What: Nike is increasingly going hyperlocal thanks to the insight it gains with its app and digital ecosystem.

Why it is important: Nike becomes a complex partner for department stores as it is growing increasingly demanding in terms of conditions and does not hesitate to exit to open free standing stores. However, there might be room for micro-partnership, with a hyper local approach, helping department stores to both continue to have Nike in the brand portfolio and also generate traffic on a given customer profile.

The goal of Nike is to “blur the lines between digital and stores”. To do so, the Nike’s membership program (300m members) is central as customers remain in the Nike’s environment and benefit from highly personalized experiences (through an intense data collection process).

This is the reason why Nike is increasingly opening super-specialized, highly local, small stores in the communities where it senses potential. For instance, it opened a workout and wellness-oriented store in Williamsburg, NY, as it noticed high engagement in the area with its training app, without any physical touchpoint yet. This also allowed them to strike deals with local gym clubs to intensify their presence in the area.

Nike is planning to open 200 stores with such an approach, at a global scale, in the coming years.

How Nike execs think through its digital ecosystem 

What: After raising capital for its digital transformation, Saks, the new stand-alone Saks Fifth Avenue e-commerce company, has unveiled its schedule of holiday events via Saks Live, its virtual events platform.

Why it is important: Saks is continuing to spruce up its digital offer and experiment with livestream commerce.

Event hosts include Saks Executive Pastry Chef Stephanie Oliveira; stylist and beauty, fashion and lifestyle blogger Chriselle Lim; and Nicky Hilton Rothschild and Stacey Bendet of Alice + Olivia, the company said.

During the events, shoppers can chat with hosts as they watch for fashion, lifestyle and shopping tips. The retailer said it will update its site with new event information and recordings of its livestream shows.

Saks debuts holiday livestream shopping shows 

What: Target makes the Buy now pay later option available through all its purchase channels, thanks to a partnership with Sezzle and its technical integration in other third parties systems.

Why it is important: The article mentions the risks created by BNPL options, especially in terms of customers being overwhelmed by debt (34% of them have already missed a payment). We also wonder about the profitability of piling up technical solutions and third parties commissions, given the fact that retail prices are, by definition, not increasing.

Target teamed up with Sezzle and Affirm to propose Buy Now  Pay Later options to its customers (see our Exclusive on the topic here). This payment option is available for purchases worth more than USD 100 and require that customers apply to Affirm prior to using it as a payment method at Target.

Sezzle BNPL options are available on website, mobile app, are compatible with Apple Pay and Google Pay in stores and with all same-day fulfilment services. Target aims to increase its market share during the Christmas period thanks to this variety of options.

Target adds buy now, pay later options with Affirm, Sezzle

What: Prices on US ecommerce websites are rising while holiday discounts dwindle.

Why it is important: As the holiday season approaches, items are around 3% higher than the previous year.

Amazon used to push down to push down the price of goods, forcing brick-and-mortar rivals to follow. But the trend has been reversed the past 15 months according to a report by Adobe.

The global supply chain strains have pushed up prices for containers, trucking, warehousing, and labour which has prompted retailers to pass on the additional charges to customers to defend their margins.

Also, out-of-stock messages were up 172% compared with the pre-pandemic period in January last year.

Online retailers fuel inflation in reversal of years-long trend 

What: Christian Dior has confirmed its sporting ambitions. After the singularly athletic looks that made up part of the Spring/Summer 2022 collection unveiled during Paris Fashion Week, the brand has announced a partnership with Italian gym equipment specialist Technogym.

Why it is important: After launching Dior Vibe, a line of athleisure wear including leggings, boxing shorts and sports bras, the brand intends to benefit even more from the increase of sport practice by venturing in a new (unexpected?) category.

Dior creative director Maria Grazia Chiuri has personalized a connected treadmill, a multifunctional weight bench including accessories such as dumbbells, and an exercise ball. The pieces are white and feature the Technogym logo, as well as the Christian Dior name between two horizontal black stripes. The collection will be available in Dior stores around the world starting January 2022.

