What: The French luxury behemoth is thinking about opening Louis Vuitton’s first Chinese duty free location in tourism hotspot, Hainan.

Why it is important: As Chinese people won’t be travelling abroad very soon, Louis Vuitton is considering a partnership with state-owned operator, China Duty Free Group, to benefit from the local travel opportunity.

It would also represent a U-turn for the Louis Vuitton brand, which is known for avoiding mark-downs.

LVMH Mulls First Louis Vuitton Duty Free Store in China

What: The buy now, pay later platform unveiled an experiential “physi-digital” retail space called the Edit Collection at Sydney’s Chatswood Chase shopping mall, in partnership with the Australian Fashion Council and Vicinity Centres.

Why it is important: The space is primarily a pilot for new retail technology that has been developed and will be rolled out in stages by eTale, with some of the products developed in collaboration with Melbourne-based retail tech start-up ShopExp.

eTale has developed a Bluetooth chip that will be tagged in every garment merchandised in store. The tags allow every item to be tracked in real time across the store and interact with Smart Mirror technology in the fitting rooms, helping customers gain further insights into the products, and immediately delivering data on the most engaged, most tried and most sold pieces back to the businesses.

The fitting rooms will also feature gesture-controlled screens equipped with cameras that allow customers to shoot and share selfies.

eTale ambitions to be the backbone of brick-and-mortar retail across the world. They want every decision that that physical retailer makes to be using our technology to make that decision. It’s about creating as many data points as possible for retailers so that they can really work and operate at maximum efficiency to achieve the best results possible.

Afterpay Unveils a Phygital Retail Concept in Sydney 

What: Business turnover declined 51% to GBP 429.5 million (USD 585.9 million) for the year ending January 30, 2021. Harrods also reported a GBP 57.3 million loss, compared with a GBP 191.4 million profit the year previous.

Why it is important: Even as lockdowns have eased, challenges still remain. International travel is yet to return to pre-pandemic levels, a blow for Harrods, which depended heavily on high-spending oversees shopper’s pre-pandemic, in particular visiting Chinese consumers.

Meanwhile, a government decision earlier this year to abolish VAT-free shopping for international visitors — an important incentive for wealthy tourists to spend big — will likely have longer term implications, the retailer said in the filing.

Nevertheless, Harrods is optimistic about the year ahead, already seeing a huge return to demand for luxury. It also plans to forge ahead with new H beauty store openings across the UK, while also investing in strengthening its presence in the crucial China market. In June, the retailer debuted a second outpost in the region for its private shopping service, called The Residence.

Lockdowns hit Harrods’ bottom line

What: The retailer, improving on top and bottom lines, raises its full-year guidance ahead of the holidays.

Why it is important: Total revenues for the three-month period ending 30 October jumped nearly 16% to USD 4.36 billion, up from USD 3.78 billion the same time last year. Third-quarter comparable sales rose 14.7%, year-over-year. The company logged USD 243 million in profits as a result, compared with losses of USD 12 million during 2020’s third quarter.

Kohl’s now expects its full 2021 fiscal year revenues to increase in the mid-twenties percentage range, compared with prior estimates of an increase in the low-twenties range.

Categories of growth in the most recent quarter included activewear, which was up 25%, led by national brands such as Adidas, Nike and Under Armour.

The biggest tailwind comes from the newly launched and game changing partnership with Sephora. There are currently about 200 Sephora shops-in-shop in Kohl’s stores and the company anticipates there will be 850 by 2023. This is transforming the business, putting the retailer in the beauty business. The mini Sephora locations are also helping drive customer acquisition. More than 25% of Sephora shoppers are new to Kohl’s. Many of them are younger than existing Kohl’s consumers.

Headwinds include the women’s business as well as continued supply chain disruptions throughout the industry.

Sephora supports growth at Kohl’s – WWD

What: Macy’s Inc. is raising its minimum wage to USD 15 across the organization and providing new educational benefits, costing the retailer approximately USD 35 million over the next four years.

Why it is important: The investments reflect efforts to attract and retain talents that are critical to the retailer’s continued growth. This will also be the topic of the IADS 2022 first Operation Meeting dedicated to HR and to be held on 2 December 2021.

Beginning February 2022, the USD 35 million four-year investment will provide a debt-free education benefit program to its colleagues. The program will be available for all U.S.-based, regular, salaried and hourly colleagues and cover 100% of tuition, books and fees. Macy’s partnered with an education and upskilling platform, Guild Education, to build the program.

