What: Saks’ invite-only loyalty program will be hosting an exclusive shopping experience for clients in Dallas.

Why it is important: The retailer is deepening its relationship with digital clients while also showing its commitment to the Dallas art and fashion community through a partnership with Dallas Contemporary, allowing them to connect with clients in a unique and impactful way.

The event will allow customers to shop a range of Saks.com designer merchandise, including men’s and women’s ready-to-wear, shoes, bags, and accessories, inside a private rooftop penthouse suite.

Saks is also partnering with Dallas Contemporary as a major sponsor for its spring exhibitions, which will be celebrated with a special dinner. Saks Live will be hosting an event to discuss the intersection of art and fashion as well as the best in spring fashion.

The loyalty program includes more than 5,000 top clients across the Saks Fifth Avenue ecosystem. Members can benefit from digital and in-person styling, personal shopping services, early access to new designer launches and the latest runway collections, and access to exclusive experiences and events around the world.

Saks Limitless, the Invite-only loyalty program, to host pop-up in Dallas

What: John Lewis has unveiled new partnerships with customer loyalty and marketing experts, dunnhumby and Eagle Eye, as well as appointed its first pan-Partnership head of loyalty, Emily Wells.

Why it is important: The department store retailer is accelerating its investment in customer loyalty to deepen relationships with customers and provide them with even more benefits.

The retailer’s five year strategic agreements with the customer insights and media firm and marketing technology company will give customers greater personalization and loyalty experiences.

The group’s loyalty programs, My Waitrose and My John Lewis, have over 9 million and 5 million members respectively.

Emily Wells will also be joining the Partnership in June as head of loyalty, leading and developing the loyalty programs and teams across the organization as well as launching a new pan-Partnership proposition in 2024.

John Lewis appoints first pan-partnership head of loyalty as it ramps up rewards

What: Amazon reported USD 127.4 billion in revenue and USD 3.2 billion in income for the first quarter, pushing shares up 10%.

Why it is important: The retailer’s cost-cutting is paying off as its first quarter results beat analysts’ estimates.

While revenue increasing by 9% compared to last year may be a sign that the company is on track for a strong comeback, it doesn’t make up for the growth that the e-tail giant is used to seeing as it reported a net loss of USD 3.8 billion in the first quarter of 2022.

Analysts estimated a revenue of USD 124.55 billion in revenue and earnings of 21 cents.

Amazon Web Services saw slow growth, reporting 16% growth for a total of USD 21.4 billion.

Machine learning investments are also driving growth in Amazon’s ad business, which saw revenue increase by 23% to USD 9.51 billion. With the application of AI, customers are seeing relevant information when they engage with the retailer, resulting in strong results for brands.

The retailer is continuing to lay off thousands of workers to improve its bottom line, with a total of 27,000 layoffs since January.

Amazon’s cost cutting-fueled comeback is underway

What: Even though innovation is everywhere, some players are focusing on a seemingly simple tool: the barcode.

Why it is important: Tweaking the approach to be able to embed more information into a barcode could be a great and cheap way for retailers to improve their operations with low changes in their organisations.

The retail industry is embracing new technologies such as automation, VR, and AR, but behind the scenes, barcode technology is changing for the benefit of businesses and customers.

For instance, the 2D barcode, developed by GS1, looks like a QR code and can hold more information than traditional barcodes, allowing for custom web pages to deliver information about the product in question. Woolworths has integrated 2D barcoding into its fresh food and point-of-sale technology, which alerts cashiers when produce has expired or is subject to a recall. The barcode can be scanned by customers, providing valuable information on provenance, quality, and sustainability, and differentiating one product from another.

QR code adoption was low before Covid but increased quickly, and companies such as Haleon are working on integrating QR codes into their marketing moving forward.

Are barcodes the new big thing in retail tech? 

What: While 2023 looks promising for Kohl’s, its past quarter performances led to a S&P downgrade.

Why it is important: For now, financial ratings are still based on financial performance. It is highly probable that, in the future, environmental efforts will also become a standard way of gauging businesses.

