What: The luxury department store has launched a new 360-degree campaign aimed at supporting New York’s burst of new talent.

Why it is important: Bergdorf’s is investing in and supporting independent, local fashion labels and creatives through this creative campaign.

Bergdorf Goodman’s has partnered with New York native artist, Joana Avillez to unveil its “Only in New York” campaign. The campaign features a drawing by Avillez of a fantasy dinner party of current New Yorkers dressed in locally designed brands.

The immersive project leverages Bergdorf’s investment in independent, New York-based fashion labels and determination to support a new generation of designers.

The imaginary dinner party will be set up in the stores famous 58th Street windows, in addition to micro e-commerce websites being built, special menus in the BG Restaurant, and a live illustration by Avillez.

Bergdorf Goodman’s immersive campaign to support independent, New York City brands

What: Saks.com is adopting a cautious approach to 2023 as they see a deceleration in growth.

Why it is important: While the e-commerce business has increasingly seen success after splitting from Saks Fifth Avenue, the retailer is preparing for a more normalized year in the current economic climate.

Saks.com has seen two years of strong growth in volume, product choices, customers, and services following its split from Saks Fifth Avenue. The company is expecting 2023 to be a more normalized and challenging environment as consumers slow their discretionary spending.

The luxury e-commerce business plans to focus on scale and efficiency and predicts that there will be pockets of strength and pockets of softness this year. While footwear and handbag were top-performing categories over the last few years, sportswear and eveningwear will be stronger categories this year.

In Q4, the gross merchandise volume was up 11% with the top-performing categories being dresses, eveningwear, and women’s contemporary ready-to-wear.

After a run of quarterly gains, Saks tempers its 2023 outlook

What: After a year of experimenting, the company announced that it would remove the shopping capability from live broadcasting.

Why it is important: Live online shopping was predicted to go viral in 2023, but the featuring was underperforming on the app.

Users will still be able to set up and run their shop on Instagram as the platform continues to invest in shopping experiences that provide the most value for customers and businesses.

According to Instagram’s data, 90% of users follow at least one business on the platform.

Instagram’s current shopping strategy is about capturing consumers at the moment of inspiration, not pushing shopping in their faces at every turn.

Instagram ends live shopping

What: Neiman Marcus Group is laying off hundreds of workers and evolving its leadership structure.

Why it is important: The department store group follows several other retailers in laying off its workforce as retailers look to recalibrate and manage costs to be in line with softening revenues.

The Neiman Marcus Group is laying off under 5% of its workforce, including workers in corporate stores, and other areas of the business.

The CEO of the group stated that the cutbacks are a result of the volatile economic climate, a deceleration of business since the summer, and decisions on how to best focus resources on the highest value customers.

Neiman’s is also evolving its leadership structure by shifting technology and customer insight responsibilities to NMG’s two brand presidents, strengthening their current roles and capitalizing on execution and decision speed as they are critical in a moment of volatility.

Neiman Marcus Group sets layoffs, reorganizes management

What: JD.com is set to close its e-commerce services in Indonesia and Thailand after a difficult year for China’s technology and retail sectors.

Why it is important: As China’s largest online retailer and biggest overall retailer, the company’s exit reflects the highly competitive e-commerce landscape in Southeast Asia.

JD.com is retreating from Southeast Asia, ending its services in Thailand from March 3 and Indonesia at the end of the same month.

The retailer, which started in 2015, failed to gain traction against larger competitors such as Alibaba Group, Lazada, and Sea Ltd in addition to a slowing economy and the impact of Covid-19 restrictions in China

The company stated that it will continue to serve Southeast Asia and global markets through its supply chain infrastructure. While the retailer is exiting the consumer side, they plan to focus on merchants, brands, and logistics infrastructure in Southeast Asia.

China’s JD.com to shut e-commerce sites in Indonesia, Thailand

What: China’s luxury market saw a decrease in luxury sales as a result of tense lockdowns and rounds of crackdowns on the tech, real estate, and entertainment sectors.

