What: After Kohl’s underperforming stock, shareholders are pushing the department store to either split off its e-commerce and legacy store operations into two companies or sell itself.

Why it is important: HBC retailers have all gone through such separations, so the suggestion is not unprecedented, but how its affecting their operations remains to be seen.

An e-commerce spinoff entails severing the retailer's online and brick-and-mortar operations while keeping its brand and customer experience intact.

This has become a favored tactic among financial pros these days, at least when it comes to department stores.

While financial wizards are keen on the idea, many analysts and retail experts are not, citing the difficulty of two companies maintaining seamless branding, merchandising and fulfillment as demanded by the customer. If you take Walmart and Amazon for example, it seems that they are spending more time integrating their online and offline operations.

Hedge fund pushes Kohl's to consider e-commerce spinoff 

What: In a break with tradition and retail practice in the U.K., Harrods will be launching its Winter Sale on 17 December (instead of 26 December), and running it throughout the holiday season, and into early 2022.

Why it is important: COVID-19-related lockdowns have upended the seasonal routine, and this marks the second time that Harrods has pushed forward its sale.

Harrods kicked off its sale in early December last year in between two national lockdowns. The physical sale ran for just three weeks, and then shifted to online when stores were forced to shut.

Harrods also needs to compete with the big online retailers, which usually start their winter promotions earlier than the physical stores. Net-a-porter already unlocked its 50% off sale. Matchesfashion is offering an extra 10% off its sale merchandise.

Harrods Defies Tradition, Again, With Plans to Start Winter Sale Early 

What: Macy's is grappling with how to make its e-commerce business a standalone company without losing customers who rely on its department stores to pick up or return items they bought online, according to people familiar with the deliberations.

Why it is important: The e-commerce business could be worth USD 14 billion on its own, more than Macy's entire market capitalization of about USD 8 billion. But the split of e-commerce and stores, highlighting the critical importance of physical retail, is not comparable to Saks’ similar move earlier this year.

Macy’s asked consulting firm AlixPartners to review its business structure after Jana Partners urged it to separate its e-commerce arm. AlixPartners also advised HBC on the separation earlier this year of Saks’ e-commerce business from its department stores.

Macy's has close to 800 stores. It has said its online sales are two to three times higher per capita in regions where the stores are located, because of the convenience for customers of picking up and returning items at the stores. Saks, on the other hand, has only about 40 stores, and the privately held company's e-commerce business generates annual revenue of less than USD 1 billion. That is a fraction of Macy's e-commerce revenue, which is set to exceed USD 8 billion this year.

A separated Macy's online business will need to have extensive commercial agreements with the company holding the department stores. They would have to govern everything from merchandise distribution and storage to promotions and marketing, in order to provide Macy's customers a seamless experience in-store and online.

Jana Partners suggested that a benefit of separation could be a cash infusion in the online business that would help hire top talent and invest in new technology. It pointed to the case of Saks, which attracted a USD 500 million investment from private equity firm Insight Venture Partners at a USD 2 billion valuation for its online business.

Macy's reliance on stores for e-commerce weighs on mulled split 

What: Multibrand store Fred Segal opens a physical and digital space to sell NFTs and related merchandise.

Why it is important: This is the first time to our knowledge a multibrand retailer creates a space to sell NFTs. Department Stores should take notice.

Los-Angeles-based fashion retailer Fred Segal announced the opening of a space called Artcade, a “dynamic retail experience” which physically displays NFTs and digital art on wall displays and via a streaming studio. So far, other examples were provided by brands (Dolce & Gabbana, Rebecca Minkoff) but not by wholesalers.

The offer will include well known NFTs (The Bored Ape Yacht Club, Cool Cats…) but also IRL collectibles and limited-edition apparel. The space is developed in collaboration with Subnation, a media tech company, and a virtual version of the store, in the upcoming Metaverse, is planned.

Logo: Fred Segal

NFTs are making their way into physical retail 

What: Indian retail giant is accelerating in the e-commerce world to become the equivalent of Alibaba in the country.

Why it is important: Reliance Retail is building up a full digital ecosystem including apps and software, which might very well generate the ideal context for new disruptive brands to appear there, just like how Shein emerged from a similar context in China.

Reliance Retail, which is focused on the Indian middle class (30% of the total Indian population) is in the midst of a shopping spree through various acquisitions of start-ups and B2B solutions to leverage whatever portion of the middle class wallet size. Its strategy is to combine traditional retail in top tier Indian cities, and partner with smaller stores or merchants in the tier 2 and tier 3 through its omnipresence in the Indian e-commerce world. As such, it places itself directly in competition with Amazon or Alibaba, by being at the same time a direct retailer and a wholesale marketplace.

