What: Footfall for the UK dropped 15.3% compared to pre-Covid levels for this year’s Boxing Day.

Why it is important: Store traffic in the Southeast and London reflected the smallest footfall decline on Boxing Day compared to 2019 (-8.0%), but was up year over year (61.2%) for the day. From a category perspective, Clothing and Shoes attracted the highest traffic on Boxing Day compared to 2019 (-6.3%) and was up almost 71% over last year.

UK footfall drops 15.3% on Boxing Day

What: The UK has lost a total of 9,300 retail outlets in the pace of 2 years due to the pandemic.

Why it is important: The country used to have the second highest number of retail square feet per capita in the world, and the pandemic led to a reset for more balance (creating casualties on the way).

According to a BBC/Ordnance Survey, the pandemic contributed to a 13,4% drop in the UK (excluding Ireland) between March 2020 and March 2022, leading to the closure of 328 units (including the Debenhams and Beales entire fleets).

At the same time, 8,5% of fashion stores had to close (4,300 units) including Burtons, Dorothy Perkins, Wallis, Topshop and Miss Selfridges entire fleets. Malls have replaced them by hair & beauty services (+5,9% in total units), services and hospitality-based venues.

In the UK, the pandemic was the most damaging to department stores and fashion stores 

What: The former Arcadia Group brands and Debenhams, which were snapped up by Boohoo last year, have continued to make a loss under the etailer’s ownership.

Why it is important: Debenhams, Boohoo’s largest acquisition, made an 11.7-million-pound pre-tax loss against 56.9 million pounds in sales in a slightly longer period of 14 January 2021 to February 28 2022.

The group acquired the department store retailer in a 55-million-pound deal in January 2021 after it fell into administration. It then snapped up Burton, Dorothy Perkins and Wallis in a separate 25-million-pound deal the following month.

The online retail giant blamed falling consumer demand and rising returns post-lockdown for the disappointing performance of its newly acquired brands, which also hit the wider Boohoo Group.

Arcadia brands and Debenhams fail to profit under new owners

What: The National Association of Large Distribution Companies Agned’s collective agreement is expiring at the end of 2022 which has opened negotiations for its renewal along with ‘historical’ salary increases.

Why it is important: Of the 234,000 employees that Anged brings together, the main union at El Corte Inglés, will request a total wage increase of 19.6% in four years (6% in the first two and 3.2% in the following), while Comisiones Obreras aligns itself with Fetico requesting an 18% increase in salaries during the term of the agreement.

The unions support their demands with the argument that wages in Spain have risen only 1% since the current agreement was put in place during the pandemic in 2020, and with inflation rising, workers are concerned.

Unions negotiate for historic salary increases in Spain 

What: Labour union members took over the sales floor to demand higher wages.

Why it is important: Luxury department store La Samaritaine was shut amid the last-minute Christmas shopping rush as protesters took over the sales floor Thursday.

The store remained closed for the remainder of the day. CGT said about 200 protesters, wearing the union’s signature red vests, entered the store to demand wage increases and stood among the displays of luxury goods, according to AFP.

La Samaritaine closes due to protests

What: Japanese retail sales rose for a ninth straight month in November, data showed on Tuesday, as the lifting of COVID-19 border controls and the government’s domestic travel subsidy helped consumer demand.

Why it is important: Sales fell from October, with price increases in daily necessities weighing on Japanese households as the nation’s core consumer inflation rate hit a fresh 40-year high, indicating price hikes were broadening.

Retail sales grew 2.6% from the year earlier but short of a median forecast of 3.7%. The pace of annual growth in sales, a barometer of private consumption, slowed from 4.4% in October and 4.8% in September.

A recovery in private consumption, which makes up more than half of Japan’s economy, is key to driving growth in the economy, which unexpectedly shrank in the third quarter.

Japan retail sales stay up thanks to tourism

What: Predictions claim that one of China’s biggest exports in 2023 will be its social e-commerce phenomenon as TikTok, YouTube and Amazon.com among others begin rolling out features that blend online sharing and shopping.

Why it is important: There’s early evidence that selling goods over live social networking is beginning to take hold outside of China, with viewers enjoying interacting with celebrities and so-called influencers; the ultimate goal is clicks to buy.

Live online shopping revenue will help offset shrinking marketing budgets. U.S. social media advertising spending, which had been growing at around 30% a year, is set to slow to about 12% on average over the next three years, to reach USD 114 billion in 2025, according to data portal Statista. By contrast, consultancy McKinsey projects U.S. social media e-commerce sales will increase 20% annually over the same span, to USD 80 billion.