Standard & Poor's (S&P) downgraded Kohl's Corp. to a junk rating of "BB" from "BB+" due to weaker-than-expected Q4 results, lower margins, increased clearance activity, and muted demand. The downgrade suggests heightened vulnerability to default risk amid business or economic changes.

However, S&P expects improved metrics in 2023 as Kohl's enhances merchandising execution, reduces inventory levels, experiences lower freight costs, and continues its Sephora shop rollouts. S&P also noted reduced capital expenditures and favourable market trends in beauty, as well as the potential for revenue growth in 2024. Kohl's off-mall locations are considered advantageous for their lower cost structure and customer accessibility.

Despite these positives, S&P believes Kohl's operating margins will remain below historic levels at around 4%. The ratings agency expressed concerns about the company's free operating cash flow, leverage, recent management changes, and the competitive pressures faced by department stores.

Kohl’s downgraded from BB+ to BB by Standard & Poor’s 

What: Apple is moving into banking services through partnerships with third parties.

Why it is important: Who controls customers’ means of payments influence their future purchases.

In the US, Apple and Goldman Sachs have partnered to offer a new savings account with a 4.15% annual interest rate, over 10 times the national average rate of 0.37%. This move aims to attract US depositors and outperforms competitors like American Express and Goldman's Marcus brand.

The account is available to Apple credit card users and requires no fees or minimum deposit, with a maximum balance of $250,000. As Apple expands its financial services, some speculate that it is becoming a bank, but its focus remains on hardware sales and non-banking services, leveraging partnerships with institutions like Goldman Sachs.

Apple teams up with Goldman Sachs to offer saving accounts in the US 

What: The online fast fashion retailer is set to invest 750 million reais (USD 148.85 million) in Brazil to establish a network with thousands of textile manufacturers in the country.

Why it is important: The company intends to partner with 2,000 manufacturers which should generate around 100,000 jobs over the next three years.

Shein to invest nearly USD 150 million in local production in Brazil

What: IA Interior Architects has released a report that shows the benefits and barriers to adopting extended reality in stores.

Why it is important: The report found that female consumers aged 55 and older could be the key to driving adoption of extended realty (XR) technology in retail, with in-store associates playing a critical role for stores promoting extended reality.

Retailers should take a moderate approach to adoption and consumption as they question whether or not an investment in reality technologies will be profitable.

The report found that 80% of 1,012 US adults had experienced a form of extended reality and 71% use it daily or weekly. Almost seven in ten respondents had made purchases in XR, mainly for gaming products. Additionally, more than half of the respondents reported previous experiences using extended reality in a physical retail environment, with 95% having positive experiences.

While teenage males are assumed to be the target demographic, IA’s report found that female consumers aged 55 and older appear to be a key driver of future adoption and are eager to learn and willing to spend as they are part of the highest income group.

To encourage the use of XR devices in a retail environment, IA advises retailers to provide in-store associates to guide consumers, ensure easy and secure payment methods, provide opportunities for groups to shop within the XR realm together, customize familiar products using XR, and supply equipment access for those with impairments.

Retailers whose products or services can be customized are the ones most suited for the metaverse. Home goods, furnishing stores, and design centers that sell larger products can use XR to their advantage to help with the design and visualization process. Soft goods still have some way to go before the metaverse becomes more than a brand awareness vehicle.

The top barriers to XR purchases in store and online are: concerns about security of personal information, lack of access or expense of technology, not having the right product or service, the inability to touch, feel, test, or try products, and difficulty or unsecure payment options.

The top motivators to make an XR purchase include: in store associates to guide customers, easier and secure payment methods, the ability to shop with groups, and accommodations for impairments.

What retailers need to know about the metaverse

What: Mytheresa is one of the few e-commerce players that has remained consistently profitable in the past years.

Why it is important: Their success suggests that e-commerce multibrand retail can deliver profits only with high-margin products such as luxury goods.

German luxury retailer Mytheresa announced preliminary Q3 results with net sales between EUR 196- EUR 199 million, up from EUR 169.5 million in the prior-year quarter.