The company has already phased in the USD 15 rate across several markets and expects to achieve this target nationally by May 2022. Last summer, Macy’s upped the minimum wage to USD 15 per hour for all distribution centre colleagues. The company said that the average base pay will eventually be above USD 17 hour and average total pay will be USD 20 hour. Minimum wages vary from state to state, and in certain cases, workers are entitled to commissions and overtime pay.

Other benefits were announced, including providing Macy’s corporate and hourly colleagues with one additional flexible paid holiday to support their well-being and provide further flexibility to take a day off on a holiday that is most important to them.

Macy’s Boosts Minimum Wage and Benefits to Workers 

What: The deal reflects Nordstrom's strategy to massively expand its digital assortment from 300,000 items to 1.5 million. To reach this goal, the retailer is establishing new deals with brands and doing more drop shipping, and even taking financial stakes in brands (like it did with Asos, which owns the Topshop).

Why it is important: Nordstrom.com seeks to capture a greater share of wallet from current customers and a new audience of sports fans with lower price offerings. Fanatics has similar arrangements with Walmart, Kohl’s, Amazon, and as of a month ago, Macy’s.

Nordstrom.com is now offering a significant portion of Fanatics’ array of professional and college sports team merchandise. Nordstrom will power the front-end digital customer experience. The orders get fulfilled and shipped by Fanatics. Only nordstrom.com will carry the products, but down the road, it’s possible Nordstrom brings its Fanatics assortment to Nordstrom stores and possibly rack.com.

This is the first time Nordstrom is starting with a 100% drop shipping model.

Nordstrom Appeals to Sports Fans With Fanatics Partnership 

Nordstrom Teams Up with Fanatics to Expand into Licensed Sports Fan Product Category for First Time

What: Walter Loeb shares his thoughts on how department stores and major retailers can succeed as digital retailing continues to advance.

Why it is important: In the post-pandemic era, most companies must use the internet as a tool to serve their customers and sell more merchandise profitably.

As digital shopping continues to increase, department stores and other large retailers will need to adapt. Walter Loeb gives suggestions on how these retail formats can win in the digital retail revolution.

Department stores need to:

• Take quick action on orders, ensuring all stock is up-to-date to not disappoint customers
• Equip the website with a live chat box
• Define the target audience so the buying team pulls together to allow more fluid complete looks
• Downsize store space to offer a more edited assortment

Chain stores need to:

• Buying teams will need to focus on innovative ideas and new fashion designs
• Services must be evident from the minute a customer contacts the store
• Delivery services will need to be updated to offer speedy delivery with attractive prices.

2022 Will Bring A Digital Revolution To Retail

What: Hermès has popped up in Brooklyn with a temporary gym that takes aesthetic cues from its signature accessory designs.

Why it is important: This is the HermèsFit concept’s first stop in the United States after an inaugural run in Chengdu, China, this past May. From here the concept will travel to Paris, Taipei and Shanghai. After the opening of a Bottega Veneta pop up store last June, Brooklyn has become a destination for luxury brands.

Fans and customers can book special exercise experiences featuring Hermès scarves, which have been applied to boxing bags and inspired new yoga sequences. Those with more of a taste for jewellery can participate in a “kickboxing with bracelets” class that incorporate Hermès’ classic enamel Clic Clac bangle designs.

There are Hermès-inspired barbells, a climbing wall, photobooth and juice bar. Interested participants can pre-register for classes on Hermès’ website or drop by the space at 60 North 6th Street for a peek at the experience. Proof of vaccination is required for entry.

Inside Hermès’ Temporary Gym Installation in Brooklyn

What: Once considered fringe with audiences not interested in fashion or beauty, platforms like Reddit, Discord and Twitch are attracting the attention of digital marketers aiming to diversify their channel mix away from Instagram.

Why it is important: As frustrations grow over the rising costs and diminishing returns from advertising on the Facebook and Instagram, marketers are casting a wider net. Platforms including Reddit, Discord and Twitch, all of which once had a reputation as digital homes primarily for young men and gamers, are getting a closer look from fashion and beauty brands.