Social commerce to go viral in 2023

What: Fast fashion production has increased twice as much compared to 20 years ago, leading to a 10-fold increase in textile waste every year.

Why it is important: Calls for reduced consumption of fast fashion items are multiplying and increasingly echoed in mainstream media (such as the FT). Department stores must pay attention to this movement, as it might propagate by capillarity to consumption of other goods in a context combining  inflation with customers having lower purchasing power and climate crisis.

In its opinion column, the Financial Times reviews the fast fashion business model and consumption patterns. In the $100bn fast fashion market, industry players produce twice as much as they did 20 years ago, and it is estimated that 50bn items are thrown away every year.

Since recycling is labour-intensive, the use of new plastics is easier, leading to an increase in permanent waste (polyester is not biodegradable). The Financial Times mentions that industry solutions include lab-grown fibres, however, it strongly advocates for a reduction in consumption instead.

Calls for fast fashion consumption reduction are multiplying 

What: According to findmycasino.com, Harrods, Selfridges and Macy’s were ranked as the ‘most popular’ department stores globally.

Why it is important: The metrics for ranking included average Google search volumes, Instagram hashtags and TikTok views.

Paris’s Galeries Lafayette store took fourth place in the ranking, followed by Saks Fifth Avenue for most popular department stores; Harrods was the clear winner in the first place, followed by Selfridges and Macy’s. Harrods scored 10 out of 10, with 134,000 people per month Googling the store, while shoppers have so far uploaded 1.5 million images of the retailer on Instagram. Selfridges, with a score of 9.49 out of 10, with Google searches for the retailer averaged 109,000 per month. However, it’s loved on TikTok, with over 47 million views on the platform. Macy’s, the largest department store in the US, had a lower Google search ranking, but the store still receives over 1.2 million hashtags on Instagram and 2.3 billion views on TikTok.

Harrods, Selfridges, Macy’s ranked as ‘most popular’ department stores globally

What: Half-year profits surged 53% to 284.6 million pounds as Frasers Group’s new acquisitions helped boost sales.

Why it is important: Frasers said UK sports retail revenue increased by 11.6% thanks to the acquisition of Studio Retail, premium lifestyle revenue increased by 24.7% thanks to the growth of Flannels and its online expansion, while sales across the group increased by 12.7%. Excluding acquisitions, Frasers Group revenue increased by 22.2%.

Frasers Group profits surge 53% from acquisitions

What: After beating Wall Street estimates on the top and bottom lines in the third quarter, the beauty retailer has once again increased its full-year outlook.

Why it is important: Despite inflation, customers don’t appear to be deterred from making beauty purchases at higher prices leading Ulta to beat its Q3 estimates, ultimately raising its 2023 outlook.

Net sales rose 17.2% to USD 2.3 billion in the 13 weeks ended Oct. 29, primarily due to the favourable impact from the continued resilience of the beauty category, retail price increases, and the impact of new brands and product innovation. Cosmetics sales rose 44%, hair care 21%, skin care 16%, fragrance and bath 12%, services 4% and accessories 3%.

Net sales are now forecast to come in at between USD 9.95 billion and USD 10 billion. Diluted EPS are expected to be USD 22.60 to 22.90, compared with prior guidance of USD 20.70 to 21.20.

Ulta beats Q3 estimates and raises full-year forecast

What: A slowdown in retail sales before the winter stirs fears of a recession in Europe.

Why it is important: Tourism has helped so far department stores to weather the situation, including in November. But many IADS members are wondering what will be in store for the beginning of 2023.

Eurostat reports that retail sales in Europe fell by -1.8% in October 2022, compared to the previous month. This is the largest drop recorded since July 2021, and took place before heating was turned on. By comparison, in the US retail sales increased by +1.3% on the same period.

While the EC forecasts a GDP decline as early as Q4 2022  due to the rapid rise of energy costs and the upcoming cold winter, it is also understood that the resilient European labour market should help into making the feared upcoming recession a short-lived one.

Retail sales are slowing down in Europe

What: Macy’s aims at helping SMEs from minority backgrounds to develop and scale up their companies.

Why it is important: The new fund is a smart way to both promote diversity but also secure a good ROI in terms of new brands and products access for Macy’s.

Macy’s has teamed up with Momentus Capital, a small business lender, to launch a $200m fund to help entrepreneurs from underrepresented backgrounds, of which Macy’s contributes to $30m.

