What: Ikea is increasingly expanding its reach by opening locations in city centres.

Why it is important: Such a strategy emphasizes the interest of city centres and potentially creates new flows, which is great news for department stores, in addition to potentially opening up opportunities of collaboration with Ikea.

Ikea has been working on the past three years on smaller store formats, which opened in various cities across the world (LA, Paris, Moscow, Toronto and New York).

The idea is to reach shoppers where big-box retail is not available, by opening 800 to 900 sqm stores, located in the heart of cities and focusing on specific areas of interest (kitchens, bathrooms, bedrooms).

Ikea is not the only big box retailer to explore such options: Best Buy for instance is also exploring similar ideas.

Ikea goes big for city centres smaller stores 

What: Richard Marcus, who served as chairman and chief executive officer of Neiman Marcus from 1979 to 1988 has passed away

Why it is important: Richard had a strong influence on the growth of the business in the ‘80s, he launched the first retail loyalty program as CEO and his departure marked the end of the official Marcus affiliation with the Dallas-based luxury store.

Richard Marcus, former Neiman Marcus Chief Executive Officer, dead at 84

What: The ESG initiative pledges to turn companies into forces for good, but some are wary of its growing focus on multinational corporations.

Why it is important: When companies that create large amounts of waste and do not pay workers fairly, such as Nespresso, are awarded a B Corp certification, the entire system’s accountability is put into question.

Although it started as a way to note companies that are tackling issues that are in line with environmental, social, and governmental ideals, there is a wide debate about the future of the B Corp movement following recent companies that have successfully achieved certification. Originally B Corp set out to be the gold standard of certifications as firms would need to meet high levels of overall performance, provide transparent information, and adhere to legal accountability to balance profit and purpose.

Today there are about 6,400 certified B Corps across 158 industries. The B List used to be made up of smaller businesses that were trying to challenge how business was being conducted, but now major companies want to be included on the list. In order to gain B Corp status, companies need to score 80 points out of 200 across a variety of metrics covering governance, treatment of workers and customers, community, and the environment. The benefits of obtaining B Corp certification are that it is good PR for the business and creates a list of companies that are seen as good to do business with.

But there are limits to the certification as fair wages are only monitored for direct employees and not in relation to the company’s supply chain. Also, how companies deploy increased profits is not dictated by B Corp so the money can either be used to create more positive business practices, or it could be used to ramp up executive pay and dividends.

In order to address the criticism, B Corp is planning to change its standards to be more prescriptive about where they stand on specific topics to make points more difficult to achieve. Many critics are pushing B Corp to go back to its roots of awarding smaller organizations that are actually operating responsibly and leaving behind the idea of being a club for large multinational businesses that are not in line with the certification’s purpose.

The struggle for the soul of the B Corp movement

What: Data has shown that customers are spending less online because funds take too long to process.

Why it is important: Poor return policies are a contributing factor for struggling customers to slash their spending, resulting in a loss of revenue and repeat business for retailers.

In a poll conducted by the banking platform Tink, 30% of UK consumers said they spend less online because refunds take too long and they’re worried about their bank balance. Additionally, 52% of respondents stated that they’re less likely to shop with a retailer if a refund takes a long time.

As retailers anticipate a difficult year, 54% state that they are or expect to be forced to stop offering free returns as a result of the economic climate. The cost of processing returns and length of time that it takes for a customer to get their money back are the top pain points for merchants.

36% of retailers believe that instant refunds would enhance the customer experience of returns while 32% feel they would ultimately reduce the returns cost to their business.

Refund delays mean consumers spend less overall

What:  A survey identified the top retail trends for business to explore this year. The who, what, where, and why behind our shopping experience is going through a metamorphosis.

Why it is important: The retail industry is reshaping the shopping experience in 2023, redefining how we shop and sell, as well as where we shop and what we buy.

1. Retailers are expanding where they sell

Retailers are expanding the number of digital channels they sell on in the next 12 months as social media continues to evolve. There is a growing number of ways to reach and connect with customers and retailers are looking for a central way to do so. It’s not enough to be present in just one place, brands need to be seen and heard beyond a physical store and online presence

1. Retailers are planning for economic uncertainty

44% of retailers in the survey noted raising prices as their top choice in taking steps to prepare for an economic turndown. Additionally, 88% of consumers said that they’d understand if their favorite local retailer raised its prices.

