What: According to analysts and solution providers, retailers have upped their inventory management game while also investing in digitalization, e-commerce, and supply chain logistics.

Why it is important: Brands and retailers are investing in operational efficiency as online sales growth plateaus while pandemic-born services remain popular, further complicating fulfillment.

Retailers and brands are sharpening their e-commerce and operational capabilities while putting a lot of focus on supply chain logistics as anywhere up to half of the margin organizations are making could be leaked because of delivery.

Additionally, with services like BOPIS remaining popular, retailers are laser-focused on operational capabilities to ensure the best service while not overspending in terms of labor.

Supply chain, inventory management are top priorities for retailers

What: Macy’s is using a cocktail of tech and training to empower its customer-facing employees.

Why it is important: In-store staff are now here to contribute to 4 customer pillars: discovery, convenience, service and engagement.

Macy's has restructured its employee training and development programs to meet the changing role of stores and store employees (94,570 full- and part-time staff).

The US department store chain now focuses on two tracks: customer-facing front-of-house roles and backroom operational work, compared with spreading specializations across many different responsibilities, an approach which prevented them from “being able to meet the customer where the customer needs”.

Most customer-facing employees now receive generalized training, which provides greater flexibility for both workers and customers, with the goal to contribute to discovery, convenience, service and engagement.

The company has also introduced augmented reality technology in its beauty department, and uses IBM's Watson technology to provide product information on its website and in call centers.

Macy’s Store Officer on how the labour force is evolving

What: Saks has released its latest quarterly survey of the lifestyle and spending habits of luxury consumers.

Why it is important: The luxury market and luxury consumers are going to be more resilient in the uncertain economy as consumers plan to spend the same or more on luxury items.

The Saks Luxury Pulse is a quarterly online survey conducted in-house by Saks. The latest survey had almost 3,000 US-based respondents who are engaged Saks shoppers but could also shop at other luxury retailers.

The survey results capture the mood of luxury shoppers towards purchasing luxury goods. Momentum is starting to slow as 62% of luxury consumers plan to spend the same or more on luxury items in comparison to 68% in September 2022.

Responses also showed that luxury consumers are focused on traveling and plan to spend on clothes and accessories related to their upcoming trips.

Other insights from the survey show that millennials have the most positive attitude toward luxury spending, the most desired shopping services are free basic alterations and in-store returns, and consumers are first spending on travel and events, then clothing.

Saks takes the pulse of luxury consumers

What: M&S has launched a new partnership with CommerceHub to expand its product selection with a unified marketplace.

Why it is important: The partnership is unlocking new possibilities for the retailer as they aim to hit GBP 1 billion in third party sales.

CommerceHub is one of the world's largest commerce networks and provider of software solutions connecting supply, demand, and delivery for retailers and brand globally.

M&S will be utilizing the network’s Commerce Suite, which will enable the business to quickly expand assortment, boost customer engagement and loyalty, and attract new customers while maintaining profitability with more agile and flexible merchandising and fulfillment.

The partnership will allow Marks & Spencer to offer more products to customers without the need for additional, owned inventory and increases the ability of the retailer to respond quickly to changes in customer demand.

M&S unveils new partnership to help it seamlessly reshape as an omnichannel retailer

What: The German department store group will be closing 52 of its 129 stores with as many as 5,000 employees losing jobs.

Why it is important: The group is one of the largest and oldest department store chains in Europe and has been struggling for several years despite two insolvency filings and hundreds of millions in government aid.

The company said in a statement that as part of the restructuring that the last bankruptcy filing required, 52 further locations will be closing. The group will close 21 stores in June with the rest closing for good in January next year.

Currently, the group employs around 17,400 people and the closures will result in around 4,300 to 5,000 job losses from the stores to various management divisions.

Galeria Karstadt Kaufhof has struggled since 2020, following the COVID-19 pandemic, the war in Ukraine, rising inflation and energy prices as well as uncertain consumer sentiment.