Why it is important: For the first time in 5 years, China’s personal luxury sales contracted.

The consultancy firm, Bain, reported that spending in the personal luxury space in China shrunk by 10% in 2022. Almost all categories were impacted but those with higher online penetration such as luxury beauty performed better than those with a smaller online presence.

The report stated that watches and jewellery saw the sharpest decline, followed by fashion and lifestyle at a 15 to 20% decrease.

A few brands managed to stay flat or grew during the challenging market. These brands were bigger, with iconic portfolios, and had a higher concentration of VIP clients. Price hikes have also helped some brands recoup their losses with a 25 to 45% price gap in the leather segment and 25 to 345% in jewelry and watch sectors between China and Europe.

Bain states that brands who understand the nuances of the China luxury market will succeed over time. Additionally, they urged brands to adapt and cater to Chinese tourists’ distinct shopping behaviors and preferences as they return to Paris, London, and Milan.

The consultancy firm expects growth in the sector to resume in 2023 with sales returning to the 2021 level as soon as the first half.

Bain: China’s luxury market contracted 10% in 2022

What: Macy’s continues with its Polaris rationalization plan initiated in 2020.

Why it is important: It is not about closing down stores but transitioning to a new, smaller, off-mall format. For that reason it is less about downsizing and more about rightsizing.

Macy’s, according to its 2020 Polaris plan and its announcements earlier in November, is closing 4 locations in January, in California, Colorado, Hawaii and Maryland. This is part of a strategy to close 125 stores between 2020 and 2023 in lower-tier malls, and trim 9% of the workforce.

In parallel, the group continues with its off-mall strategy, through the Market by Macy’s concept (8 stores so far including 4 opened in 2022), Bloomie’s with a third location in Seattle this year, and 300 Macy’s Backstage off-price locations, including 42 opened in 2022.

Macy’s closes down 4 locations 

What: According to Harrods, the UK is shooting itself in the foot with the cancellation of the VAT refund scheme.

Why it is important: It is not so common to hear Harrods, a notoriously discreet institution, taking such a strong public position against the UK government. Does this mean that department stores, just like brands, are expected to be increasingly politicized?

Michael Ward, CEO of Harrods, warned that London is trailing behind Paris and Milan in luxury trade, due to the lack of attractivity of the country following the decision to stop tourists visiting the UK to reclaim VAT. The measure was scrapped at the end of 2020 following Brexit and was very briefly supposed to be cancelled in Q4 2022.

As a consequence, goods purchased in London are more expensive than in other European capitals, forcing Harrods to source products that are not found anywhere else.

Shoe retailer Kurt Geiger’s CEO also mentioned that the measure was heavily counterproductive and affecting UK sales.

Harrods CEO takes a public stance against the UK government decision to scrap VAT refund

What: Macy’s announced a lower-than-expected Q4 2022 ahead of the release of the final results.

Why it is important: Even though numbers were in line for the holiday periods, the overall quarter did not reach the expectations due to a very quiet business in-between the celebrations. As other IADS members have noticed, the traffic pattern has significantly changed since 2020 and this will probably be visible in other retailer’s Christmas sales announcements to come.

Macy’s plans a Q4 2022 below its November forecast, as quarterly sales are expected to range in the low end to midpoint of the $8.16bn-$8.4bn initially planned bracket. Sales were unexpectedly slow during the non-holiday periods, even though Black Friday and Christmas were in line with expectations.

The overall outlook for 2023 is toned down according to the CEO, Jeff Gennette.

Macy’s cautious and conservative for 2023 

What: Several major fashion firms are without a permanent chief and looking for new leaders who are flexible and nimble to lead them through the impending recession.

Why it is important: Vacancy in leadership positions presents the opportunity for firms to reshape the industry’s leadership profile.

