What: Gap and Walmart team up to jointly launch a new equivalent of a private label

Why it is important: By blurring the differences between licensing and private labels, both brands make the most of their competitive advantages.

For Walmart, the move equates to launching a new private label with a strong brand image and customer appeal (all the more thanks to its exclusivity), while limiting its investment in product development and related human structure.

Walmart and Gap announced the introduction of Gap Home, a home essentials brand only available at Walmart. They are both scaling their competitive advantages (for Walmart, its distribution size, for Gap, its lifestyle brand image) into this launch of a 400-wide products collection.

Pricing is thought to be fitting Walmart’s customers’ expectations, and seasonal animations will be achieved through drops and special items.

Gap and Walmart Partner to Introduce Gap Home 

What:  Marks & Spencer proposes more products to be bought in bulk, in more stores

Why it is important:  By proposing products more complex than “staples” (rice, pasta…) such as croissants and pains au chocolat, Marks & Spencer makes the offer more exciting and sexy, while also surfing on the sustainability stance.

Marks & Spencer extends its “Fill your own” packaging-free refillable grocery concept to 8 stores, for a total of 11 stores with this option now.

With this proposal, customers have the possibility to chose between 60 lines of refillable groceries (including rice, cereal, pasta, but also bake-at-home products such as croissants). It expects to complete the proposal with new products this autumn.

Marks & Spencer extends refillables concept to more stores 

What:  E-commerce increase does not prevent Warby Parker from betting on increasing its retail footprint

Why it is important:  Omnichannel translates, for their customers, into choosing or getting information online, but still coming in stores to discuss with brand specialists and physically try products.

Warby Parker, the sunglasses 11-year-old DTC brand and success story, is planning to aggressively expand its retail footprint with 35 new stores, even though e-commerce, after an initial dip at the beginning of the pandemic, soared.

After a total closure of their store network, which led them to negotiate lease flexibility or percentage rent, they are now looking for expansion, as they realised that stores are crucial in the customer’s journey. Even though online and offline transactions are evenly split, 75% of customers who transact in stores have shopped online.

This means that they use online not only to check practical details such as store opening hours, but they preselect the products they want to see and try when in-store.

Warby Parker Founders Explain Why They Are Adding 35 Stores After Pandemic

What: Betting on travel rebound, the concept store Gatezero will open in November.

Why is it important: Could pop up stores open in department stores, knowing Highsnobiety is no stranger to retail?

The Berlin-based menswear, luxury and streetwear content-and-commerce company will open “Gatezero” on 15 November and sell products across ready-to-wear and accessories from Acne Studios, Ambush, Comme des Garçons, and more brands, as well as Highsnobiety’s own collaborations in these categories. The Zurich Airport location is due to be open for six months, and additional stores in other airports are planned to open in 2022.

Highsnobiety to Open Concept Store in Zurich Airport 

What: The department store brings a distinctive, fashion-focused twist to the category "for the true avant-gardener".

Why is it important: Selfridges, focusing more on locals than tourists, intends to benefit from customers’ growing interest in gardening.

Garden centres have opened in the Oxford Street branch, in Manchester and Birmingham including an exclusive themed clothing offer from Prada, a clothing range inspired by rock band The Grateful Dead, as well as the more usual items such as own-brand compost, plants and garden gnomes.

It’s part of a 2021 theme at the chain called Good Nature and includes a ‘potting shed’ with experts on-site, workshops and events running from 25 June 25 to 11 July.

Horticulture as an activity and related sales boomed during the pandemic with reports of an extra 3 million gardeners entering the segment in 2020, almost half of them aged under 45.

Selfridges launches garden centres with fashion twist

What: eBay Korea has finally been bought by Shinsegae for a USD 3.9 billion price, with financial backing from Naver.

Why is it important: The sale will imply major changes in Korean e-commerce industry, transforming one of the top bricks-and-mortar retailers to a leading online player.

Shinsegae apparently offered a price below eBay's expectations, set to USD 4.4 billion.

Lotte Shopping and E-Mart submitted separate letters of intent to acquire eBay Korea earlier. The country's top telecom company, SK Telecom, and private equity firm (PEF) MBK Partners dropped out of the race.

Shinsegae to acquire eBay Korea for $3.9 bil. 

What: Brands are increasingly looking for nimble solutions when it comes to their retail footprint

Why it is important: The appearance of mobile popups is both a threat and an opportunity for department stores: a threat because it gives brands another option not to come to them, and opportunity because it could also be the occasion to monetize dead space.

The new trend of mobile popup stores (as shown at the end of 2020 with Louis Vuitton mobile stores) is expanding, and getting industrialised. Popup Republic, a US-based company, offers to brands, among which Nike or Amazon, to test various locations with a single popup store on wheels.

The advantage is that, while it requires an initial investment roughly similar to a standard store, once the mobile popup store is built, it can allow to test various locations without having to multiply negotiations with landlords and investments.