The department store group will be keeping 77 of its current stores open, with plans to modernize these locations within the next three years. The company also plans to give local store management more of a say to better cater to each location’s customer and will also focus more on fashion, beauty, and homeware.

The planned closures still need to be finalized at a meeting of the company’s creditors set to take place on March 27.

Galeria Karstadt Kaufhof to close nearly half of all stores in next year 

What: The company requested a safeguard procedure in an attempt to overcome significant financial difficulties.

Why it is important: The chain, already shaken by the pandemic in 2020 and 2021, was unable to recover in 2022, with households limiting their spending on clothing, in a context of high inflation. The troubles at Peek & Cloppenburg Düsseldorf add to a list of struggling retailers in Europe, including Galeria Karstadt Kaufhof which announced the closure of a large number of establishments.

Peek & Cloppenburg has 2 independent entities, the Düsseldorf branch and the Hamburg branch, the latter not being affected by the triggering of the safeguard procedure. The 67 Peek & Cloppenburg Düsseldorf’ department stores – all in Germany – as well as its e-commerce remain open.

The group warns that a significant reduction in administrative staff, including at the management level, will be necessary. At this stage, there should be no redundancies in the 67 points of sale.

Peek & Cloppenburg Düsseldorf bought Magasin du Nord in May 2021.

Peek & Cloppenburg Düsseldorf is in difficulty

What: The first housing project advertised as part of John Lewis’ grand plan is encountering difficulties.

Why it is important: This is a big test, and those difficulties arise just after the exit of the CEO who was in charge to launch this strategy, Pippa Wicks.

John Lewis Partnership's plan to build 430 flats in towers up to 19 storeys high in Ealing, west London is facing resistance and delays.

Local residents and a pressure group have raised concerns about the height of the towers and lack of affordable housing. The project is months behind schedule and has not yet filed a planning application. The delays and objections could impact the company's ethical profile and PR.

The project is part of the retailer's diversification plan to target 40% of group profits from non-retail sectors by 2030, which includes building and renting out 10,000 homes within a decade.

John Lewis runs into trouble over first housing project 

What: The department store is using supply chain automation and artificial intelligence to catalyze both the customer and employee experience.

Why it is important: The retailer’s automated fulfillment centers are up to five times more efficient than ones without their technology upgrade.

In California, the retailer has a 1-million-square-foot fulfillment center that handles West Coast DTC orders and shuttles merchandise to area stores. The center has been an automation win for the company and has allowed the retailer to get closer to customers through technology such as sortation systems.

The retailer also uses robotic solutions from Attabotics and Tompkins Robotics to efficiently store and sort products in some of its warehouses. The systems cut out-of-stocks with a technology footprint that’s 90% smaller than legacy warehouse automation solutions.

Nordstrom saw a 20% improvement in distribution and fulfillment center productivity and throughput last year, meaning customers are receiving orders faster. The retailer’s supply chain chief also credited their supply chain initiatives for a 200-basis-point improvement in selling, general, and administrative expenses as well as lower per-unit fourth quarter costs.

The retailer has also been using AI to assist customers and employees. AI-based styling algorithms pull together curated looks and associates can also quickly pick up new processes and products through AI. In both initiatives, the company is leveraging and empowering employees to make technology useful for them and create more flexibility in their lives.

Nordstrom supply chain chief talks automation, AI

What: Several past recipients of the Distinguished Service Award recall the impact of receiving the award from the Dallas-based department store.

Why it is important: The department store has been able to have a significant impact on designers’ success in the US while also building long-lasting relationships with luxury fashion houses through its renowned award.

The Distinguished Service Award was founded 85 years ago and has been awarded to many iconic designers including Yves Saint Laurent, Karl Lagerfeld, Ralph Lauren, among many others. The award has been given to more than 100 luxury fashion leaders and has had a significant impact on designers’ careers, especially European designers with jumpstarting their businesses in the US. This year’s recipient of the award will be Brunello Cucinelli.