This fund aims at helping Macy’s vendors to scale their companies and meet the demand, but non vendors can also apply to a variety of support, including 10 years loans or capital participations. This action is part of Macy’s plan to promote diversity and sustainability, but also helps the retailer to secure access to new products and brands as well.

Inside the Macy’s plan to fund underrepresented entrepreneurs 

What: Klarna expands its affiliate marketing program through a new platform linking influencers and retailers.

Why it is important: Micro-influencing is everywhere, including in the Buy Now Pay Later payment apps, which is quickly making traditional credit cards program looking old fashioned.

The Buy Now Pay Later company Klarna is expanding its Creator Platform (initially launched in the US in October) globally. This program matches retailers with the right influencer among a pool of 500,000 and tracks performance metrics in real time. This is also a way for Klarna to expand their affiliate marketing business, said to generate 600m leads a year.

Klarna launches a globally curated influencer partnership platform 

What: Inflation is hitting a 40-year high and retailers are concerned that the mounting costs squeezing margins, in combination with rising return rates will sour this holiday season.

Why it is important: Several surveys conducted by separate companies and organizations have revealed the consumer perceptions around returns and their increased likelihood to return gifts this year.

According to a survey by Phelps United, 52% of respondents said they expected to return at least one gift received via an online merchant, 47% said they expected to return at least three gifts, with nearly 1 in 5 (19%) saying they planned to return at least five gifts and 6% planning to return more than 10 gifts.

With returns being so ubiquitous, more than three-fourths (76%) of respondents said they scrutinize return policies, saying they would be more likely to shop at an online retailer in the future if it provided free shipping on returns (82%), a flexible window of 30 days or more for returns (58%), and a hassle-free or no-questions-asked return policy (52%).

The logistics company ParcelLab also reported that 62% of consumers stated that they are unlikely to shop again with a retailer or brand that had a poor/inconvenient returns process, with 37% saying returns that include shipping fees as part of the returns process might lead them to shop less.

In a separate survey conducted by PayPal, nearly 50% of consumers say they’ll be returning holiday gifts this year, with 86% of consumers saying they make a point to check a retailer’s return policy before they even make a purchase. Nearly 1 in 4 have been returning a greater percentage of their online purchases because of inflation and other economic pressures. This number skews even higher for those under the age of 45.

Higher inflation, a higher rate of returns?

What: Analysts predict that marketing chiefs will face serious challenges with growing brand value and loyalty amid the economic storm causing major trend shifts for consumers.

Why it is important: Loyalty is becoming ever more important as consumer behaviours change with the increasing inflationary pressures across socioeconomic demographics, which has been supported by Gartner’s research from September.

Gartner believes traditional methods of tracking and shoring up brand value, including brand reach, brand sentiment and perceived differentiation, are at risk because of disruptive new market entrants, higher consumer expectations and the fact that it’s easier than ever to learn about unfamiliar brands. Three-quarters of surveyed audiences have searched for information on a brand they didn’t previously know about while browsing online, while only 15% said they were loyal to a given familiar brand.

One-fifth of surveyed respondents are ditching in-store shopping for online, and one-third are trading down to store-name brands. The results line up with reports that retailers are investing more in promoting their private labels to capture increased interest, amplifying the competition.

Cross-functional collaboration is also creating worse outcomes for marketers, and disruptive market dynamics are weakening mainstay tactics for winning consumer favour. CMOs may need to make less money going further and fight for their independence considering these headwinds and as larger corporate mandates focus on preserving growth and cutting costs in the marketing department.

2023 uncertainty poses unique challenges for marketers

What: Neiman Marcus Group earns a score of ‘B’ for its first Climate Change disclosure to CDP, a global non-profit organization that operates the world’s leading environmental disclosure platform.

Why it is important: Neiman Marcus Group’s ‘B’ score recognizes the company’s management of climate issues across Neiman Marcus and Bergdorf Goodman retail locations, as it makes ESG a critical part of its growth and transformation strategies.

NMG reduced Scope 1 & 2 emissions by 31% in the calendar year 2021 compared to a 2019 baseline, demonstrating strong progress toward the company's goal of reducing Scope 1 & 2 emissions by 50% by 2025.

Neiman Marcus Group earns ‘B’ for climate disclosure

What: China’s announcement on Monday that it would re-open its borders to visitors and drop quarantine requirements was good news for luxury stocks.