Reddit has long been a place for engaged digital communities to gather. But fashion and beauty brands are increasingly tapping its power, too. The platform says its top fashion and style communities have 20 million monthly visitors. Reddit users interested in fashion are 41% more likely to visit a retailer site weekly than the average internet user, according to internal Reddit data. Meanwhile, Reddit users make nine times faster purchase decisions and spend 15% more, according to a study Reddit commissioned with Vero Analytics.

Users on Twitch — the Amazon-owned livestreaming gaming and entertainment platform that counts 30 million daily users — are three times more likely than the average consumer to wear something they saw their favourite influencer or celebrities wearing, according to the platform’s Research Power Group.

Resale platform StockX advertises on Reddit and is a Twitch partner. “There’s just a more rich, emotional connection between us and some of the communities we engage with on some of these platforms,” said StockX vice president of customer acquisition Mitzi Emrich.

Discord is the platform that is perhaps the least familiar to fashion and beauty brands. It could be considered as the first toe in the metaverse for brands. There are no brand profiles or homepages, but instead “servers,” customisable digital spaces that offer a combination of voice, video, images and text. The goal of any Discord server is to bring together a community, and for brands, that means offering them discovery, education, customer service or experiences such as panels.

While brands like AllSaints, 1stDibs and Nars are active on Discord, there are no paid ad tools on the platform yet. Discord is testing influencer monetisation. Meanwhile, fashion brands can create digital goods that users can “purchase” using points they’ve redeemed on the platform (though they are not NFTs or tied to the blockchain).

Finding Fashion Consumers Beyond Instagram

What: Through a new partnership with Muhammad Ali Enterprises, the retailer will incorporate the late boxer's Six Core Principles into its charitable efforts (confidence, conviction, dedication, giving, spirituality and respect). The principles are a natural extension of JC Penney’s founding principle of the Golden Rule — to treat others as we would like to be treated.

Why it is important: JC Penney’s has supported the charity since 2018 by providing grants, mentoring and most recently, a virtual panel for International Women’s Day. The partnership was created by Authentic Brands Group, which owns Muhammad Ali Enterprises in partnership with Lonnie Ali.

Penney’s Names Muhammad Ali Goodwill Ambassador

What: Walmart is making progress towards finding sustainable alternatives to single-use plastic bags.

Why it is important: Single-use plastic bags are an issue that almost all IADS mentioned that they are trying to reduce. Walmart offers some interesting programs to promotion reducing and reusing.

A Walmart store in Santa Clara, California piloted a solution called Fill It Forward that lets customers scan a tag on their reusable bags each time they use them to accumulate points, which then convert into monetary donations to a local organization.

Another store in Mountain View, California, piloted Goatote, which lets customers "check out" reusable bags via an app that are free if returned within 30 days or cost USD 2 if customers keep them.

Many cities and states in the US have started to ban single-use plastic bags, an ordinance that already exists in most of Europe and other parts of the world.

How Walmart is testing sustainable bags 

What: The design competition is open for creative thinkers up to the age of 15.

Why it is important: An interesting idea to foster fresh ideas as well as to better understand and attract younger customers.

Contestants can participate alone, but also together with friends, girlfriends, your whole class or your sports team. The designs of the finalists will be shown in the shop windows of de Bijenkorf in January 2022. The winner’s idea will be implemented in real life.

Design the store of the future

What: US Retailers, who were supposed to be swept out by the pandemic, seem healthier than ever.

Why it is important: IADS members also took the hit of the 2020 lockdowns, which forced them to structurally change their ways of operations, which is also starting to be paying off.

The Covid-19 pandemic was supposed to be the final blow to stores, in the continuation of the Retail Apocalypse. On the contrary, retailers are bouncing back healthier, with many US companies exceeding their 2019 profits.

According to the newspaper, this is due to a better inventory management with fewer goods translated into less cluttered stores, leading to a better ins-store experience and less off-priced sales. What is more, the scarcity of goods due to the international logistic chain bottleneck allows them to charge products are full-price and rely less on discounts to maintain the top line. Finally, the race to online also allowed US retailers to reduce the number of stores and therefore also work on their operational expenses. The Wall Street Journal talks about the “Great Retail Reset”.

The Great Shopping Reset How the Pandemic Helped Fix the Retail Industry

What: Ikea’s international brick& mortar expansion is not limited to countries where it is already present.

Why it is important: Ikea follows different strategies at the same time but always in city centres: small stores, huge stores or conceptual experiences, apparently to the detriment of the suburban big boxes that used to be its trademark. Can this be an opportunity for department stores?

