynes, and Edinburg.

The H Beauty expansion comes as premium beauty has remained resilient during the pandemic, despite the setback in work-from-home orders, mask-wearing and the cancellation of social events made in sales of make-up and fragrances. Expansion focused at the moment; H Beauty helps Harrods gain market share within the beauty industry.

Harrods confirms Bristol’s H Beauty opening in the Spring 

What: Selfridges has been testing out livestream shopping experiences in Cantonese.

Why is it important: In 2021, Chinese consumers were expected to spend $300 billion on products featured in livestream shopping. As a result, Selfridges is learning firsthand about the potential and benefits of livestream shopping. A more immersive experience should lead to higher engagement, higher conversion and happier customers.

Selfridges’ first live in Cantonese 

What: Nordstrom is reported to be considering spinning-off its loss-making off-price Rack business

Why it is important: It is building on a strategy which has been previously used by other department stores to split between online and offline businesses but applied here to an entire division rather than a sales channel.

Nordstrom CEO Erik Nordstrom mentioned during the Q3 earning call that he was not satisfied at all with the recovery of Nordstrom Rack, which was not aligned with customers’ expectations in terms of number of premium brands and price point level of products sold there.

This is the reason why Alix Partners (who is also advising Saks Fifth Avenue, Hudson Bay and Macy’s on their e-commerce brand spin-off projects) has been appointed to help improve the overall performance and profitability.

According to Bloomberg, Alix Partners would be in fact exploring with Nordstrom the possibility to proceed with a spin-off of their Rack branch and consider what it would entail in terms of management team split and individual public reporting. This approach builds on Alix Partners’ management of similar but not identical business cases.

Nordstrom reported to consider a spin-off of Nordstrom Rack business 

What: Neiman Marcus Group promoted two senior leaders in order to drive Supply Chain and Technology Efforts.

Why is it important: NMG is making long-term investments in the business including, the enhancement of the company's systems and distribution facilities, the retailer's Connect platform, the acquisition of Stylyze, and new digital labs.

They have appointed Amanda Martin as Senior Vice President, Chief Supply Chain Officer. Martin will take over responsibility for all supply chain operations, including NMG's multi-year supply chain transformation as well as oversee the retailer's photo studio and customer care divisions.

Vijay Karthik has been promoted to Senior Vice President, Chief Technology Officer. Karthik will drive end-to-end customer facing IT development and architecture, in addition to leading a number of functions including omnichannel engineering, cloud platforms, operations and reliability, and architecture for the luxury retailer.

Neiman Marcus supports the organisation's growth roadmap 

What: Visa releases its insight for October sales in the US.

Why it is important: Consumer confidence is increasing after 3 months of decline, leading to a rebound in retail sales (excl. restaurants and bars which remain flat).

Retail sales rose 17,6% year over year in October, after having risen 15,6% in September. Spending in restaurant and bars was relatively flat, and the growth was supported by retail sales, especially in Electronics and e-commerce.

This was supported by an increased disposable income (+2,3% in September) helping to support a growth in non-durable goods and services spending.

This shows also that consumer confidence rose in October, after 3 consecutive months of decline, thanks to a stronger job growth. However, Visa analysts remind that persistent inflation might tone down the situation in the coming weeks.

Retail sales are supporting a strong Q4 spending level in the US 

What: Selfridges is reported to be finally sold this year, after having received an unsolicited offer earlier in 2021.

Why it is important: If the sale amount is confirmed, the Galen family will have multiplied their investment 8 times in 20 years.

Selfridges is reportedly sold by the Weston family to Thailand Central Group for a total amount of GBP 4 billion according to the newspaper. The confirmed amount remains however unclear, as well as the clear picture of the exact part of the Selfridges business to be bought. The Galen family acquired Selfridges in 2003 for GBP 598m.

Central already operates KaDeWe, Rinascente, Illum and Globus as its overseas operations, in addition to being a major player in Thailand. It also invested earlier this year with JD.Com into online retail and fintech. The Selfridges group is comprised of four stores in the UK, Brown Thomas and Arnotts in Ireland, De Bijenkorf in the Netherland and Holt Renfrew in Canada.