Dior launches exercise equipment with Technogym

What: Nineteen new locations will open this holiday season.

Why it is important: The big-box retailer will increase the number of Apple shops-in-shop in Target stores from 17 to 36 this holiday shopping season.

Target launched Apple shops-in-shop at 17 locations in February after 15 years of selling select Apple products on target.com. The extended partnership will include new locations in Florida, Texas and Minnesota, an updated assortment of Apple products, both in stores and by way of Target’s e-commerce business, and Apple-trained Target Tech Consultants in stores to answer questions and conduct product demonstrations.

Target grows Apple shops-in-shop

What: Retail veteran Walter Loeb is wondering what would be at stake should Macy’s follow the lead of Saks Fifth Avenue and the Hudson’s Bay Company, and split its offline and online activities into two specific companies.

Why it is important: It is all about what to do with stores and digital, and how to combine both of them in the most efficient manner possible. What works for a company might not work for others.

Financial activists call for Macy’s to spin off its e-commerce unit (USD 8,45 billion estimated sales in 2021, doubling in the past four years). Walter Loeb recalls that Macy’s and Bloomingdale’s have worked hard to maintain a business model properly blending e-commerce (a third of the business) and store business. Overall, the total merchandise sold generates a profit that allows the company to remain in business across both channels.

Splitting up activities might create unneeded problems:

• In a particular store is unprofitable, in the new scheme, it will have to be written off since the asset is no longer viable, and might generate a snowball effect putting the whole spin off company dedicated to stores under a considerable stress,
• Every resource (warehouses, trucks…), function (CFO, logistics…) and salary in the current Macy’s company will have to be reviewed and prorated across the brick & mortar and digital company. This will generate additional administrative workload which will not be contributing to profit.

For Mr Loeb, a well-managed organization could more smoothly ensure that seamless experience a customer would want. Macy’s being significantly bigger than Saks in terms of store count, he does not believe a split-up would benefit the company as a whole.

Why Macy’s Won’t Survive If It Sells Off Its Digital Business

What: The usually record-breaking golden week fell short of last year’s level.

Why it is important: Post-pandemic consumption recovery is a reality, however it might not be as fast as needed by worldwide retailers.

Tourism revenue fell by 5% year on year during the last seven-day holidays from Oct 1-7 marking National Day. Normally the busiest travel period, domestic tourism revenue totalled USD 60.36 billion, the equivalent of 60% of the same week before the pandemic. According to Citi bank, this sluggish recovery is due to the soft prices of travel products as well as a shift towards short-haul trips. However, even on that front things are not yet settled: domestic trips are down -1.5% compared to last year, and represent only 70% of pre-pandemic levels.

While China has largely been successful in containing the Covid-19 multiple waves, including Delta variant, analysts are worried about potential new outbreaks.

China's soft Golden Week data bode ill for retail sales

What: Walmart has positioned Google’s cloud more deeply at the centre of its most critical initiatives. One of the main propositions of Google’s cloud business lies in artificial intelligence, machine learning and other data-driven services that are tailored for sectors like retail.

Why it is important: Google Cloud’s client list now ranges from established retailers like Macy’s or Sephora to partnerships with LVMH. When Macy’s used Google Cloud’s Retail Search, the department store saw a 2% jump in conversion and a 1.3% uptick in revenue per visit. Ikea’s adoption of the Recommendations AI tool led to a more than 30% boost in click-throughs and more than 2% gain in average order value.

Walmart runs its most data-intensive, critical “decisioning” processes on BigQuery (one of the Google cloud tools), an enterprise data warehouse that manages and analyses partner data using ML, geospatial analysis and business intelligence. It can act on practical insights and make its operation more efficient. Its rivalry with Amazon makes the initiatives fundamentally important, and so far, it has seen concrete results: BigQuery has had a direct impact on the business, improving Walmart’s processing time by 23%.

Across the whole operation, Google’s cloud has facilitated the retail behemoth’s ability to apply AI — from back-end issues like predicting demand, managing in-stock levels and optimizing the supply chain, to freeing up associates to better serve customers.