Ikea will open early next year its first location in Indonesia, in the Mall Taman Anggrej in West Jakarta. The store will span over 10,000 sqm and two stories and will allow customers to access the full product range.

In addition, the store will include pickup point to collect online purchases.

Ikea to open first mall store in Indonesia

What: Since Brexit, an EU-enforced cap on fees charged by card issuers is no longer in place in the UK, meaning providers are free to hike charges. Visa increased the interchange fees it charges merchants for processing digital transactions between the U.K. and the EU.

Why it is important: The move is seen as a way for Amazon to get some bargaining power over Visa to lower its fees.

The new policy is set to be enforced from 19 January 2022. Amazon customers can still use Visa debit cards, Mastercard and Amex credit cards, and Eurocard, the company said in a note to its customers.

Amazon to stop accepting Visa credit cards issued in the UK

What: Samsung has designed a new-gen type of selling space for its opening within Selfridges, entirely dedicated to experience and trial.

Why it is important: Consumer electronic has been a winning category in the past year, and Samsung is also a strong partner for some IADS members, such as El Corte Inglés, who also have deployed similar experiential points of sale.

Samsung has opened a shop in shop in Selfridges to display its full range of electronic lifestyle offer. The goal is to maximize discovery and interaction, thanks to an immersive point of sale designed by brand innovation studio Dalziel and Pow. Entirely designed in sustainable materials, the retail space conciliates innovation, tradition and well-being.

Inside Samsung Tech playground

What: Muji teams up with JD to enter new categories.

Why it is important: It is not the first time that both companies collaborate, as Muji already opened a store at JD headquarters dedicated to its employees, in Beijing.

Muji has entered the fresh food industry by launching a partnership with JD’s Seven Fresh in Shanghai under a joint-venture agreement. The collaboration gives birth to a hybrid format in Shanghai, with Muji products range including food products including ramen or oatmeal, alongside the more traditional home, fashion, and personal hygiene products, through a Seven Fresh shop in shop located within the store.

Muji launches fresh food concept

What: The Shein business model, dissected.

Why it is important: It is a Chinese-inspired business model, applied to the rest of the world. Given the volumes and distances, concerns are increasingly growing over environmental problems it contributes to.

Media are discovering Shein and its innovative business model: after The Economist article , the BBC also reviews what makes this Chinese brand so special, apart from its remarkably low prices which can not entirely explain its massive success over TikTok and YouTube.

The company, which earnings are estimated to top USD 10bn in 2020, proposes 600K products for sale at any given moment, relying on thousands of third-party suppliers and 200 contract manufacturers. They constantly analyse in real-time sales, and can identify, among new products (launched in batches of 50-100 units) which ones have the most potential, also thanks to Shein’s partneship with influencers. New products can be launched in as low as 25 days. They are then shipped from China (which can be a drag given the delivery delays) to one of their 250 m followers.

Such a business model obviously raises questions on sustainability, be it environmental or social, with the psychological impact it can have on teenagers and children.

The secretive Chinese brand dressing Gen Z 

What: Driven by the execution of the Polaris strategy and an improved economic environment, quarterly net sales and earnings exceeded expectations.

Why it is important: Considering the results on top and bottom lines, the department store is raising its full-year 2021 guidance. Net sales are expected to reach USD 24.12 billion instead of  USD 23.55 billion. Adjusted EBITDA as a percent of sales is expected to reach 12.5% instead of 11%.

Comparable sales are up 8.9% on an owned basis, and up 8.7% on an owned-plus-licensed basis respectively, versus 2019. Digital sales increased 19% versus third quarter 2020 and grew 49% versus third quarter 2019.

Approximately 4.4 million new customers shopped the Macy's brand, a 28% increase compared to third quarter 2019, with 41% of these customers coming through the digital channel in third quarter 2021.

Categories that were solid throughout the pandemic, including home, fragrances, jewellery, watches and sleepwear, continued to see strong sales performance. Occasion-based categories, such as dresses, men’s tailored and luggage, continued to recover. Emerging categories, such as toys and pets, showed encouraging results.

Bloomingdale’s comparable sales on an owned basis were up 9.1% and on an owned-plus-licensed basis were up 11.2% compared to the third quarter of 2019.

Gross margin for the quarter was 41.0%, up from 35.6% in third quarter 2020 and up 100 basis points from third quarter 2019.