1. Automation can enhance customer experience

Retail customers are a fan of automation and in most cases tend to prefer it. Automation creates room for your customers to experience things their way at their own pace.

1. Customers want to engage with brands

86% of customers want to hear from businesses they frequent and email ranked the highest as customers preferred option.

1. Social and mobile commerce are two of the biggest digital trends in the retail industry- and they’re booming

The new omnichannel landscape of selling on social media is thrilling with 91% of retailers surveyed now selling on social media. Retailers have seen success with 79% of consumers making purchases directly from mobile devices.

The top retail trends for 2023

What: The iconic destination department store in Zurich will undergo major restructuration in the coming years.

Why this is important: Even though Jelmoli managed to grow from 2021 to 2022, even though it did not reach 2019 levels, the decision is very significant and raises questions about the new positioning aimed by the owning company.

The owner of the iconic store Jelmoli in Zurich, The Swiss Prime Site company, is planning to refurbish and redevelop the Jelmoli building in Zurich. The goal is to update retail spaces and introduce new uses to the building, starting in 2025.

The lower floors will have reconfigured retail spaces and a portion of the upper floor will be offices and public spaces like fitness and dining, and the refurbishment aims to maintain the building's status as a shopping destination. The company has been conducting market surveys due to the changing retail landscape and has decided to close the Jelmoli department store at the end of 2024, with a new market position in 2027.

The company will not manage operations itself. The employees and business partners will be given support and time to adjust to the changes. Nina Müller, the CEO of Jelmoli, will be handing over management to Reto Braegger, current CMO, by the end of June 2023.

Jelmoli will close for 3 years to rebuild and reposition itself 

What: Frasers Group is introducing its own buy-now-pay-later (BNPL) offer as part of its own brand

Why it is important: The service is expected to boost the group’s earnings and will give the group an advantage as it’s regulated by the Financial Conduct Authority.

The service, Frasers Plus, will allow shoppers to borrow up to GBP 2,000, split and defer payments, or take a loan through the group’s app. Payment plans will start at three months with periods of six, 12, 24, or 36 months also available with interest.

Customers will also be able to earn reward points when they use the group’s financial products, with one point being rewarded for every GBP 1 spent.

Studio Retail, an FCA-regulated firm, that Frasers bought out of bankruptcy last year, will activate consumer loans and technology created by Tymit, in which the retail group holds a 28% stake, will facilitate the buy-now-pay-later payments.

Frasers set to launch own-brand BNPL app-report

What: Falabella launched an automated warehouse inside its distribution center in the Lo Espejo district.

Why it is important: The company can increase its storage capacity by up to 200,000 units and increase the speed of online order preparation by four times.

The 100% automated warehouse is specifically dedicated to preparing orders for small e-commerce products and required an investment of 4 million dollars.

The robotic equipment increases the speed of online order preparation by four times, optimizing deliveries and increasing the dispatch capacity of small products by more than 50% which translates into an increase of up to 15,600 units per day.

This logistics center, named Autostore, improves shopping experience by reducing wait times for e-commerce customers and helps meet Falabella’s goal of making the preparation and dispatch of e-commerce orders more efficient.

Falabella invests 4 million dollars in a robotic logistics pole for its retail division

What: Amazon saw success in the final quarter of 2022 but will focus on its shopping experience as e-commerce fell under expectations.

Why it is important:  The retailer is focusing on technology to improve its shopping experience to overcome the economic stress it will face in the coming year.

Amazon pulled in USD 149.2 billion in net sales in the final quarter of 2022, beating analysts’ estimates of USD 145.8 billion.

But shares still sank 3% as e-commerce slid in under expectations at around USD 1 billion less than anticipated and Amazon Web Services also fell short for the second quarter in a row.

All of this resulted in quarterly earnings at just 3 cents per share when analysts expected 17 cents per share.

The blame fell on inflation and economic pressure for consumers spending less. Amazon saw consumers spend less on discretionary items, and shift to lower priced items and value brands but continue to spend on everyday essentials.