Why it is important: Luxury brands rely heavily on Chinese shoppers, and the lifting of the previously mandatory quarantine for incoming passengers will be China’s first full opening which has already led to a 2.7% increase for LVMH and a 4% rise for Richemont shares.

Despite the lifting of restrictions, China has seen a surge in infections in recent weeks, with some reporting estimates of 250 million cases.

Luxury stocks rise as China re-opens

What: John Lewis and Marks & Spencer on Oxford Street will see their business rates drop 60% by April after the government revealed its transitional business rates relief scheme.

Why it is important: The drop in business rates is a welcomed relief for retailers facing the effects of economic strain, customer behaviour shifts, operational cost increases and the cost-of-living crisis.

In addition to the 60% drop for M&S and John Lewis, other Oxford Street retailers, such as Selfridges, Harrods, Reserved and Adidas, are set to see their rateable value fall by at least 40%.

Retailers on Regent Street will see a smaller drop in their business rates compared to Oxford Street, with Burberry expected to benefit from a 37% drop. Followed by H&M and Arket, which will see their rateable value fall by 35% next April and & Other Stories, benefiting from a 25% fall.

M&S and John Lewis’ business rates to drop by 60%

What: Frasers has acquired Amara living, a luxury homeware retailer.

Why it is important: Frasers group continues to acquire brands and retailers, with its latest acquisition aimed at developing Frasers into a credible homeware destination.

Following a string of continually increasing stakes in Hugo Boss, the group most recently added menswear tailor Gieves & Hawkes to its portfolio, snapping up five of the brand’s stores, including its Savile Row flagship.

Frasers acquires luxury homeware retailer

What: The Louis Vuitton brand is no longer just a fashion label, as the LVMH conglomerate has created a multitude of initiatives which expand into food, hospitality, the arts and new product categories.

Why it is important: The Louis Vuitton name has attained a level of power and influence that allows the brand to successfully expand into other markets and categories, such as jewellery, sneakers, perfume, chocolate and hospitality.

Some notable initiatives have been:

• An ephemeral tearoom installed in the brand’s Lille boutique with Meert waffles,
• Two ephemeral restaurants in Saint-Tropez and Seoul with the starred chefs Mory Sacko and Alain Passard, respectively,
• A presentation of furniture and objects in Shanghai,
• A yearlong installation of ‘LV Dream’ housed in the brand’s Paris headquarters which will exhibit the brand’s collaborations with artists, a café, chocolate factory and gift shop.

In 2021, Louis Vuitton accounted for 27% of the world's number one luxury sales, whose turnover then reached 64.2 billion euros.

Louis Vuitton is becoming more than a fashion brand

What: Nordstrom teams up with an historical Black US university in order to train its future technologists.

Why it is important: It is not only about training and recruiting future talents, but also use this initiative as part of the Nordstrom socially responsible branding.

Nordstrom has inked a partnership with Morehouse College in Atlanta (Georgia) to sponsor a course and a mentorship program. Nordstrom leaders and staff will be teaching classes and mentoring students from this historical Black college. Interestingly, the course sponsored is Tech Product management, in order to train specialists in the use of technology in retail and product management.

Inside Retail sees this initiative as notable for two reasons:

-    It is a smart way for Nordstrom to fill in related positions and create a talent pool on its own,

-    It also allows Nordstrom to champion social inclusivity at the same time.

Companies are increasingly creating made-to-measure courses in partnership with academic institutions in order to train new people and make sure they will be filling in actual needs and positions.

Nordstrom partners with Morehouse College 

What: Unexpectedly, German retail trade sales have fallen sharply in October.

Why it is important: Clothing and shoe business revenues were 7.9% below the level of October 2021, while internet trade recorded a drop of 7.2%.

In a year-on-year comparison, the Federal Office reported a real 5.0% drop in retail sales for October and a nominal 6.2% increase. According to economists, a poor mood among consumers due to high inflation has caused revenues to fall by 2.8%. Initially, the drop was expected to be lower at 0.5%.

German retail sees sharp declines

What: The Indian department store company is entering a new market.

Why it is important: While many department store companies in the world go upmarket, Shoppers Stop aims to pre-empt a lower segment, probably having in mind the arrival of new players on the market.

Indian department store company Shoppers Stop is opening a new store format, based on “value” in fashion and lifestyle categories. The new format, between 700 and 800 sqm, will be opened in Tier 2 cities outside of metropolitan areas and the first pilot is bound to open in the next months.

This marks a change for a company which has traditionally relied on premium and mid-segments in metropolitan cities.

Shoppers Stop to open a new store format