Inventory was up 19.4% from third quarter 2020 but down 15.4% from third quarter 2019.

Macy's results

What: The iconic US company is planning to significantly expand its retail footprint.

Why it is important: While he does not question the wholesale and retail mix model, the CEO wants to rebalance the business model to guarantee a proper presentation of the brand, often neglected by wholesales who are aware of its over-dependence on them.

Ralph Lauren aims at balancing its international stores footprint by finding the right mix between wholesale presence and retail sales, be them online or offline (as a whole, direct to customer sales grew +14% vs. LY).

According to analysts, the brand is over-reliant on wholesale partners (such as Macy’s in the US) and this leads to some issues in terms of brand presentation. This is the reason for its plan to open 90 stores in 2022, partly financed by the sale of Club Monaco to private equity. According to Ralph Lauren CEO Patrice Louvet, there is still a gap between the brand name and recognition, and its actual financial results.

Ralph Lauren is opening 90 new stores this year

What: A successful series made fully shoppable through the parallel release of a dedicated collection.

Why it is important: IADS has identified this opportunity back in Q3 2020 and communicated it to relevant members. We believe very much in the parallel release of cultural content and related shoppable merchandise.

IADS partner Mint Group has finally released a collection in coordination with ViacomCBS for the second season of Emily in Paris, due to be aired mid-December. The collection will be released at the same time and will allow the audience to buy almost in real time the garments and accessories features in the series. Among the participating brands, there are Chanel, AZ Factory, Makri, Zeus+Dione, Goossens, Causse and others such as French chef Pierre Hermé. The collection will also be streamed on Netflix.com, Saks.com, and vendors e-commerce websites. Prices run from 30 euros for a box of macaroons to 7,430 euros for a pair of earrings.

 ‘Emily in Paris’ Will Have Shoppable Content for Season 2

What: As Ikea pushes more environmental projects, it still faces problems in supply chains.

Why it is important: Ikea is one of the most advanced when it comes to tracing their raw materials, but even they are having difficulties ensuring wood is correctly sourced. This proves that a truly traceable supply chain is more difficult to achieve than meets the eye.

Ikea argues that wood is a sustainable and renewable material that is far better to use than plastics or metal. Others will claim that Ikea fuels disposable consumption by producing cheap furniture.

Either way, ensuring wood is sourced sustainably is not easy to decipher. Timber suppliers can have permits for certain areas, but then illegally log in neighbouring forests. Another issue is the misuse of sanitary felling, where all trees in an area are cut down to protect them from disease or after a calamity such as wind damage.

Ikea tries to protect its wood supply chain through audits, wood procurement plans from suppliers, and through a certification by Forest Stewardship Council. Even with these protocols in place, somehow illegal wood entered the supply chain in Russia.

Ikea shows the challenge of sustainability for companies

What: Looking at department stores’ agreements with DNVBs from the other side.

Why it is important: There are many good reasons for such innovative brands to enter in department stores, including, and this could be surprising, the possibility to increase their digital sales.

An increasingly number of department stores are striking deals with digitally native brands, in the hope to attract younger customers. This, in turns, allows these brands to build a physical retail and real estate strategy.

Shop in shops are easier than standalone stores (including the associated long-term leases and costs) and help DNVBs to test markets before making decisions on going on their own. It is also a way to cover a market when its size might not justify a full retail presence.

It is also, paradoxically, a way to boost online sales: in 2019, Information Systems Research showed that the opening of a store helped DNVBs to increase their sales by +23 to +33%.

What The Newest Department Store Partnerships Mean For Physical Retail Strategies

What: M&S will expand the rollout of its "M&S Opticians" service, following a successful trial.

Why it is important: As the heath and care market is expanding, retailers are trying new services to attract and retain customers in their physical stores. In France, Monoprix ‘variety store’ is also testing such a health service (see IADS Exclusive).

M&S is rolling out its M&S Opticians service, a shop-in-shop which provides sight and hearing tests in addition to selling glasses and contact lenses, across its UK estate.

The service will launch in 43 more stores over the next 18 months. Currently, the service operates across 12 UK M&S stores. The trial received a customer satisfaction rate of 96% and a customer recommendation rate of 96%. All 55 branches will be operated by optician and hearing provider Owl Optical. It will sell a range of M&S and third-party branded frames.

M&S to roll out optician offering