For many of the designers, going to Dallas to receive the award was the first time they had ever been to the States. When Gabrielle Chanel landed, it was the first time an international plane had landed at the Dallas airport. Karl Lagerfeld also received the award during his time at Chanel, stating that the award presented to Gabrielle in 1957 did a lot to re-establish her image in the U.S.

For Carolina Herrera, the last recipient of the award in 2016, Neiman Marcus has been a loyal partner since the inception of their brand, and the group has supported the luxury fashion house over the past four decades, especially during the pandemic.

Missoni received the award in 1973 as their first international prize. This award felt the most important to them as it recognized the style they had invented. It was especially important in introducing the brand to the American market and the brand has remained in Neiman Marcus since, one of the longest continuous collaborations the brand has had in its commercial history.

In 1947, Christian Dior received the “Oscar of Fashion” months after opening his house and introducing the iconic New Look. For him, it was much more than a personal accolade as he felt that the awakening of French fashion was being recognized. His trip to the US inspired his future silhouettes and he was also able to discover the impact of his creations on American society.

Giorgio Armani was the recipient of the award in 1979, and stated that it gave him legitimacy in the States as he label had only been in existence for four years. The strong relationship between Neiman’s and Armani started because of the award and introduced the Italian fashion house to the American customer, allowing the brand to see international success.

Memories of the Neiman Marcus Award

What: The luxury department store has launched a made-to-measure service created in collaboration with eight brands.

Why it is important: The retailer has increased its fashion tailoring offer by 75% for spring 2023 in response to the increased demand for tailored clothing.

The participating brands are set to become residents in “tailoring workrooms” introduced to the store.

The service allows customers to make appointments online before attending one of the personal shopping suites in the department store’s London, Manchester, and Birmingham stores.

Selfridges hopes to encourage customers to purchase made-to-measure when purchasing luxury items as mindsets are changing around product lifespan in the industry. The luxury department store brings a unique brand mix that appeals to a broad range of customers and considers how people are dressing with this new offer.

Selfridges introduces made-to-measure offer

What: Amazon announced another round of layoffs, cutting another 9,000 employees in advertising, human resources, Twitch, and Amazon Web Services.

Why it is important: The potential disruption to Amazon Web Services could be a cause for concern to apparel, beauty, and other online retail outlets that rely on Amazon’s cloud division.

Amazon’s cloud division is the top cloud computing platform by market share and fuels a massive load of e-commerce with artificial intelligence and machine learning powers.

The CEO of Amazon stated that Amazon Web Services is still a priority for the company and the move to cut more jobs is one of efficiency as they streamline their costs and headcount.

The announcement brings the company’s total dismissals to more than 27,000 since November.

Amazon's deeper cuts could impact retail outlets

What: Macy’s top executives discussed their key strategies and formats for the department store’s future growth at the Morgan Stanley Retail Roundup.

Why it is important: With Macy’s CEO announcing his retirement, there’s been concern regarding the retailer’s future path to profitability and relevance.

At the Morgan Stanley Retail Roundup, Macy’s CEO and CFO laid out the roadmap for the future of the retailer with strategies for growth being a main focus.

The retailer has seen pressure on all income tiers as they look at their proprietary credit card data. Making sure they have the right inventory for consumers who are going to be more discerning with their purchases is a top focus as economic pressures continue this year.

Macy’s has rebuilt its private brand portfolio which makes up 16% of its business presently. Based on customer research, Macy’s customers are looking for comfort first, followed by versatility and style leading to the refreshing, amplifying, retiring, and adding to its offer.

The retailer also plans to intensify its luxury offer at Bloomingdale’s, in the beauty category at Macy’s, and Bluemercury. In Macy’s and beauty they see a big luxury opportunity, resulting in the decrease of bigger brands on the floor and bringing in niche luxury players to see success.