Thai conglomerate in advanced talks to buy Selfridges

What: Despite splitting its e-commerce and store operations into separate businesses, Saks is delivering a "frictionless" shopping experience, Saks CEO Marc Metrick tells vendors.

Why it is important: Saks’ CEO addressed industry curiosity on how splitting e-commerce and stores is working out. “Metrick wrote: “This model works as reinforced by key stats: 44% of online returns were made in stores and 21% of online orders were fulfilled by stores.”

For the third quarter ended 30 October, “On a gross merchandise value basis, online sales increased 56% over 2020 and 84% over 2019, driven by higher site traffic, sales conversion and inventory,” Metrick wrote. “Traffic was up 32% [compared] to 2020 and 88% to 2019, and new customer counts grew by 54% to 2020 and 122% to 2019./nbsp]

At the Saks stores, comparable sales on a gross merchandising value basis were up by 30% to 2020 and nearly 24% over 2019, Metrick reported.

During the first three weeks of November leading up to and around Thanksgiving, there’s been “outsized” performances in outerwear, women’s shoes, handbags and holiday gift sets. “On Black Friday, we set record highs for traffic, customers, volume and transactions, which proved to be our largest demand day ever, up over 50% to 2020 and more than double to 2019,” Metrick wrote.

At the stores, he said comp sales were up more than 50% to 2020 and high single digits to 2019 for Black Friday, driven by men’s wear, fragrance, women’s shoes and jewelry.

Saks’ Update to Vendors_ Strong Q3 Followed by Record Black Friday 

What: US online prices increased 3.5 percent in November from a year earlier, the biggest gain since software company Adobe Inc. started tracking the digital economy in 2014.

Why it is important: The surge, marking the 18th straight monthly increase, is another sign of how broad-based inflation has become in the country.

E-commerce once was the land of discounts, especially during the holiday season, has now become a source of price hikes in the pandemic recovery.

Nationwide, inflation is running at the highest levels in decades.

US Online Retail Prices Rose a Record 3.5% In November 

What: British skateboarding label Palace is teaming up with the department store to launch an exclusive collection and pop-up store.

Why it is important: The collection is branded Palace X Harrods which makes the department store logo very visible. It’s a smart move for Harrods to associate its name to a fashionable streetwear brand appealing to younger customers.

The collaboration features Harrods logo, which will be found across collection items, the in-store pop-up, as well as via a Palace takeover on Harrods e-commerce.

Besides skateboards, caps, varsity jackets and hoodies, it offers food, wines and coffee. It will be available online and in-store at the 'Palace Harrods' pop-up, staged at the Knightsbridge store, on the second floor from December, 10. The store pop-up runs from December 10 to 12, while the collection will be available online until December 17.

Palace Opens Harrods Pop-up With Exclusive Christmas Capsule 

What: The newly created digital arm of The Hudson Bay opens a first pop up in Canada.

Why it is important: It is all about brand recognition and equity to promote the Hudson’s Bay brand as a household name in North America.

The Bay, the e-commerce arm of The Hudson Bay, has opened a popup shop at the Canadian shipping container market, with brands such as Saint Laurent, Google, Herschel or Ugg. It is packed with tech solutions such as QR code scans to pay for purchases, Buy Now Pay Later services, etc..

It is aiming to be a thoroughly curated selection of gift ideas and probably as a way to increase the visibility of the Hudson Bay’s marketplace which has been launched early 2021. Hudson’s Bay also separated its e-commerce activities from brick & mortar in August this year. While Hudson’s Bay remains responsible for the stores, The Bay is in charge of brand direction, marketing, buying, planning and technology for both companies.

The Bay opens a tech-enabled holiday pop-up 

What: The furniture company is opening its first two store-within-a-store experiences in Fenwick’s Newcastle flagship department store and the chain’s Bentalls store in Kingston.

Why it is important: The retailers believe that this type of collaboration is an excellent route to sustainable growth. It allows both brands to extend their offer in relevant ways, bringing the benefits of each brand to the customers of both.

Two North East retail giants have joined forces to create the ultimate shopping destination for customers.

Furniture retailer Barker and Stonehouse, based in Stockton, is opening its first store-within-a-store concept in Fenwick’s Newcastle flagship department store and the chain’s Bentalls store in Kingston. The new Newcastle concept store will have 10,000 sqft of retail space, with the Bentalls store slightly smaller.