As the pandemic is seemingly in the past and a recession is predicted in the near future, boards are looking at who is the most qualified to lead their company. With a number of top fashion firms losing their top executives within the last year, it often isn’t their current CEO. This turmoil gives the industry an opportunity to reshape the fashion industry’s leadership profile and broaden the skills and experiences of the industry’s leaders from more traditional pathways.

More than ever, fashion leaders need to be flexible and nimble, have strong change management skills and respond quickly and innovatively in a highly digital world. This has lead to many fashion firms appointing C-suite leaders from consumer packaged goods companies, hospitality and tech industries, and functions such as HR and supply chain. While there is still an opportunity for those with more traditional backgrounds, they will need to be forward-thinking and flexible with the ability to build strong teams in areas like diversity, sustainability, tech innovation, and design.

With the inevitable recession looming overhead, the strengths and weaknesses of many executives could be revealed during this period, further accelerating CEO turnover.

Successful executives should keep a long-term perspective in mind and continue to invest in company culture and talent development.

The CEO fashion needs right now

What: In a vote of confidence for the metaverse and Web3, L’Oréal’s venture capital fund BOLD and the British Fashion Council are among participants in a $4 million funding round for French metaverse developer Digital Village.

Why it is important: This marks the beauty giant’s first venture capital investment in the metaverse and Web3 space.

Established in 2018, the Business Opportunities for L’Oréal Development fund, or BOLD, has invested in a range of disruptive start-ups including French biotech firm Microphyt, Sparty Inc., a Japanese firm focused on personalized beauty, and temporary tattoo-maker Prinker Korea Inc.

The Venture Reality Fund, Venrex and others also invested in Digital Village, billed as a “technology platform” devoted to emerging virtual worlds.

According to Evelyn Mora, founder and chief executive officer of Digital Village, technology is enabling “the next evolution of retail.” Digital Village wants consumers to “visit a 3D virtual world and come together for social experiences where brands can engage…in a more meaningful way.” In her view, virtual fashion, art and culture represent a “massive opportunity in what will be the largest disruption for commerce since the emergence of e-commerce platforms.”

L’Oréal invests in metaverse developer Digital Village

What: Time will be of the essence when it comes to the impact Chinese tourists will have on the global economy in 2023.

Why it is important: With rising inflation and concerns in the world, the joyful (and profitable) spirit of Q4 2022 might be well over, and returning Chinese tourists could be a boon for many retailers across the world.

In Thailand, Chinese tourists’ return is highly expected. However, it is challenging to know when to hire more workers and where to find them since many left the tourist region when tourism stopped. The Thai economy is heavily dependent on tourism and has lost out on billions of dollars from Chinese tourists over the past three years.

Tourism Authorities estimate that the city of Chiang Mai for instance will welcome back 600,000 Chinese visitors this year who will spend about $230 million. But real numbers won't start until the second quarter as the Chinese government is not allowing tour operators to restart their businesses until Feb. 6. There has been a shift towards more tech-savvy Chinese travellers taking trips on their own instead of group tours. Over the past decade, group tours have dwindled due to a crackdown on cheap zero-dollar tours. A hotel owner in Phuket believes that big tour groups will come back, but it is uncertain how big they will be.

In London, the Lunar New Year parade in Chinatown saw over 300,000 visitors last week, but few Chinese tourists were present. A restaurant-owner in central London stated he did not expect any travellers from China for the holiday, but is hopeful for their return in a few months. The business is expected to not suffer as 85% of its customers are Chinese students from nearby universities who are not returning to China.

Chinese tourists are returning to Britain and Australia, but their numbers are still far from pre-pandemic levels. The slow growth can be attributed to a lack of flights, higher ticket prices, visa requirements, and expensive COVID-19 tests for Australian travellers. Round-trip flights from China to London are around $1,300 and flights to Australia are between $1,800 and $3,000. Despite the eagerness of travel operators for the return of Chinese tourists, some worry about the industry's ability to keep up with an influx of tourists, as the industry has disappeared for two years and hiring back drivers and tour guides may be difficult. There are concerns about being able to accommodate them properly and provide high-quality service.