The operations and localised assortment of off-mall formats will also be a focus for Macy’s Inc. Currently, there are two Bloomie’s with a third location opening soon and eight Market by Macy’s locations, with the metrics being significantly better than its department store locations.

Macy’s emerging marketplace is also an exciting opportunity for the retailer as they can offer more products with less risk through this business model. They have seen a great response from customers so far and expect to see a meaningful impact on growth in future years. Electronics and video games are an example of this as they were gigantic sell-throughs for the retailer.This year, the retailer has a goal of reaching 2,000 brands on the marketplace.

Personalisation will be a major contributor to Macy’s growth as they continue to test new technologies and learn more about traffic patterns through the Retail Next technology that has been installed in stores. So far, they have seen positive results as customers have been more responsive to relevant communication.

Opportunity knocks: where Macy’s is placing its bets

What: The UK retailer is rebranding its London flagship to Flannels X, a space for cultural creators to exchange and broadcast ideas.

Why it is important: Flannels is looking to immerse its brand into consumers’ lives by engaging more deeply with younger audiences and investing in people-led experiences.

The 18,000-square-foot space will now act as a stage for cultural creators, rather than a space for selling products. Influential creatives will be invited to act as cultural creators and offer an intimate look inside their personal universes.

The flagship will have activations from store takeovers to collaborations with leading creatives in addition to a monthly talk series which will be broadcasted to other regional Flannels stores.

The new flagship aims to differentiate in a crowded market by creating a connection between the store and the consumer. As younger generations will account for 80% of global luxury purchases by 2030, Flannels is looking to offer a more welcoming space for these consumers by putting them at the center of culture.

The retailer is investing for longevity and to future-proof the business, which means measuring success beyond footfall and sales and focusing on reaching target demographics, positive customer sentiment, and media feedback.

Flannels accounted for 22% of Frasers Group’s total revenues at GBP 1.05 billion for the fiscal year ending in April 2022.

A new playground for luxury: Flannels rethinks role of flagship store

What: The UK department store is trading ahead of 2019 levels as leadership is confident in the retailer’s performance amid the economic downturn.

Why it is important: Despite economic downturn and threats of a recession, Harrods has seen an increase in customers purchasing premium items from super brands.

The managing director of the department stated that the rich get richer during the recession, fueling his confidence that the retailer will remain successful during the economic crisis.

Shoppers are increasingly purchasing goods from superbrands like Louis Vuitton and Hermès at the department store and the retailer is also seeing a trend of customers going for more premium items, making the middle ground of the market tougher.

Harrods trades ahead of 2019 levels

What: Boscov is the largest family-owned department store in the US, with $1b sales.

Why it is important: While many companies are busy trying to find new recipes to reinvent their business, some remain quiet, but know how to focus on their local customers.

Department stores have been in decline for three decades, with sales dropping 62% since 1992. Macy's and Kohl's have been hit hard by this trend, whereas Dillard's has bucked the trend with its value rising 1,500% since April 2020. This success is attributed to its family-run company status and traditional retail skills. However, even Dillard's has not been able to reverse the overall decline in department store shopping. In contrast, Boscov's, the largest family-owned and operated department store chain in the US, has been able to grow and prosper through careful and deliberate expansion, with one store opening per year.

The 49-large-stores company, which was founded in 1918, has a strong tradition of supporting local causes and non-profits and prides itself on providing old-fashioned retail, with the right products, price and people in place, in combination with a very careful expansion policy (1 new store opening per year).

When it comes to the ‘secret sauce’, it is all about a combination of select national brands, aiming to be ‘everything for the home and everyone in the family’. Pricing is sharp, and includes a 15% discount to veterans and active service members.

Boscov, the largest US family-owned department store, is growing sales 

What: A high-profile industry insider has accused the retailer of losing sight of what’s important after the Partnership’s chairman suggested bringing in an outside investor.