Gross merchandise value (GMV) is expected to be between EUR 218- EUR 221 million, compared to EUR 186.6 million last year. Adjusted EBITDA is estimated to be between EUR 34- EUR 43 million, up from EUR 10.2 million. The company updated its 2023 guidance, expecting GMV growth of 13%-15% and net sales growth of 9%-11%.

The retailer also recently launched its China Designer Program, focusing on growing its business in China and promoting Chinese fashion designers.

Mytheresa’s sales are growing in spite of the general slowdown 

What: The resale platform has launched its own ChatGPT-driven shopping bot.

Why it is important: Offering technology such as ChatGPT to assist in finding products can be extremely valuable, especially in the second-hand market as individualized offers can change rapidly depending on availability and what's being sold.

Mercari, a peer-to-peer selling platform, has launched a beta test for Merchat AI, a conversational shopping assistant based on OpenAI’s ChatGPT.

As a second-hand selling platform, the retailer has deep inventory that can’t always be covered by a general search as products can be hidden in the variety of categories offered.

Merchat AI can offer gift suggestions, recommend items that fit the latest trends, search collectibles that are difficult to find, and offer styling tips.

The company has launched the shopping bot as a test feature, acknowledging that some flaws may appear, and full features won’t be available. A cautious release will help set reasonable expectations and allow the retailer to test new features.

Inside Mercari’s new Merchat AI shopping bot

What: Macy’s modernization strategies have received approval from J.P. Morgan’s managing director of equity research and retailing.

Why it is important: The department store group’s succession plan and rebranding are going over well on Wall Street with Macy’s stock price up 7.5 to USD 18.78 and an overweight rating, suggesting the stock price should perform better in the future.

The managing director reported clear confidence in Macy’s FY23 top/bottom-line plan, foundational change, and a clean balance sheet with no material debt maturities until 2027.

Macy’s has also rebranded its website, logo, and ticker symbol as part of its modernization strategy, moving the department store’s signature star from the apostrophe to the lowercase ‘i’ and the stock ticker symbol now featuring a small star on the top left side of the ‘m.’

J.P. Morgan upgrades Macy’s Inc. 

What: The continued use of plastic throughout the retailing and distribution process is adding to fashion’s waste problem.

Why it is important: While retailers are making greater sustainability efforts, the plastic problem in retail persists as there is no clear way to eliminate plastic from the retail system.

From mailers, hangers, to pallet wraps, polybags, tags, and more, retail uses a large amount of plastic.

In Europe, 18 countries have banned single-use plastic bags, while there are several US states with similar laws, in the US, 100 billion single-use plastic shopping bags are used each year in addition to billions of hangers and plastic polybags. Globally, less than 14% of all plastic packaging used is recycled.

While greater efforts towards sustainability are being made, there is no clear way to eliminate plastic from retail in the near term as the current plastic solutions are convenient and cost-effective and every major retailer requires individual bagging.

Some businesses have turned to biodegradable polybags but still run into issues with complying to shipping requirements from bigger companies such as using plastic hangers or buying specific mailers.

Nordstrom is one of the retailers finding solutions on how to handle its plastic waste with a goal to reduce single-use plastic in its value chain by 50%. In 2022, the company replaced its Nordstrom Rack plastic shopping bags with paper bags, reducing its plastic use by 853 tons. The department store group also sourced half of its new bags from a domestic supplier to reduce carbon emissions.

Through its BeautyCycle program, Nordstrom has reported 25 tons of beauty products being recycled. Additionally, the retailer trains employees on packaging reduction efforts and also has a hanger reuptake program. Despite these widespread efforts, the retailer still relies on polybags and requires brands to send items in individual bags.

Innovation may be necessary in order for retailers to reach their plastic reduction goals and reduce their plastic reliance as there are no scalable solutions.

One potential outlet for retailer and brand plastics is companies like Trex, a billion-dollar company who pays retailers for their trash and then uses the postconsumer waste to make its products. This is a win-win situation as the retailers get paid for recycling but also don’t have to pay for their waste.

Inside retail’s plastic bag problem – and efforts to curb it 

What: Bergdorf Goodman has begun offering a wider assortment in its home category through its website.

Why it is important: The retailer’s home department is a rarity in US retail as it offers a specialty and extensive range of unique products.