The retailer plans to focus on technology to improve its customer experience as consumer behavior changes and starts to feel economic pressures.

What Amazon’s earnings say about improving its shopping experience

What: Siam Paragon mall is aiming to reinvent itself in Bangkok

Why it is important: The competition is harsh in Thailand, with Central and The Mall Group having already announced similar projects at a more massive scale earlier, in 2022.

Siam Paragon, a 500,000sqm retail destination in Bangkok, has launched an $88.6m transformation project called The Next Level Evolution to become a global landmark in 18 months. The project aims to upgrade the shopping mall to "bridge the physical world, the digital world, and the metaverse" and is set to be completed by mid-next year.

Siam Paragon's investment plan will meet the surging demand from luxury brands, and more than 100 brands are on a waiting list to open stores in the mall. The mall has exceeded its revenue target and achieved growth of over 50% YoY in 2021, primarily driven by the luxury segment.

Siam Piwat, the company behind the project, is putting away traditional real estate development methods to create a unique destination for brands, entrepreneurs, architects, designers, and tech experts to engage in co-creation. The project will also integrate art, technology, and nature to create a cleaner, more sustainable world. Siam Paragon will continue to trade throughout the redevelopment project with areas refurbished and rebuilt in stages to minimize disruption to visitors.

Inside the $88.6m Siam Paragon mall transformation plan 

What: M&S is expanding on its recently-launched ‘Bra-Fit’ campaign by adding a breast cancer awareness initiative. Working with the long-standing charity, Breast Cancer Now, the retail giant is rolling out signage to more than 1,500 UK fitting rooms in 110 stores with guidance on the signs and symptoms of breast cancer.

Why it is important: As breast cancer is the most common cancer in the UK, accounting for 15% of all cancer cases in females and males combined, the campaign will also appear in M&S’s colleague changing rooms.

Marks & Spencer to offer breast cancer information in fitting rooms

What: Wicks joined the company in August 2020, at the height of the pandemic. Her replacement on an interim basis is Naomi Simcock, the firm’s retail director. She’s a 12-year veteran of the company and has worked across a variety of roles in both its John Lewis and Waitrose brands. She was previously with Marks & Spencer.

Why it is important: Most notably, under Wicks’ watch, the venerable Never Knowingly Undersold price-matching promise was ditched as part of the overall revamp of the John Lewis brand that she oversaw, and the successful budget Anyday own-brand was introduced.

Pippa Wicks exits John Lewis

What: Takashimaya’s future is linked to upmarket tourists travelling to city hubs.

Why it is important: A similar trend remarked worldwide, department stores are all focusing on their key flagship units as they struggle to generate profits in their regional stores.

Japan's department store industry has been in decline for the past two decades due to various factors such as fast fashion, budget-conscious consumers, e-commerce, and deregulation. As a result, the number of department stores in Japan has decreased from 210 in 2019 to just 192 at the end of 2022.

Luxury-focused stores such as Takashimaya and Tokyu have also been hit hard, with some stores closing due to poor growth prospects. However, Takashimaya has shown signs of recovery, with strong sales growth in January across its 15-store chain. The revival of inbound tourism has played a key role in driving category sales, particularly in apparel and expensive personal accessories. The return of overseas visitors has also been a boost for stores that derive a significant portion of their sales from tax-free sales to tourists.

Takashimaya's overseas business is stabilizing with its four units outside Japan in Singapore, Ho Chi Minh City, Shanghai, and Bangkok generating nearly $219 million in the first nine months of 2022 and contributing 4.1 billion yen in operating profit. The weak yen has been a factor in the improved numbers for the overseas stores.

The Shanghai unit is now much improved, and management is confident it can be profitable in the long term. In Singapore's Orchard Road, Takashimaya operates one of the largest department stores in Southeast Asia, with 20% of sales from tourists. Takashimaya's Vietnam store and Bangkok flagship are also on the rise.

The company sees huge promise in Toshin's expertise in developing retail small tenant support and other uses such as office and residential to build out integrated mixed-use projects (Toshin is the development arm at Takashimaya).