So far, the retailer has migrated the majority of its data tables, as much as 90%, to the cloud, and it has migrated 30% of the big data. It plans to nearly double that by the end of the fiscal year.

Walmart’s AI Push Drives Google Cloud Deeper Into Its Organization 

What: The project, run in partnership with the Toy Project, is part of the store’s ongoing sustainability efforts.

Why it is important: Selfridges customers will be invited to donate toys at the pop-up in the run up to Christmas. Donations can be made every weekend from 23 October to 18 December. These toys will either be sold back through the Selfridges pop up or the Toy Project’s north London store or given a second life and donated to children through the charity.

Curated in partnership with Selfridges, the edit of toys includes recycled puzzles, games, toy figures and mixed bags of smaller pre-loved toys which can be used for children’s parties alongside a collection of vintage toys and collectables.

SELFRIDGES CELEBRATES A CIRCULAR CHRISTMAS WITH PRE-LOVED TOY POP-UP 

What: A dive deep into the new fast fashion darling Shein and its business model

Why it is important: Shein is so attractive as a brand that it pushes tweens to forget their commitments to sustainability and massively buy fast fashion items coming from the other side of the planet in the blink of an eye.

The Economist reviews the mechanisms and key success factors of Shein, the new fast fashion darling and “a new style of Chinese multinational”.

Contrary to the founders of Zara or H&M, Mr Xu, Shein’s founder, does not come from the clothing industry, but from search-engine optimisation.

This is the reason why this model is so different, as Shein is fully about social commerce when it comes to design and production:

• The product catalogue is rich and somehow overwhelming: while Zara launches 10,000 new products a year, Shein launches 6,000 skus every day, based on the algorithmic analysis of trends appearing across Internet.
• A real-time tracking system allows to kill the worst performers and capitalize on the best ones, relaunching production whenever needed. The catalogue has a permanent database of 600,000 references, each retailing between USD 8 and USD 30.
• Products are manufactured with a privileged group of Chinese manufacturers, who are overall better paid and faster than with other brands, allowing Shein to enjoy a higher level of commitment and loyalty. Also, a dedicated system allows to automatize the production launches in real time based on the market trends.

Shein is estimated to have reached a total gross merchandise value of USD 2,3 billion in 2019 and is expected to reach USD 20 billion in 2021. 40% of its sales are performed in the US, and another 35% in Europe.

Products are sold through a strong Instagram and other social media strategy, through the now familiar influencers’ strategy but not only: third party designers are also associated to the design process, allowing Shein to tap up their own communities as well. As a consequence, Shein has 250 million followers across Instagram, Tiktok and other social media platforms, and 70% of them shop through Shain’s mobile app (24% daily active users).

The Economist points out that Shein is a very specific Chinese multinational: the turnover is mostly achieved outside China, and is constantly trying to avoid any reference to its Chinese origins, in order not to be trapped into geopolitical controversy. Also, at home, by keeping under the radar (and also due to the fact that clothing is way less strategical than IT or electronic components), Shein is not under the same scrutiny than Alibaba and other internet groups with a large domestic business.

However, Shein’s strategy is not risk-free:

• Like other fast-fashion brands, Shein is increasingly criticized for its CSR impact.
• Product quality is not constant, affecting its reputation.
• Shein is amassing a considerable amount of data from American customers, which might, in the mid-term, be an issue just like it was for Tiktok recently.

Shein exemplifies a new style of Chinese multinational 

What: The department store supports and develops talents through Printemps Académie, this time in partnership with Paris-Dauphine University.

Why it is important: As for fashion experts having received a certification from ESMOD fashion school, the retailer is making Printemps Académie a large talent development programme. The programme should both support talent and retain employees.

Retail Manager benefited from a training course giving them certification. They were evaluated by teachers at Paris-Dauphine University and Printemps Académie. In total, 29 Store Managers and Sales Managers have been awarded this certification. Six of them also received a special mention.

Printemps partners with Paris-Dauphine University 

What: The U.S. is looking to move its supply chain to one that can operate 24/7 starting with the ports in LA and Long Beach.