Chinese tourists are coming back, but when 

What: The reopening of China does not mean that business is back as usual.

Why it is important: Customers have changed and enjoyed new experiences at home. International department stores waiting for them to come back need also to review their own ways to accommodate them.

China has reopened its borders on the 8th of January 2023 and The Luxury Conversation reviews what has changed (or not) since the beginning of the pandemic now that an expected 18m tourists flow out of China on Q1 and 40m on Q2.

First, the quality of retail in the country has significantly upgraded and international brands and retailers are now also competing with the local options, which are as attractive now (and favoured by the national pride too).

Second, the demographic have changed, with younger and increasingly female customers travelling in and out, with families. As a consequence, some appetites have changed: customers now are longing for wellness and experiences in the nature, including luxury camping for instance. Sustainability is now also a topic, even though the meaning of the term and customers’ expectations are different from the ones in the West.

The Luxury Conversation recommends the 5 following points to be checked by brands willing to be “China-ready”:

-    Social media is key but quality primes over quantity, with one platform to be nurtured instead of trying to use them all,

-    Seamless integration is not even a must, it is a stapple for Chinese customers, especially when it comes to payments,

-     Storytelling primes over the novelty of the products,

-    Phygital is the norm,

-    Being culturally inclusive is the top element to watch, as this can be a dealbreaker.

What the Chinese borders reopening means for international retailers 

What: Harrods is trialling an in-store beauty recycling scheme in partnership with MyGroup at its H Beauty store as part of its sustainability strategy to reduce waste and increase circulatory across its business.

Why it is important: With sustainability remaining a priority for consumers in 2023, Harrods is making recycling beauty products accessible for its customers.

Over the weekend, Harrods began its 3-month in-store recycling scheme at its H Beauty store in partnership with MyGroup.

Customers are encouraged to bring in their used beauty, fragrance, and skincare products to the store to be recycled at stations located by tills throughout the store. Product returns can include a range of products from compacts and mascara to vitamin bottles and lotion pumps. Most notably, the scheme also includes nail polish products and fragrance bottles, a first for UK beauty recycling, as these products are typically considered unrecyclable.

The scheme is linked to its MyBeauty rewards program, further incentivizing Harrods’ customers to come into the store and recycle their beauty products to gain access to a range of experiences and benefits.

The launch of the recycling scheme showcases Harrods commitment to bringing a more circular and sustainable shopping experience to its customers.

Harrods tests in-store recycling at H Beauty Branch

What: France has established sustainability legislation that calls for more transparency and traceability in the fashion industry.

Why it is important: The new rules are a sign of what is to come for the industry and a step in the right direction as consumers want to know what they are buying and want authentic brands.

Several new pieces of sustainable fashion legislation will curb greenwashing and cut pre- and post -consumer waste as new French laws are put into place. With deadlines fast approaching for the EU’s climate targets, France’s focus on the fashion industry is a move in the right direction as overproduction sits at 30-40%.

As the biggest plastic polluter in the Mediterranean region, France has implemented laws with a focus on waste. The most notable of these forbidding the destruction of unsold goods and retailers providing consumers with information about the environmental impact of products.

Brands will face challenges, especially with traceability as pinning down where raw materials and fabrics were made, how they were made and in what conditions is an exhaustive and ongoing process. Additionally, this legislation will push the industry towards becoming more digital. Although experts state fashion lacks digital infrastructure, brands should embrace digital product passports to capture all the information needed for product labels.

While brands affected by the French legislation will have a head start, others across the EU will soon be seeing similar laws by 2024.

France has laid down the law on sustainability

What: A handful of retail companies have laid off employees so far this year, fueling concerns that retail could be the next sector to be hit hard by layoffs.