Why it is important: The letter emphasizes the impact that John Lewis Partnership has in UK retail.

Mary Portas, a retail consultant, wrote an open letter to John Lewis Partnership via LinkedIn, stating that John Lewis and Waitrose are apart of the fabric of everyday British life, urging the partnership that they’re fighting to save part of the UK’s cultural identity, not just turning around a mediocre retailer.

The letter comes after JLP stated job cuts would be coming and chairman Sharon White shared the idea of ending the partnership’s 100% staff-owned status by bringing in an outside investor in order to raise up to GBP 2 billion.

Portas stated that failure isn’t an option for John Lewis Parntership, and that the fight to save the retailer isn’t purely financial.

Mary Portas weighs in as John Lewis controversy continues

What: A new report showed that Chinese high-spenders are ready to start traveling again after the border reopening in January.

Why it is important: 92% of survey respondents expressed interest in taking an international trip in 2023, with Europe ranking the highest among travelers.

The report noted that two thirds of the money the Chinese spent on luxury goods was done on trips abroad pre-pandemic.

According to Global Blue data, mainland Chinese shoppers were the leading nationality for tax-free shoppers in 2019, accounting for 4.25 million shoppers and spending an average of EUR 1,600 per shopper.

Chinese consumers are looking for newness and to reconnect with destinations, retailers, and brands with plans to spend as much or more as they did pre-COVID, leading to a significant opportunity for retailers to capitalize on the demand.

Chinese luxury consumers eye international travel in 2023, says Global Blue

What: One hundred autonomous drones are now at work during non-operational hours to improve stock accuracy and secure availability of products for online or physical retail.

Why it is important: Ingka Group is the first retailer to successfully use this solution for stock inventory.

Inter Ikea Group, Ingka Group, and Verity started developing a fully autonomous drone solution to track inventory and improve the wellbeing of its employees on the floor two years ago. With this solution, employees no longer need to manually confirm each pallet.

The retailer is investing in technology to better support customer fulfilment and become a true center for omnichannel retailing. Introducing drones and other advanced tools is beneficial for customers, employees, and the business as it improves employees’ wellbeing, lowers operational costs, and allows the retailer to be more affordable and convenient.

The one hundred drones that are stocking inventory are current located in 16 locations throughout Belgium, Croatia, Slovenia, Germany, Italy, the Netherlands, and Switzerland.

One hundred drones now used across Ikea retail for stock inventory

What: The Inditex group will remove its 'Join Life' sustainability "indicator" from all its garments, This decision seeks to pre-empt compliance with European legislation.

Why it is important: The company says it reached a point in the development of its strategy where it is no longer necessary to differentiate the products with this label.

The 'Join Life' label was introduced in 2015 as a tool to raise awareness among customers and staff about the use of raw materials and processes that have a lower impact on the environment. In 2022, the number of 'Join Life' items had risen to 61% of the 621,244 tonnes of items placed on the market.

In the last year, 50% of the fibres used by Inditex (88% of production) were of natural origin (i.e. naturally sourced filaments that can be spun into yarns, threads or cordage); while 40% of the remaining fibres were synthetic (made from polymers which are not produced naturally, but are produced entirely in a chemical plant or laboratory, almost always from petroleum or natural gas by-products) and 10% were man-made (formed from a natural component as a raw material which undergoes different transformations in a chemical plant or laboratory). In 2022, the company also leveraged recycling by bringing to market up to 78,675 tonnes of recycled materials, a 90% increase compared to 2021.

In order to continue advancing in its environmentally friendly strategy, Inditex is collaborating with the sustainability expert Quantis. This collaboration is aimed at conducting specific Life Cycle Assessments (LCAs) for the various raw materials used, as well as for the production processes involved in the manufacturing of the garments.