The retailer’s home category consists of 200 to 400-square foot shops or rooms that line the corridors of its seventh level. While having this high touch operation comes with higher costs, the productivity is said to be decent considering the category is located on a higher level.

BG’s home department offers a select and extensive range of unique artwork, tabletop, glassware, books, jewelry, furniture, and more, in addition to being luxurious and not entirely expensive. It’s a kind of specialty luxury that few other retailers try to do with any degree of scale.

Bergdorf Goodman’s focuses on rotating exhibits to provide newness and keep enticing its client base in addition to the permanent selection that is offered across all categories. The department store’s home business is a mix of big, well-known brands and smaller artisans with a focus on being artisan-driven to offer unique products for its clientele.

The retailer claims that the right balance between the two is the secret sauce, and the rotating exhibits allow them to bring in brands and products they wouldn’t normally have.

The home floor features The Hallway, which runs the length of the floor and features artwork that ties together the various shops and rooms. Within the hallway of shops, there’s a space called the Loft which spans 1,000-square-feet and houses different presentations from artisans. Both of these spaces’ presentations change about every three months.

Additionally, growing the e-commerce business has allowed the retailer to expand its range and story by offering more categories. During the pandemic, a lot of Bergdorf’s fashion customers transitioned to the home category and the retailer has seen success in the category since with this past Christmas being their best ever.

At home with Bergdorf Goodman

What: The owner of Westfield mall chains has acquired the outstanding share of the Croyden Partnership from UK property giant Hammerson.

Why it is important: With full ownership of the property, Unibail-Rodamco-Westfield (URW) will be able to work with local stakeholders to redevelop and transform the area to meet the future needs of the community.

URW has acquired Hammerson’s 50% stake in the Croydon Partnership, which is a ten hectare parcel of land including high street retail frontage, office blocks, parking garages, as well as the Whitgift and Centrale shopping centres.

Hammerson has been selling off properties to improve its financial performance and focus on its strong core portfolio, giving URW the opportunity to transform and redevelop the area as they now have full ownership of the property.

Westfield owner confirms the purchase of Hammerson’s Croydon development stake

What: In February, retail sales in Germany fell by 1.3% and nominal 0.5% in comparison to January according to the Federal Statistical Office.

Why it is important: Analysts were surprised by the development as a 0.5% increase was expected.

Compared to February 2022, real sales fell by 7.1% and the industry reported a nominal increase of 2.6%. Due to high inflation and sharp price increases, German consumers’ purchasing power has been reduced.

Germany: retail sales are lower

What: The Asian convenience store chain is entering 8 European countries at the time.

Why it is important: Customers will have access to new services and price points, creating an additional benchmark for department stores, especially in terms of proximity services.

7-Eleven is planning to expand into Europe, seeking experienced franchisees from retail, foodservice, or hotel industries.

Initial target markets include France, Germany, Ireland, Italy, Poland, Spain, Turkey, and the UK, with Austria and Switzerland also being considered. The Benelux countries are not part of the current plan.

This expansion follows a similar move by Canadian convenience store giant Couche-Tard, which entered a strategic partnership with Total to operate service stations outside France and potentially offer additional services along European motorways.

7-Eleven to enter Europe 

What: Gucci has launched its first ultra-luxe Salon store concept in LA, open to top-tier clients and by appointment only.

Why it is important: The retailer is focusing on its wealthiest shoppers as part of its turnaround strategy, creating a sense of community and displaying its most elevated and exclusive products at the Salon.

The 4,380-square-foot space is located on the prime corner of Melrose Place and Melrose Avenue, featuring products ranging from EUR 40,000 to more than EUR 3 million.

The Salon is the ultimate playground for Gucci’s top clients to explore the possibilities of the retailer’s Italian craft and interact with the brand creatively. Customers will find made-to-order collections for men and women, accessories, luggage, décor, high jewelry and watches, as well as rare and exclusive vintage pieces that have been restored by Gucci artisans.

Private appointments can be booked from two hours to a whole day and a special menu will be offered for the Gucci Osteria restaurant.