Why it is important: Retailers need to recalibrate and manage costs to be more in line with softening revenues as the retail industry could be next to see layoffs.

Over the past week, Saks.com, TheBay.com, and Kohls laid off corporate employees. As consumers spend less on merchandise due to inflation, retailers are under margin pressure as they discount product to reduce inventory and fight price resistance.

A survey of 300 senior retail executives revealed that over the next year, 20% are expecting to trigger layoffs. However, some retail experts have stated that the tech sector layoffs aren’t an indication of what will happen with the retail industry.

While layoffs are still expected to occur, companies should focus on performance and efficiency while optimizing what they already have rather than expansion. Retailers should also use what they learned during the pandemic to help in their strategies and plans.

At retail, pink slips start to surface 

What: Amazon, DHL, and Ikea are investing in soft mobility for short deliveries, also known as last-mile deliveries.

Why it is important: Retailers are reducing their CO2 emissions and reducing the climate footprint of home deliveries.

These retail giants are starting to make deliveries with electric cargo bikes

What: Macy’s goes towards more sustainability in segments parallel to its main drivers.

Why it is important: Going green in Fashion is complicated and long. Macy’s is addressing in parallel other segments, including the Home one (which has proved to be resilient during the Covid-19 pandemic), which might astutely add some margin points and make the offer more attractive than the competition.

Macy’s has issued a new policy to its furniture suppliers, including a variety of new demands such as the use of responsibly sourced wood (or recycled, or reclaimed), and prohibits the use of illegally-harvested timber.

This is not a premiere, since Macy’s follows the steps of Wayfair and Crate & Barrel. However, this new policy is part of the $5bn commitment announced in March 2022 to become more sustainable, and takes into account the fact that sustainable furniture is a growing market.

The article also reviews sustainable furniture brand Sundays, which explains how difficult the process can be sometimes. Interestingly, Sundays mentions that they do not claim too loud to be sustainable, for fear of being accused of greenwashing, due to the complexity of the topic and the fact that going towards more sustainability is an ongoing process.

Macy’s rolls out responsible sourcing policy to its furniture suppliers 

What: eBay invested £7.5 million in the UK-based luxury resale company, Cudoni.

Why it is important: Resale is a fast-growing fashion market and offers eBay an opportunity to expand its marketing position.

An investment from eBay brought the total raised by Cudoni to £14.3 million since its founding in 2017.

Cudoni, which has over 4,000 brands available on its website, plans to invest the £7.5 million raised in its sales and marketing functions. The resale company has seen its volume of sales increase sevenfold on its platform since 2020.

eBay invests in luxury resale platform Cudoni

What:  US customers bought more during the holidays than last year, but this was mainly due to the price increase of goods.

Why it is important:  Even thought facial values are satisfying, the reality is more bittersweet and worrying: customers are reducing their purchases and increasingly looking for discounts.

GlobalData, when researching the holiday season spend (Thanksgiving, Black Friday, Cyber Week, Christmas) in the US, showed that it grew +6.7% compared to 2021. Each celebration was individually growing: Thanksgiving grew +8.4%, Black Friday and Cyber Week +6.9% and Christmas +6.5%. However, volumes (respectively +0.2%, -1.1%, -1.6%) suggest that the growth was mainly due to the price increases.

Online sales grew +7.4% and brick & mortar +6.6%, but the total sales generated might not offset the growing costs of online orders fulfilling.

Overall, US customers set a budget for their purchase (63.1% this year compared to 45.6% last year), reduced the number of gifts, and were looking for discounts.

Total US holiday spend grew 7%... thanks to the inflation 

What: Liberty saw its total revenue leaping to £82 million in the year to the end of last January, from £59.6 million in the previous 52-week period.

Why it is important: Revenue has almost recovered to match the year ending 1 February 2020, but profitability is still affected as the move to online sales has increased its cost base.