With the department store business recovering nicely, Takashimaya announced revisions to its earnings forecast for FY23. The big city flagships are recovering well, but regional stores are lagging, and the company is looking at ways to cut costs, including having fewer store personnel.

Why tourists and flagships are essential to Takashimaya’s recovery 

What: Kohl’s has named board member and interim CEO, Tom Kingsbury, as its new Chief Executive Officer

Why it is important: This is a pivotal time for Kohl’s as the business has been underperforming for several seasons.

Kingsbury joins Kohl’s with an extensive background in discounting and department store retailing. He is responsible for elevating Burlington, rising the stock price from USD 25 to more than USD 200 during his time with the company.

However, the new leader has a tough turnaround ahead of him as the retailer has seen a declining performance by the business and its stock prices.

Kohl’s also announced it entered into a cooperation agreement with Macellum Advisors, who was responsible for pushing the previous CEO, Michelle Gass, out of her position.

Kohl’s names Tom Kingsbury chief executive officer

What: Revenues were down 14% at Gucci and Balenciaga’s backlash from ad campaigns led to a 7% dip in fourth-quarter revenues at Kering.

Why it is important: While Kering’s revenue was down in Q4, LVMH reported a 15% increase in revenues for the last quarter of the year.

The overall Q4 figure represents a slowdown from the third quarter, when sales rose 23%.

For the full year, revenues at Kering rose 9% on a comparable basis to 20.35 billion euros.

Gucci, Balenciaga slowdowns dent Kering’s Q4 results

What: Following the departure of Roland Armbruster, Coin Spa has appointed a new CEO, coming from its own ranks.

Why it is important: There are many things at stake regarding Coin’s current situation, including making sure that the diversification strategy, away from La Rinascente’s luxurious positioning, is profitable, in an inflationary context.

Italian department store group Coin SpA has appointed Ugo Turi as its new CEO, effective immediately. Turi, an experienced executive who was already a member of Coin's board, has been chosen to lead the company's growth and achieve the targets set by Coin's strategic plan at a challenging time for the retail industry.

In 2022, Coin SpA generated €300 million in revenue, up from €288 million the previous year, and had a total consolidated revenue of around €440 million, including revenue from partners operating separate accounts.

The group operates 37 directly owned branches and 102 Coincasa stores in Italy and abroad and distributes over 1,000 consumer brands across a retail area of around 110,000 square metres.

Coin Spa appoints a new CEO 

What: Costs are the reason why the French and German speaking markets will be phased out.

Why it is important: Department stores still have to figure out how to solve the e-commerce profitability equation.

De Bikenkorf is discontinuing international e-commerce activities in French and German speaking countries due to rising costs. As a consequence, the website will only focus on the Dutch and Flemish markets.

The phasing out will be completed in the next few months and is the direct result of rationalization due to rising costs.

De Bijenkorf scales back international e-commerce 

What: Kering is developing an area on rue Saint-Honoré and rue de Castiglione.

Why it is important: The new Kering development is located directly opposite of its top rival, Louis Vuitton.

The luxury group has purchased the entire building at 235 Rue Saint-Honoré for a reported EUR 300 million. The development on rue Saint-Honoré and rue de Castiglione spans nearly 8,000 square meters.

The group plans to open a new flagship store for its leading label, Gucci which would sit directly opposite of its top rival, Louis Vuitton. The store would extend over 2,350 square meters on two floors but Gucci’s CEO and Kering have yet to confirm the project.

Kering embarks on huge commercial development opposite Louis Vuitton near Paris’s Place Vendôme

What: New research shows that consumers are irritated by keeping track of online shopping login information.

Why it is important: According to research by Bolt and YouGov, 62 percent of shoppers prefer having one account that can be used anywhere when perusing online sites.

Bolt said this research aims to understand consumers’ shopping concerns and behaviors while also highlighting the need for brands and retailers “to cut friction in the store account creation process to drive lifetime value with consumers,” the company said in a statement.

Using technology that provides users with secure, one-time passwords for a simpler login process can help brands and retailers relieve the checkout process with consumers.

Can frictionless checkout drive conversions? 