Why it is important: President Biden thinks that this is going to speed up the delivery of goods across America.

The new schedule means that ports will now be open for 60 extra hours each week, allowing cargo to flow out of the port at a 25% faster pace than during the daytime as they will flow into highways at off-peak hours.

Walmart, Target, and The Home Depot are among the cargo owners and carriers that have committed to use the extended hours.

Walmart, Home Depot commit to use night hours at West Coast ports to smooth cargo flows 

What: The department store’s two new directors, Ashley Buchanan and Tracey Zhen, have experiences steeped in innovation and technology.

Why it’s important: Tracey and Ashley will be strong additions to the board, bringing skills and experience that directly align with Macy’s strategy and ensure the company’s growth.

Ashley will be bringing decades of experience in retail and a history of overseeing omnichannel transformations, while Tracey’s global consumer technology background and track record of fueling innovation and applying technology will deliver profitable growth.

Macy’s inc. pumps up the board

What:  Amazon is using data that should remain private to sellers to fine-tune its own private-label products, and then promote them over the original ones

Why it is important:  The worrying point is not that Amazon engages in such practices, which are finally common practices for any retailer with private labels business, but that it also uses data taken from third-parties selling on its marketplace.

Reuters reports that Amazon has secretly exploited internal data from Amazon India to copy products sold by other companies and then offered them on its platform. They also rigged the search results in order to make the private label products appear in the top tier results.

After identifying the most interesting or promising brands, the Amazon India team partnered with them and sold them on the website, in order to learn from the data gathered and replicate their key success factors, with products sold 10 to 15% cheaper. Amazon started operating in India in 2013 and soon recorded significant losses, leading to setting up a target of 40% of total sales achieved through private labels.

We already reported Benedict Evans’ thoughts on Amazon’s approach to private labels here. He points out that retailers have watched what they sold and copied their suppliers since the 19th century, and this is a basic part of how the industry works (private labels represent 20-30% of retailers’ revenue, vs. 1-2% for Amazon).

He mentions that such an approach on the marketplace (60% of Amazon’s business) is more worrying: marketplace vendors are not just Amazon’s suppliers but also its customers, and Amazon has always promised that it would not look at this kind of data. So far, there is no technical nor legal framework guaranteeing Amazon’s promise.

Amazon copied products and rigged search results, documents show

What: After six years of renovations and a EUR 600 million investment, Berlin's grandest luxury department store, the KaDeWe, finally opened new fashion and beauty floors this week. The revamp comes alongside a more directional fashion buying philosophy.

Why it is important: With 700,000 square feet of floorspace and seen as the German equal of Galeries Lafayette in Paris or Harrods in London, KaDeWe is expected to generate more than EUR 1 billion in the next year.

Since 2015, the KaDeWe has been undergoing what local media have described as “once-in-an-era” renovations. This week the department store unveiled 150,000 square feet of the revamp, including the new men’s wear, women’s wear and beauty departments. The latter boasts lofty, 100-foot ceilings.

The building work was overseen by renowned Dutch architect Rem Koolhaas and his firm, OMA. According to Koolhaas’ plans, the department store would be roughly divided into four areas, with each getting a sculptural staircase.

Another factor that will make the KaDeWe fashion floors more enticing are the changes in fashion buying policies at the department store. More effort has gone into seeking out directional and new brands. Pop-ups are taken very seriously as another way of adding spice to the retail mix.

Before the pandemic, KaDeWe attracted a lot of tourists and customers were around half international and half local.

In Berlin, Spiral Staircase, Star Architect heralds New Era for KaDeWe 

What:  Immersive retailer Camp opens its first boutique in a mall

Why it is important:  “Less experiential, more retail”: what can department stores learn from their approach, more similar to what they can do (and expect in terms of profitability) than a Fifth-Avenue based flagship?

US-based toys retailer Camp, which we reported here, keeps on expanding in the US by entering the mall business, with a new store planned to open in one of the largest East Coast’s malls, Westfield Garden State Plaza in New Jersey. The store is 650 sqm and is, according to Forbes, “more retail and less experiential” compared to the flagship on Fifth Avenue.