Designed by Gideon Ponte, the Salon is made to feel like an old Hollywood movie set with mirrored columns, stage-like curtains, theatrical dressing rooms with red and purple velvet stripe walls, and chandeliers. The center of the store also features the house’s recent red carpet looks.

The Italian luxury house will be opening nine permanent and temporary salons with locations in New York, Paris, Milan, London, Dubai, Hong Kong, Shanghai, Taipei, and Tokyo, each having their own collection of products.

Gucci is currently in a transition period as Alessandro Michele left the house as creative director in November and in the last three months of 2022, sales fell 14%. The Salons are the latest step in Gucci’s product elevation drive, as its average selling price rose double digits last year.

Gucci Salon ultra-luxe private store concept debuts in LA

What: Loewe’s first store dedicated to cleaning and repairing its leather goods has opened on Hankyu Umeda’s newly renovated Green Age floor.

Why it is important: The new store will join a variety of other brands with sustainable inititaives as the department store reopens its floor dedicated to creating a sustainable future.

Loewe is introducing Loewe ReCraft, a store dedicated to cleaning and repairing its leather goods.

The boutique offers a variety of services from sewing work, restoration, and replacement of handles among others. Customization options are also available as well as a selection of products which are made from surplus materials.

The Green Age floor of the department store has been recently renovated and revamped to accommodate more eco-friendly brands, products and services.

The department store is also offering limited edition products to commemorate the opening of the Green Age space. The floor of the department store features over 90 brands and aims to co-create a sustainable and prosperous future with consumers, brands, and communities.

Hankyu Umeda’s Green Age floor features Loewe ReCraft

What: Mall owners are repurposing their properties with alternative uses and attracting tenants and experiences not typically found in shopping centers.

Why it is important: Department stores are increasingly leaving traditional mall formats in the US, leaving mall owners to get creative with their vacant space.

Diversification and densification are driving Maerich’s strategy, a California-based mall owner that expects 30 to 40 percent of its portfolio to be non-traditional use. Currently, that number is at 15 to 20%, as they repurpose square footage that was previously occupied by department stores and other retailers.

The California-based mall owner has transformed these vacant spaces and underutilized parking lots into residences, hotels, experiential concepts, fitness centers, and added more food and beverage options, as well as a variety of DTC consumer brands.

Malls and shopping centers need to continue to adapt as consumers’ discretionary spending goes more towards experiences and less on material goods, mall traffic decreases, and Amazon continues to be a top competitor.

To see success, the mall owner has been remerchandising and redeveloping its real estate with a differentiated, alternative mix of tenants in addition to adding square footage to existing assets that are productive.

Top malls today look much different than 10 to 15 years ago with the exit of department stores and other traditional retailers. Maerich is increasingly adding experiential-type tenants as they drive foot traffic and bring energy to the mall, which results in improving sales and better rent. Leasing volumes come from a mix of both traditional retail and nontraditional concepts like fitness centers.

The leasing environment is the strongest the company has ever had, with 93.6% of its malls leased a the end of the fourth quarter. The company is expected to see USD 56 million growth in annual rent income from store openings this year through the end of 2025.

In 2022, total revenues came to USD 859.1 million. Additionally, traffic is tracking 95% of pre-COVID levels and retail sales are closer to 115% of pre-pandemic levels.

Making the most of a mall

What:  A plan has been approved and should give the new CEO more freedom to transform the company

Why it is important:  Creditors are giving away 98% of the debt of the company, and half of the stores will close.

Galeria Karstadt Kaufhof's rescue plan has been approved by its creditors, bringing the German department store chain closer to safety.

The plan involves a major downsizing, with the closure of around 50 stores and creditors agreeing to drop an estimated 98% of their outstanding claims.

Under the leadership of its new Belgian CEO, Olivier van den Bossche, the company will focus on promising locations, rapid store conversion, digital investments, efficient processes, and localization.

The Belgian subsidiary, Inno, is not impacted by this plan as it has been profitable and not involved in the financial troubles. With the approval, the CEO now has more leeway to steer the company towards a positive future.

Galeria Kaufhof Kardstadt is getting out of trouble 

What: Ikea considers the US as a strategic market for their development.