Reliance Retail's Covid strategy is to further boost its e-commerce reach 

What: Coresight made its annual store tour to review Black Friday performances in the US and Canada.

Why it is important: Black Friday is now a worldwide event and seeing what is happening in the US is a good temperature check. In addition Coresight provide pictures of some stores.

Coresight undertook a store tour for the Black Friday in US and Canada, to see the key trends on the market. Overall:

• Frequency and magnitude of the deals were in line with previous years
• Stock levels were in general very strong, with a few exceptions due to logistical issues,
• Crowds were extremely heterogeneous, with stores packed and others empty,

Coresight considers that, even though traffic and inventory varied, even in the same stores in similar areas, the demand was healthy as there was a high degree of willingness to shop from customers, more than offsetting their fear of entering stores. For them, the impression is encouraging.

A detailed chart and some pictures allow to have an impression retailer by retailer.

Black Friday insights from the US and Canada 

What: An interview of Shopify’s Head of Data Science to understand how Shopify puts itself at the service of merchants.

Why it is important: Such an approach allowed Shopify to compete with Amazon in terms of GMV in the course of very few years.

Forbes interviews the Head of Data Science, Engineering, Revenue and Growth at Shopify to understand how Artificial Intelligence and Machine Learning are used to enhance both product offerings and customer experience, for the 1.7m merchants it powers.

Shopify aims at empowering entrepreneurs and retailers by giving them a simple and efficient experience: personalized onboarding, intelligent tech support, advanced analytics to detect in 30 seconds the most important points of attention. Machine learning is also used to categorize products en masse.

This is achieved thanks to a vision that has helped Shopify since the beginning, i.e. putting themselves in the shoes of merchants instead of building a new technical solutions. It is all about simplifying tech to put tech as a tool at the service of someone who does not know anything about it (and should not).

Data Driven Decisions And Forecasting At Shopify

What: Streamed live from a private suite, some actress hosted a White Elephant party. Before the event, each guest received a party-in-a-box with game instructions to participate in the party.

Why it is important: Dedicated to selected guests, the event was accessible both online and in store.

During the game, party guests were able to preview and win some of Neiman Marcus' gifts that were also available for purchase. In addition to the assortment featured in the White Elephant party game, Neiman Marcus Style Advisors were personally available to offer hand-picked product suggestions.

Neiman Marcus extended the event across all 37 stores as select customers were invited to join the luxury retailer for exclusive, invite-only White Elephant parties hosted in their gifting suites and private restaurant spaces.

Neiman Marcus Hosts The Ultimate White Elephant Party 

What: From working extensively with Kanye West in the late 2000s to molding street-style scene with Off-White, countless collaborations, running numerous DJ sets and art exhibitions, to finally taking over Louis Vuitton’s men’s wear, it’s difficult to sum up “multihyphenate” Abloh’s work.

Why it is important: Abloh will be remembered for his global influence on society besides fashion, and by popularising luxury streetwear with Off-White bit also with Louis Vuitton.

Abloh graduated with a Bachelor of Science in civil engineering from the University of Wisconsin-Madison and started DJing at the age of 17.

In 2007, Kanye West hired Abloh and they briefly worked on West’s first fashion project, Pastelle, together. From there, he interned at Fendi with West in 2009, and was officially named West’s creative director. Also in 2009, he opened Chicago store RSVP Gallery in Wicker Park, offering luxury and contemporary fashion and streetwear brands like Chanel, Comme des Garçons and Bape.

In 2012, he launched Pyrex Vision, a streetwear brand produced partly from deadstock Ralph Lauren products and apparel pieces that served as the impetus of streetwear’s fashion takeover. He launched Off-White in 2013 and established his signature marks, like zip ties, quotation marks, slant stripes and barricade tape.

Off-White was a finalist for the LVMH Prize in 2015. Though the brand did not pick up the prize that went to Marques’ Almeida or the special prize won by Jacquemus, Off-White did score countless collaborations like Levi’s or Nike on their “The Ten” series that included reinterpretations of 10 of the sportswear company’s sneakers, and even with Ikea on furniture. Other collaborations include Jimmy Choo, Moncler, Tsum, Byredo, Babylon LA, Ginori, Vilebrequin, Champion, Timberland, Dr. Martens and Umbro, Rimowa.

He teamed with retailers Ssense on athletic apparel; Sunglass Hut on a sunglasses collection; an exclusive capsule for Browns, and Le Bon Marché on a café.