Flagship sales per square foot are on a recovery trajectory, reaching £1,072 in the period compared to £779 the year before.

EBITDA before one-off costs, was a narrower loss of £3.5 million compared to a loss of £12.3 million in the previous year. But it still trails the £14.4 million profit generated in the last year before the pandemic hit.

It made operating profit of £2.4 million in the latest year compared to a very small £88,000 operating profit in the year prior. And the loss before tax shrank to £187,000 from a loss of £2.8 million 12 months earlier.

After Covid-related lockdowns and disruptions, Liberty reopened to a market that remained heavily impaired by lower footfall. That said, trading strengthened progressively during the summer months and gave management confidence that the pace of recovery would be in line with expectations for Christmas.

Also, Liberty launched its first subscription service called Beauty Drop, which it says is unique and received a very strong initial response from customers. Basically, subscribers get four boxes of curated beauty products a year in return for a monthly spending commitment.

Liberty on the recovery trail 

What: There may soon be two separate Amazon Prime deals. The group is currently testing a "Prime Lite" subscription in India giving access to free two-day delivery, and opening access to its Prime Video streaming platform.

Why it is important: This test constitutes a significant strategic development for the Prime offer if it were to be rolled out outside the sub-continent.

This experiment relates to a subscription formula at 999 rupees (11.30 euros), instead of the 1499 rupees (17 euros) for a classic Prime account giving access to free deliveries in 24 hours.

Amazon quietly testing a cheaper Prime subscription

What: Marks & Spencer is investing in its retail network with plans to open bigger and better stores in hopes to better improve their customers’ shopping experience.

Why it is important: Marks & Spencer’s investment in new stores supports a better omnichannel shopping experience that customers want, while also boosting local economies through job creation.

M&S is investing £480 million in 20 new bigger and better stores across the UK. Their plan to future-proof their physical retail stores will create around 3,400 jobs.

Chief executive, Stuart Machin stated that stores are a core part of the company's omnichannel future and their store rotation program is ensuring M&S has the right stores, in the right place, with the right space. The UK retailer has already seen success in its newly relocated and renovated stores, giving them the confidence to move faster with their plan.

The new stores deliver a better shopping experience for consumers and employees while also supporting Marks & Spencer’s investment in new digital services to offer an omnichannel service to customers. M&S stated that they would roll out Digital Click & Collect to 130 stores across the UK and Scan & Shop which allows customers to scan and bag items through the app as they shop.

In M&S’ Christmas trading update, the company announced that there was a 33% increase in sales through the app, and active users grew from four million to five million.

M&S to future-proof its retail with 480 million pound investment and 20 ‘better’ stores 

What: It is now possible to pay at or after the delivery for EU customers ordering on Alibaba.com.

Why it is important: Instead of trying to change the logistics (Alibaba orders take between 10 and 15 days to be delivered as they are shipped from China), why not change behaviours by making new options appear as benefits (while they are simply adaptations to basic customers’ expectations)?

Chinese internet giant Alibaba has started allowing customers in Europe to pay for purchases on its international e-commerce platform, AliExpress, only after receiving their merchandise in an effort to boost global sales as growth slows at home.

Fintech firm Splitit Payments will join with Ant Group's Alipay to provide a delayed-payment option to customers of AliExpress, which sells consumer products to more than 200 countries.

The service, called "Pay After Delivery," will allow customers to pay for merchandise in instalments via their credit cards. The service will first be rolled out in Germany, Spain, and France and could expand into other international markets.

AliExpress has seen a decline in orders in Alibaba's last three fiscal quarterly reports, due to a weakened euro, changes in EU tax rules and supply chain disruptions caused by the Russia-Ukraine war. Chinese e-commerce firms are looking more abroad to bolster sluggish sales growth at home, as a result of Covid-19.

Alibaba offers delayed payment options to EU customers 

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