Why it is important: The company has been extremely active on all continents, actively testing many different formats, as we continuously reported. The US iteration will certainly come with innovations once again.

IKEA is set to invest $2.2 billion in the U.S. market over the next three years, opening eight new stores and expanding its fulfillment network.

This move, which will create 2,000 jobs, defies the store-closing trend seen among other big retailers. According to IKEA US CEO Javier Quinones, the U.S. is a priority market and offers great potential for growth.

The company plans to open large-format stores, nine Plan & Order locations for design consultations, and 900 new pickup points for online orders. IKEA will also invest in digital innovations and improve fulfillment capabilities for its existing stores.

Despite predictions of a wave of store closures in the home furnishing sector, IKEA remains confident in its growth strategy, focusing on an omnichannel approach that combines physical and online retail experiences.

Ikea plans massive investments in the US 

What: The luxury conglomerate is focusing its investments on other booming Chinese cities as Hong Kong loses its relevance.

Why it is important: Hong Kong was previously Asia’s premium shopping hub, but interest has started to decrease as mainland Chinese consumers switch to shopping at home.

Mainland tourists were attracted to Hong Kong by lower prices and wide array of product offerings but anti-government protests in 2019 and the pandemic left Hong Kong devoid of tourists, causing major retailers to shut their doors.

As a result, post-Covid recovery in Hong Kong has been much slower in Hong Kong than elsewhere in China for LVMH. The conglomerate has already moved the regional headquarters of some of its brands and the group’s local office to Shanghai as well as relocated some senior executives to the mainland.

The portion of total luxury spending that’s done within the mainland is expected to almost double pre-Covid levels, with some of the biggest names in luxury already expanding their presence on the mainland as they reap the benefits of China’s reopening.

The duty-free island of Hainan and gambling hub of Macau are two emerging cities set to see success as luxury destinations. Hainan’s duty-free sales more than tripled in 2021 from 2019 and Macau’s visitor arrivals recovered to 62% of 2019 levels over the Easter holiday, only further accelerating Hong Kong’s decline as a luxury shopping mecca.

LVMH is shifting out of Hong Kong as luxury shoppers stay home 

What: ChatGPT is already used in a very practical way by some retailers in specific use cases.

Why it is important:  It might be a solution for any retailer looking at fine-tuning its economic business model and grapple some productivity points here and there.

ChatGPT can revolutionize retail in various ways, including:

-    Writing product descriptions: By inputting product information, ChatGPT can generate multiple product descriptions, speeding up listing processes for retailers like Snipes and Shopify. Human intervention is still required for editing and quality assurance.

-    Providing real-time shopping assistance: OpenAI has partnered with companies like Instacart and Shopify to create chatbots that assist customers with recipe suggestions and shopping based on dietary restrictions.

-    Managing inventory: ChatGPT can analyze sales data and forecast demand, helping retailers optimize their inventory management. Some companies, like Night Shift Brewing and Coca-Cola, have even incorporated AI into their marketing campaigns to showcase their innovative use of technology.

The ChatGPT current use cases in retail

What: Showfields and Neighborhood Goods are examples of retail stores reinventing themselves through showrooming, which helps brands to develop and emerge.

Why it is important: Department stores are in need of interesting brands, often coming from the digital world, in order to attract younger customers. Such a model could prove able to bring at the same time such brands while also making sure the operation would be profitable to a certain point.

Showrooms in retail are physical spaces designed to showcase products rather than just serving as a transaction point. Showfields and Neighborhood Goods are examples of showrooms that assign spaces to brands, custom-building and designing shop-in-shops.

Showrooms provide an economical and flexible way to bring products to customers in real life, including shop-in-shops, which rent spaces to showcase products. Showrooms also benefit the brands they host, as they act as a marketing platform.

Babylist, an online marketplace and registry for baby-related products, tested the concept with two pop-up showrooms before opening its first permanent showroom in Los Angeles.

Showrooms are a cost-effective alternative to digital advertising, and more brands and marketplaces are likely to turn to showrooms for their marketing needs.

Is showrooming an option for retail?