The location used to be a Toys R Us store, and will feature a treehouse and slide in the centre of the space. 2 additional stores are planned in the West Coast and in New England, for a total count of 11 stores at the end of the year, and 18 by the end of 2022.

Immersive toys retailer Camp to continue US expansion 

What: The department store recently learned that an unauthorized party obtained personal information associated with certain Neiman Marcus customers' online accounts in May 2020.

Why it is important: Customer data security is an issue for retailers and Neiman Marcus' investigation is ongoing.

The personal information for affected Neiman Marcus customers varied and may have included names and contact information; payment card numbers and expiration dates (without CVV numbers); Neiman Marcus virtual gift card numbers (without PINs); and usernames, passwords, and security questions and answers associated with Neiman Marcus online accounts.

Approximately 4.6 million Neiman Marcus online customers are being notified of this issue.

Promptly after learning of the issue, NMG began taking steps to protect its customers, including requiring an online account password reset for affected customers who had not changed their password since May 2020. NMG has set up a dedicated call which is open seven days a week

Neiman Marcus Confirms Unauthorized Access to Customer Online Accounts 

What: John-Lewis has been a staple to the British community, but in an age of Instagram and Amazon, beautiful stores that treat their employees well lose their allure.

Why it is important: Department stores need to be more agile to stay relevant in the eyes of young shoppers and in the age of ecommerce.

John Lewis is going through the ‘greatest scale of change’ as it enters a new market of offering homes and financial products to customers as the retail business struggles. British department stores such as Debenhams, House of Fraser, and Topshop have all failed to adapt and survive as shells of themselves. Retail chains that have flourished, have all been agile exceptions.

John Lewis recorded its first loss last year and did not pay a bonus to its 80,000 plus employees that are referred to as ‘partners’. With losses and layoffs, the partnership model of John Lewis is starting to lose its shine.

In response to Amazon Prime, John Lewis is looking into a ‘pseudo-membership’ loyalty programme across John Lewis and Waitross which will grant members free delivery and a day early access to Black Friday sales

John Lewis is also looking into creating 15-20 smaller convenience stores offering click-and-collect.

Inside the John Lewis nightmare 

What: Geoffroy van Raemdonck, CEO of the Neiman Marcus Group privately disclosed the fiscal fourth-quarter financial figures to lenders and investors. The group wrapped up its fiscal year on a positive note and is “prepared” to meet the demand for holiday shopping and confront the headwinds challenging the industry.

Why it is important: It’s been a year since Neiman Marcus emerged from bankruptcy with new owners and a lot less debt, and since then Neiman’s CEO has been vocal about a recovery. Q4 surpassed the retailer expectations with a 6% comp growth in revenues on a 21% decline in inventory, compared to the fourth quarter in 2019.

Since March 2020, Neiman Marcus and its leaders have been emphasizing efforts to further a full-price positioning after several seasons of pumped up promoting. A year ago, Neiman’s completed its exit from the off-price business. Twenty-two Last Call stores were closed, and only five remain open, though those are just for clearance, not for off-price merchandise.

During the fiscal fourth quarter, the average order value improved 13% compared to the third quarter, due to customers shopping more at full price and more expensive items as well.

Men’s wear, specifically men’s designer and contemporary areas are performing best during the fiscal fourth quarter, followed by women’s shoes, handbags and jewellery. The sneaker business was “extremely strong.” On the softer side was women’s apparel.

New customers are buying more at full price and they come back at an accelerated rate. Previously, one in six new customers would return to shop within three months. Now one in five come back within three months.

neiman marcus q4 results

What: Walmart capitalizes on its learnings and size to propose an express delivery to local brands and retailers.

Why it is important: Forget branded trucks, it is all about pivoting and allowing Walmart to enjoy additional revenue streams by renting out its profitable capabilities to other retailers.