In 2018, Louis Vuitton named Abloh men’s artistic director, making him the first Black American to hold the position at LVMH. His first show also marked a new direction for the fashion house that tapped further into skate and street culture.

In 2019, he held his first solo exhibition, “Virgil Abloh: Figures of Speech,” at the Museum of Contemporary Art chronicling 20 years of his designs, inspirations and collaborations. The exhibit would travel separately from Louis Vuitton’s traveling men’s pop-up shops.

Shortly before Abloh’s death, LVMH acquired a 60% stake in Off-White and granted him a bigger role at the company to work on their wine and spirits and hospitality categories.

Virgil Abloh dies at 41

What: Coresight, just like FT and Forbes, is against the strategy of splitting up offline and online activities for large retailers.

Why it is important: The spilt-up reasoning is purely financial, but creates logistical and operational hurdles, according to analysts. So far, the Saks.com example suggests however that it can generate enough resources to fuel both online and offline activities. But one example might not suit all retailers.

Coresight addresses the very trendy topic of large US retail companies being under pressure from activist investors, who are pushing them to spin off their e-commerce division just like what Saks Fifth Avenue and the Hudson Bay did earlier in 2021: Macy’s, Kohl’s, and others… Coresight is not the only one sceptical with this approach: the Financial Times or Forbes also expressed doubts. For them, this approach goes against optimal retail management and is contrary to long-term trends, as the articulation between online and offline allows retailers to have a holistic view of their inventory, creating benefits in efficiency, pricing and customer satisfaction.

Investors are pushing spin-offs as companies with a combination of slow-growing and fast-growing businesses are typically sanctioned with a “conglomerate discount” in their market share price. Splitting up allows to value companies at the right price, and boost them when they are growing, like e-commerce. Coresight reckons that the strategy worked well for Saks, as they received an $500m investment which helped to allocate resources to the e-commerce company and make it grow (+80% GMV since the spin-off). Such an approach allows Saks to stop having to make choices in terms of resources allocation, between stores and online, and do both at the same time.

Coresight analysts do not really provide evidence that the strategy is ill-suited to department stores, even though if they assert that splitting up would create confusion for consumers and make click&collect and BOPIs activities very difficult.

An open letter to department stores to resist spinning-off ecommerce 

What: A Fintech mixes a bank account with a second-hand resale platform.

Why it is important: Now that all department stores are going into circularity, and some of them already have a payment card programme, should they consider adding specific perks such as this one?

GDR is a UK-based trend spotting company, partner of the IADS. They have recently spotted DIEM, a new UK-based banking start-up which wants to generalize circularity by taking care of its customers’ old products resale.

The principle is simple: customers upload a picture and enter key details. DIEM values the product and make an offer through a dedicated algorithm. If the offer is accepted, DIEM will attempt to sell the product. Of course, this is completely integrated into the customer bank account.

A UK bank takes care of products circularity on behalf of customers

What: Gaming and NFTs represent a EUR 50 billion opportunity according to Morgan Stanley.

Why it is important: The metaverse can offer luxury brands exposure to teenage customers, and male customers, who currently account for only 30% of luxury purchases. It could represent 10% of luxury’s addressable market by 2030.

Morgan Stanley sees NFTs and social gaming, which includes concerts, as the most attractive near-term opportunities.

Gaming collaborations are “more advanced in their ability to generate revenue and a wider halo effect for the industry,” while NFTs are more profit-generating. The former is seen representing 40% of metaverse revenues, but only 20% of profits by 2030, the report says.

The Metaverse Is Seen as a Mega Opportunity for Luxury Brands

What: Marks & Spencer recently announced an undisclosed investment in Hirestreet’s parent Zoa Group through a joint venture with brand accelerator Founders Factory, as it launched its debut rental offering on the platform.

Why it’s important: This makes M&S the first major high street retailer in the UK to signal broader ambitions in the burgeoning clothing rental market.

Entering the apparel rental market is the latest in a series of efforts to reverse years of declining sales in the M&S apparel division.

Last year, the company began offering third-party brands on its website and launched an ongoing collaboration with Ghost. In January, it acquired British womenswear brand Jaeger after going into administration, which allowed it to expand its brand offerings on its platform.

These actions are part of a multi-year struggle to remain relevant in an increasingly volatile and competitive retail market.

Following Investment, M&S Launches on Rental Platform Hirestreet 

What: The CEO of Central Group gives an interview to lifestyle magazine Monocle.

Why it is important: The group does not have specific plans for further expansion outside Europe, however, they intend to maximize the usage and benefits from their digital platform, which has been launched in Thailand earlier this year.