Inditex discontinues sustainability label 'Join Life'

What: M&S has invested GBP 57 million in its front-line retail staff, meaning more than 40,000 store workers will see their hourly wages increase starting April 1st.

Why it is important: Following the retailer’s biggest-ever investment in its shop workers, all M&S staff will be paid more than the National Living Wage and in line or more than the Real Living Wage.

With rising costs and current economic climate, Marks & Spencer is looking out for its employees and colleagues through investments in hourly pay rates and industry leading benefits. The UK retailer has raised pay twice during the 2022/23 financial year, with hourly pay rising by more than 20% since the start of 2021.

Marks & Spencer invests 57 million pounds to increase pay for retail store staff

What: Inside Retail covers the state of the market in Australian loyalty scheme

Why it is important: Department store Myer is said to perform 73.5% of its transactions via its loyalty program, co-built with partners from other businesses, such as Virgin Australia or American Express, both online and instore.

Australian airline Qantas has revamped its loyalty program with the introduction of Qantas Marketplace, a platform where its frequent flyers can purchase products from a selection of 900 brands. They are said to already have 14.7m loyalty members, while their initial target was to reach 12.9m by 2024. The program allowed to bring AUD$905m in underlying earnings between 2022 and 2022 financial years.

The benchmark in the Australian market when it comes to loyalty is the Myer program, dubbed the “Myer One” loyalty scheme. It boasts 4.1m members and 73.5% of the company’s transactions were made through the program.

The article also reviews the programs at Super Retail Group, Chemist Warehouse, and also covers the marketplace launched by the City of Adelaide earlier in 2022.

A panorama of loyalty programs in Australia

What: The new owners of Selfridges have added over GBP 1.7 billion of debt to the firm’s balance sheet.

Why it is important: The higher risk strategy the new owners are taking could boost investment returns significantly.

A loan of GBP 1.7 billion was provided to the new owners against the freehold of the historic Selfridges London flagship.

The Thai and Austrian owners paid GBP 4 billion for the group and the loan was reportedly used to release capital for the acquisition, but wasn’t equivalent to the payment of a dividend to the new owners.

While using debt to buy a business is a common strategy, the Selfridges owners have rejected this notion as their amount of debt is much lower and the luxury focus of their business insulates them from the current problems occurring in the UK retail industry.

New Selfridges owners take on extra debt

What: Falabella has received the LEED Gold certificate for its 25,000-square-meter store located in Parque Arauco.

Why it is important: The certificate is the second highest, recognizing that the store stands out from the vast majority of projects that are certified, reaching high numbers of comfort, sustainability, and energy efficiency attributes.

This recognition is prepared by the US Green Building Council and highlights different criteria including the design and construction of the store, adequate and efficient management of energy resources and water, the correct use of materials, waste management in construction, and the quality of the environment inside.

Falabella Parque Arauco is the first of its stores to measure its carbon footprint during the construction stage. The store also has low water consumption faucets and appliances, 100% high efficiency LED technology, an area for separating waste, and a recycling plan that recycled 96.6% of building waste during construction.

Falabella Parque Arauco officially receives the LEED Gold international certification

What: The year has already been full of major retail happenings, with retailers filing for bankruptcy, layoffs, and the threat of recession, some retailers are feeling the pain more than others as the year kicks off.

Why it is important: Value conscious consumers, rising layoffs, and new leadership are shaping the year ahead.

With bankruptcy, ongoing layoffs, inflation, and the threat of recession, consumers have started to pull back and take a more cautious approach to spending.

Default rates are expected to stay relatively low, however its likely that retail’s strong will get stronger and the weak will suffer. However, some sectors could be better off than others.

E-commerce sales are still on the rise, yet digital native brands are suffering through layoffs and cost-cutting as venture capital firms pull back and take a harder stance on profitability.

Consumers are turning towards private labels and seeking out cheaper alternatives as they navigate the current financial landscape, which could result in a boost for the resale market.

What lies ahead for retail in 2023