Walmart launches GoLocal in the US, a new delivery service proposed to local brands and retailers. It will allow them to deliver within 2 hours their products, thanks to Walmart Spark Driver service, the retailer’s response to Uber, under a white label offering. This means that products delivered will not be carried in Walmart branded trucks.

This new service to retailers is capitalizing on the learnings from Express delivery that Walmart developed in the last 3 years in the US.

Walmart launches Walmart GoLocal, a new delivery as a service business

What: Amazon will allow many tech and corporate workers to continue working remotely indefinitely, as long as they can commute to the office when necessary. It is a change from Amazon’s previous expectation that most employees would need to be in the office at least three days a week.

Why it is important: Company directors will have discretion to allow teams that they manage to continue working remotely.

Amazon’s update to its return-to-work policy followed similar moves from other big technology companies. Microsoft announced last month that it had postponed reopening its offices indefinitely.

Amazon will allow many employees to work remotely, indefinitely

What: Much-anticipated logistic crunch led US retailers to stock items earlier than last year to make sure they would not be in a bottleneck at Christmas.

Why it is important: Many of them are either tempted, or forced, to launch seasonal sales way earlier than last year, to respond to a structural need in terms of capital and space.

The post pandemic retail scene is affected by two factors combining themselves to make things worse: a renewed customer hunger for purchases (Deloitte expects a +7 to +9% surge compared to 2020 during holidays) weighing in on disrupted supply chains, which were halted during Covid-19 lockdowns. As a consequence, many retailers anticipated a global shortage of goods (which might happen anyways for those of them who are late in restocking) and increased their inventory level significantly earlier in the year than in 2020.

As a consequence, retailers are also tempted to offer deals and discounts ahead of the season, in order to free up capital and space. Amazon for instance will start promotions 8 weeks before Black Friday and 11 days earlier than in 2020, while Target will also start deal days on October 10. As a consequence, many analysists are worried that this leads to a price war ahead of the traditional weeks when customers are offered discounts, leading to another major Post-Covid-19 change in retail practices.

US Christmas retail crush comes early as supply chains buckle

What: Fashion may be preparing for a future in the metaverse, but retailers still need to attend to today’s business of selling to physical customers, often in physical stores. Selfridges, which has leaned heavily into creating engaging in-store experiences, is now looking to virtual ones as well.

Why it is important: The project is the latest example of how fashion companies and retailers are trying to bridge the divide between the real and digital worlds. Many brands are anticipating a future where they’ll meet more of their customers in video games and other virtual environments.

For the next two weeks, visitors to the designer floor at Selfridges’ London flagship will discover a portal into a virtual city. The space is a pop-up in collaboration with Charli Cohen, a London designer of physical and digital streetwear, and Yahoo Ryot Lab, Yahoo’s content studio. Pokémon also lent its characters to the project in celebration of its 25th anniversary. It’s mostly there, however, to prompt customers to explore “Electric/City,” an immersive virtual environment shoppers can access in the store by scanning a QR code or visit online through a dedicated website. The collaboration also includes an array of products for sale, both physical and virtual.

A screen on a stand offered visitors their first view ofthe virtual world, and on another stand nearby was the QR code shoppers scan to go to the Electric/City site. According to BoF, the in-store space is sparse, and the interactivity between digital and physical can feel limited without help from the store staff guiding customers through the experience. Where the collaboration comes to life is inside Electric/City.

The target audience for the project is all Selfridges’ customers, especially those who may be less familiar with immersive digital worlds. Designers also made sure the environment was accessible on mobile and in a regular browser window, without any sign-up or headset required.

Beyond the products for sale in Selfridges, there are spots in Electric/City where visitors can purchase clothes from the Pokémon tie-up to be delivered to their homes. A separate collection of digital Charli Cohen garments is available for sale inside Electric/City. They’re enabled by ReadyPlayerMe, which lets users create a digital avatar from a selfie to use across more than 300 compatible games and virtual spaces, such as VRChat. They’re also AR-ready. A shopper in Selfridges who buys a digital item and creates an avatar can project it on their phone into the middle of the shop floor.

How Selfridges Is Bringing Virtual Fashion to Stores