Set to launch before Christmas, there will also be a selected range of high-quality furniture and accessories from Barker and Stonehouse, with a focus on inspirational styling across the new-look floor to give customers plenty of ideas for their own homes.

North East retailers Fenwick and Barker and Stonehouse launch new store concept 

What: Sales at the 31-year-old South Korean retailer’s luxury outpost in Seoul’s reached KRW 1 trillion (around USD 844 million) for the first time.

Why it is important: By the end of November, sales had grown 31% year-on-year, with revenues from luxury goods generally up 49%, and luxury jewellery and watches up 67%.

Sales from VIP customers, which make up more than 40% of Galleria’s luxury goods sales, were up 49% from 2020. The company attributes this growth partially to the introduction of arts and lifestyle experiences, including art sales.

Galleria Department Store’s Annual Sales Hit 1 Trillion Won Mark 

What: The Financial Times reviews the Central Group, believed to being in talks to acquire Selfridges.

Why it is important: It is all about commenting rumours, however, the Thai group is well-known for acquiring top-end department stores including their real estate as a strategy.

The Financial Times gives in the rumour that has been spreading for the past week according to which Central Group is in talks to buy Selfridges, even though Central has denied such talks (it is understood that the purchase would be made directly by the Chirathivat family, for £4bn). Selfridges would be a jewel in the crown for Central, which also operates outside of Thailand Kadewe, La Rinascente, Illum and Globus, especially that they would also acquire the property, including the Oxford Street flagship one.

Today, Central Group is headed by a è-large family board which supervises a 11-member management team including Vittorio Radice, former CEO of Selfridges and La Rinascente. In the past, they tried to expand in China, without success, and are now fully focused on Vietnam and Europe.

The Thai retailer hoovering up Europe’s luxury department stores

What: Unmanned stores are expanding in London.

Why it is important: While they are an obvious asset in a talent-short world, automated stores also need to convince the general public that they are a progress. The notion of data privacy is often mentioned.

The Economist follows up the opening of the new J Sainsbury automated store in London, the latest to open a checkout-free store in Holborn, and the first one to have Amazon’s “just walk out” technology license. It is the second time they have this initiative, as they already tried in 2019 during 3 months. In the same street, Amazon and Tesco have also opened unmanned locations.

Customers need a QR code to enter the store, but then, once inside, they just have to place items in a bag and walk out, thanks to sensors and cameras which enable the retailer to invoice the right articles directly on the customer’s credit card account. While some believe that this is the future for retail, especially in rural areas where cost of staffing is high, the English newspaper also echoes opinions from customers who remain to be convinced.

The pandemic tech boom is reshaping our cities

What: WWD takes stock of the 2021 edition of MAPIC, which was held physically for the first time since the beginning of the pandemic.

Why it is important: The opening keynote, held by Philippe Houzé, was all about putting people first, delivering experiences, rather than focusing on profits in a context where competition comes from everywhere.

This year’s MAPIC welcomed a third of its 2019 traffic, and was all about mixed-use developments, combining shopping with offices, hotels, restaurants, gaming and other digital experiences. Eric Costa, CEO fo Citynove (the real estate division of Galeries Lafayette) explained that the cookie-cutter retail strategy is now over: it is all about being able to integrate the retail surface into something bigger.

International retailers (New West End Company, McArthurGlen Group) all mentioned that footfall is stabilizing (at a lower level than 2019 – and it will stay like this until international tourism reopens), with an uptick in terms of average basket, allowing to reach 70% of their pre-pandemic sales.

However, the weight of international travellers (30% of the traffic and 65% of sales in the case of New West End Company) makes that everyone is longing for their return, not expected before the second half of 2022.

Another trend currently taking place is the fact that people are not shopping anymore by necessity, but by pleasure: retailers even talk of shopping resorts replacing shopping malls. This means that people need to feel relaxed and well, meaning that more space might have to be allocated, as explained by Eric Costa, for whom retail shifts from a transactional model to one that builds relationship with people. The Galeries Lafayette Group announced that 2,000 sqm would be dedicated to health and well-being in the basement of the Haussmann store next year.

In Commercial Real Estate, Experience Matters