Tos Chirathivat, CEO and grandson of the founder of Central, took the company into Europe in 2011 when he bought La Rinascente. Since then, the group acquired Illum, Kadewe, Globus. According to him, these opportunities arose due to the fact that the department store job is a tough one. They remain focus on creating destination stores, unique to the city where they belong. He confesses not having any plans to go to the US or Japan, as Europe is already quite a complex playground.

His next grand plan will be to expand the European business through Central’s existing digital platform, which already boasts 18m members within the loyalty program in Thailand.

The interview of Tos Chirathivat, CEO Central Group 

What: After months of testing, Walmart has determined that autonomous trucks offer an "efficient, safe and sustainable solution" for transporting goods. Trucks are supplied by Gatik, a relatively new company for automated, self-driving trucks handling short-haul logistics.

Why it is important: The autonomous trucks are supposed to help meet the increasing online demand, keep delivery times short, and compensate for driver shortages.

Since July 2019, Walmart has been testing Gatik’s driverless truck with a safety driver in the vehicle. Last August, the safety driver was removed from the vehicle. The driverless trucks have been making repeated delivery runs per day, seven days a week on public roads.

At Walmart, B-to-b Deliveries Going Driverless 

What: The sportswear retailer is affected by the disruption in the global supply chain for sneakers. The same disruption is expected to hit the production of Spring/Summer 2022 collections.

Why it is important: A few months ago, Nike announced it will favour a direct-to-consumer strategy and a limited number of close retail partners. The fact that retailers are having their orders cancelled is concerning.

Nike cancels retail orders due to supply chain problems

What: Masks are imposed again in the UK, in spite of many incidents during which customers assaulted retailers asking them to wear masks.

Why it is important: All European retailers are watching the outburst of Covid-19 this winter and expecting to be hit by new measures.

With the expansion of the new Omicron variant, Covid-19 is now pushing the UK government to control entries on the territory, by imposing a self-isolation, as well as the permanent wear of masks in retail spaces. Retailers are faced with the dilemma of being proactive, and facing customers’ anger, or waiting to be forced to impose masks, and facing official backslash.

New variant fears mean compulsory face masks are back for English stores

What: A retail veteran’s view on the current paradox between online retailers buying land and department stores being pushed to sell off real estate.

Why it is important: Warehouse space is the new gold rush in the US and elsewhere in the world, to allow smarter, faster, more efficient and less costly logistics.

Walter Loeb, who spent most of his career in retail (Macy’s, May Department Stores and Allied) reviews the current paradox and dichotomy between online players rushing to acquire real estate, while at the same time department stores are urged to divest in stores and switch to become 100% digital.

According to the retail veteran, major US retailers are currently buying a significant number of square metres dedicated to warehousing as a matter of control, both in terms of costs and operations. The top 25 US retailers bought 3,8 m square metres in 2020, a decade high. Owning the warehouse allows to operate more efficiently and save on logistics, but also to be able to tamper with global supply shortage, like the one we are going through this year. This allows for instance to anticipate orders and stock products well in advance, and limit reliance on just-in-time logistics. Amazon is currently the largest corporate land owner in the US, with 78 buildings and 8,36 m square metres.

In the meantime, other retail companies such as Macy’s are being urged to divest their real estate holdings by activist investors who want stores to be sold off. Saks Fifth Avenue is currently going in that direction, by its split between an online company and a real estate one. Loeb is currently in wait and see mode for what relates to this strategy.

Why Retailers Win Big By Owning Real Estate

What: Amazon proposes to distant customers ultra-local store tours and experiences via local “hosts” equipped with cameras, able to buy products on behalf of the customer.

Why it is important: Take it in the other way: could Department Stores propose to distant customers such services, including of course their stores but also visits of the city where they are located?

Amazon has launched Amazon Explore, a new service for now only available to US customers, which allows them to engage in virtual travel experiences and shop local products during those visits.

The system is quite simple: a local “host” walks the streets or stores, equipped with a camera, and the shopper is able to guide him and ask the host to buy such and such product. Amazon then takes care of the shipment.

Service is charged by the minute, or total duration. For instance, a 40-mn session in Missisippi is priced at USD 10, while a 75-mn session in Kyoto is priced at USD 90.

Amazon launches shoppable virtual travel experiences

What: Rents in three of Hong Kong’s prime shopping areas are near the lowest in more than a decade in the wake of 2019′s anti-government demonstrations and some of the world’s strictest Covid-19 travel restrictions.