What: Opened at the end of 2020, when physical stores were experiencing new closures, the French website of Dutch department store, De Bijenkorf, will close on March 1, 2023. Online shops in Germany, Austria, Luxembourg and Monaco will also close. Posting positive results, only the Dutch and Flemish sites will remain open.

Why it is important: With e-commerce slowing down, De Bijenkorf couldn’t maintain online operations outside of its native territory.

De Bijenkorf to close its French website

What: POS solutions can help create better in-store shopping experiences for consumers.

Why it is important: As shoppers return to physical stores in full force, retailers need to catch up with demand by simplifying and improving their in-store technology.

Data has shown that consumers are returning to physical stores in full force which is having a profound impact on how retailers and brands assess, deploy, and integrate their in-store technology.

In an NRF panel, multiple retailers agreed that the store experience is still important and alive. The retailers discussed the importance of cloud POS and how these solutions can improve the shopping experience through reliable systems.

As shoppers move fast, retailers need to catch up with these cloud POS systems that allow them to make transactions smoother, friction-free, and fully integrated.

Rethinking tech needs as shoppers return to physical stores

What: The Australian market is increasingly difficult for department stores, as customers are either going for low prices or asking for great experiences, and Australian department stores often find themselves in the middle.

Why it is important: Conditions are ripe for a market concentration, from two players to one, as well for a massive closure of regional, non-profitable stores, in order to be able to focus on the flagships.

The Australian retail industry has seen an increase in spending since the pandemic, going from $26.5 to $27 billion a month to $34 to $35 billion a month. However, it saw a 3.9% decrease in spending between November and December 2022, with most industries experiencing a decrease in turnover during this time. Department store spending saw the largest drop, with a 14.3% decline in spending between the two months. Despite this, year-on-year spending increased by 7.5% from December 2021 to December 2022, but spending appears to be falling from the mid-year high where spending increased by 19.2% in August 2022.

The decrease in spending is believed to be due to a combination of cost of living pressures, price sensitivity, and the end of the lag effect after the easing of Covid-19 restrictions. November is typically a bigger month for retail than December, due to online sales events such as Black Friday and Quick Frenzy. The decrease can also be attributed to the long lead times for deliveries, as Christmas shopping is mostly done in November.

The retail sector will face challenges in 2023, with rising inflation, energy costs, and interest rates affecting consumer spending. Consumers are expected to be more sensitive to price in 2023 and focused on servicing debts, fuel prices, and food. Only 2 options are viable: low price and high turnover, or high price, high profit and more exclusive experiences.

This is why experiential offerings and sustainability are high on the agenda for Australian department stores in the future. The future of traditional department stores is expected to be a smaller model, focused on flagship stores and CBD locations, offering a more luxurious, premium, and prestigious experience. This comes at a price: as one commentator puts it, you can not have a pianist in the cosmetics department, a champagne bar on level three and oysters on level four, when you have 60 stores, but this can be done when you have five.

Can Aussie department stores pivot ahead of a spending decline?

What: Net-a-porter has partnered with The Seam to offer customers alterations and repair services for clothing, jewelry, and accessories.

Why it is important: The British retailer is helping customers extend the life of their clothing and delivering accessible sustainable solutions while working towards its sustainability goal.

The service will launch in February for womenswear, with menswear and more services following at Mr. Porter and the Outnet in the spring.

The Seam is an on-demand tailoring service that connects users with a network of seamsters, tailors, and makers from local communities across the U.K.

Through the partnership, Net-a-porter customers will have access to clothing alterations and repairs, bespoke customizations, as well as care and repair for handbags, footwear, and jewelry. Most services will be completed within seven to ten days with the option for express service.

Net-a-porter urges customers to ‘make do and mend’ with new repair service

What: The Italian group OVS has abandoned its plan to buy the Coin department store chain, which currently operates 37 branches.

Why it is important: The two groups know each other well as OVS had parted ways with Coin before its IPO in 2015. Both parties have decided to end the 6-month negotiation process. OVS, determined to reduce his debt, felt that the investment was too heavy.

2022 was also rather positive for OVS with a net turnover of a value of 1.5 billion euros, up 11% thanks in particular to a positive performance of the Christmas period and, more significantly, end-of-season winter sales. OVS plans to continue growing in 2023.

OVS won’t acquire Coin