Why it is important: While the city is in talks with Chinese officials about reopening their shared border, limited cross-border travel could resume as soon as the end of the year or in the first quarter of 2022. But rents are not expected to rebound quickly, but they may rise gradually.

Rents in three of the city’s prime shopping areas are near the lowest in more than a decade and owners are offering discounts of close to 80% from the peak about eight years ago in Hong Kong’s Russell Street, according to data from Cushman & Wakefield Plc. The strip in Causeway Bay on Hong Kong Island was ranked as the world’s most expensive for shop rentals until 2019, the last time that the firm released global numbers.

Shops that used to sell Swiss watches offer budget mobile phone gadgets after the 2019 anti-government demonstrations and some of the world’s strictest Covid-19 travel restrictions deterred China’s affluent travellers.

Prime shopping areas have been in chronic decline since late 2013, with pandemic-related travel restrictions dealing the latest blow. Rents at Causeway Bay’s premium shops fell by half in the third quarter from two years ago at the height of the protests, according to Cushman & Wakefield’s data.

As an example, Chow Tai Fook Jewellery Group Ltd. rented a shop in Central for HKD 500,000 (USD 64,200) a month, 50% lower than the previous tenant, Hong Kong Economic Times reported last week.

World’s Most Expensive Retail Rents Tumble to Decade Low in Hong Kong

What: The FT takes a position against the US trend of splitting companies between online and offline.

Why it is important: The article is not so much built on facts and figures than on opinion and gut feeling, which shows that the current debate is all about beliefs and hopes rather than certainties.

The Financial Times reports that Macy’s is supposedly looking at the same retail breakup between offline and online operations than the one Hudson Bay Company, and Saks, performed earlier in 2021. The strategy is based on a financial reasoning which leads owners to expect valorizations at multiple of their revenue (in the case of Saks.com, the expectation is a value representing 6 times its revenue).

The FT argues that in the case of Macy’s, stores play an important role in driving online sales, all the more than its omnichannel approach helps keeping shipping costs downs and driving foot traffic to stores. According to the newspaper, taking away stores would diminish the incentive to order online. Furthermore, the FT also points out the logistical and administrative chaos that such a break up would generate.

It is interesting to see that this column generated a high number of reactions in the reader’s section.

Financial Times agains retail break up

What:  An ad for its insurance services made John Lewis’ customers angry both for its content and its clarity

Why it is important:  Brand image is key to sell additional services, but needs to be maintained at all costs. If the backslash for lack of clarity can be understood, the issues about the hypersexualisation of a young boy is more surprising coming from a household brand such as John Lewis.

John Lewis is facing a backslash regarding an ad campaign related to its insurance business, on two counts: for the hypersexualised representation of a young boy, and for a misleading message on the actual content of the insurance package.

John Lewis had started running this campaign on the 11th of October and pulled it back on the 27th of October. It also contacted all customers who had contracted this insurance during the period, to clarify the content of the insurance package and make sure subscribers were fully aware of what they were buying.

John Lewis forced to pull back controversial insurance ad 

What: The Neiman Marcus Group has made three key changes at the senior level to reflect “a more modern growth mindset.”

Why it is important: The Dallas-based luxury retailer says women represent the majority of the board and more than 50% of those at the senior vice president level and above.

Natalie Lockhart has been named senior vice president of strategy and execution, responsible for coordinating all aspects of the luxury retailer’s growth roadmap. Lockhart is now also a member of NMG’s group leadership team and heads the new growth execution office.

Chris Demuth has been elevated to senior vice president, people services, environmental social governance, belonging and corporate philanthropy.

Tiffin Jernstedt has been named senior vice president, chief communications officer.

More women at Neiman Marcus

What: Ikea’s mall business is stable and was not durably affected by the pandemic.

Why it is important: With the strategy of acquiring smaller spaces located in city centres, to create mini-malls, this part of Ikea’s activity becomes a direct threat to department stores across the planet.

Ikea’s mall business company, Ingka Centres, which owns 47 malls across Europe, Russia and China, reports that while footfall remains more or less stable globally at +1% vs. LY (with discrepancies between regions as Europe fell 13%), its tenants’ sales increased +16% to €6,6 bn. Occupancy rate remains stable at 94%, with large scale tenants such as Zara.

Last year, footfall decreased globally by -16% due to lockdowns and restrictions across the globe. The company is now pursuing a similar strategy to mother company Ikea, by looking for smaller locations acquisitions located in city centres, as exemplified by the recent acquisition of the former Top Shop location in London, or plans to open in Toronto and San Francisco in 2022.

Tenants' sales at IKEA's shopping malls grow 16%