Brands are increasingly getting nimble and mobile, with various solutions: Gucci in a Milan apartment, Lego in an art gallery in London, Pantone in a café in Monaco or Matchesfashion on a yacht off the Italian coast.

The article takes the example of Cuyana, a LA-based fashion brand, to explain that the investment is worth it, by amassing data on various potential locations to make better store decisions. This project is also presented as a solution for mall owners who want to monetize their dead spaces (parking lots, courtyards, atriums).

Cuyana Fashion Label Takes Traveling Pop-Up Showrooms on the Road 

What: Online sales grew by +53% in 2020, contributing to an overall positive exercise

Why it is important: Online does not replace offline, but comes as a much-needed complement, both in terms of financial results and customer experience.

2020 was supposed to be a great year for De Bijenkorf, as it was turning 150 this year. The pandemic prevented any celebrations, and total sales fell by -22%, with the 7 stores remaining closed for 13 weeks, including Christmas (offline channel sales fell by -44%).

Even though it is not compensated, online sales helped: the number of visitors grew by +31% and sales by +53%, helping the company to still post a profit (albeit reduced by -75% to EUR 19,4m.

Online growth limits the damage for De Bijenkorf

What: Netflix mixes content and retail by opening an online store selling merchandise from its shows

Why it is important: Keeping culturally relevant is key for IADS members, this is the reason why IADS introduced to some of them the Emily in Paris opportunity with Netflix and Viacom earlier this year.

Netflix launches an online store to sell limited-edition items from its shows (the article mentions Stranger things and Lupin), first in the US and then worldwide. This will be an additional source of revenue for Netflix, which used to sell its products through Target and Walmart in the US so far.

This is another step in mixing content with related merchandise and proposing shoppable entertainment. We believe at IADS that our members should watch this new trend, since it is parallel to, and not replacing, livestream shopping.

Netflix Shopping Is Now a Thing (WWD)

Netflix and shop Online store offers limited-edition merchandise (Fashion Network)

What: A new initiative tested to increase delivery options for customers

Why it is important: Retailers need to be creative to play with the limitations imposed by new technologies. In the case of drones, the limited weight that can be carried was played not as a limitation, but as an opportunity for Kroger to propose themed bundles.

GDR UK, a retail intelligence agency based in London, reported an interesting new initiative in terms of logistics and last mile delivery. US Supermarket Kroger teamed up with Drone Express to test a 15-minutes delivery option via drone.

This option is valid only for a limited number of products in one select location for now, and provides customers with the possibility to order from their smartphone and have the products delivered either at home or in nearby parks and public spaces.

Deliveries are limited to a total weight of 5 pounds, which is the reason why Kroger is proposing bundles of products respecting this maximum limit, with themes: baby care bundle (wipes and formula), “S’mores bundle” with crackers, marshmallows and chocolate.

The 15-minute delivery delay is not a firm promise, however the marketed message heavily insists on it.

This is clearly a test for expansion in case of success and good customers’ response.

Kroger trials curated bundles for 15 minute drone delivery

What: Saks Fifth Avenue doubles down on the unbundling of its online and offline operations

Why it is important: At a moment when all retailers are racing to achieve efficient and frictionless omnichannel operations, the move is not well understood by analysts. What has Saks figured out that the others did not?

Saks Fifth Avenue’s owner Hudson’s Bay is splitting its off price operations on the same pattern than the full price one, by unbundling the website from store operations. Backed by investor Insight Partners, the goal is to establish the Saks Off 5th e-commerce business as a stand-alone operation, valued at USD 1 billion after the operation.

Saks’ off-price real estate footprint remains wholly owned by HBC and will continue to cooperate with the new off-price e-commerce structure. The move is believed to be a prelude to a public offering according to investors.

Saks Off 5th Splits E-commerce and Retail 

What: L'Oréal Paris and Sephora have opened stores in Shanghai and Beijing, respectively, both of which offer immersive experiences to customers.

Why is it important: Both retailers are emphasising AI, VR and services to appeal to Chinese customers, already very much used to great customer experiences in the beauty business.

L'Oréal Paris unveiled a 120 sqm store, the first in China using the codes of Signature, the retail concept unveiled by the beauty brand in 2020. The store offers an immersive and omnichannel experience: for instance, customers can take a virtual bike ride through the streets of a Paris postcard and collect points for discounts. A space is dedicated to live chat with influencers, while customers can perform a skin diagnosis via Modiface.

Sephora unveiled a new 480 sqm store and invited Chinese artist Chen Baoyang to create an artwork called Algorithmic Blossom that mixes algorithms and virtual reality. From the façade, flowers bloom on the screens, a visual experience that continues inside the store where customers find themselves surrounded by hundreds of flowers that gradually open as they take the stairs that take them upstairs. The store also introduces the Fragrance Studio where algorithms allow customers to discover the perfumes that best suit them. In addition, this store can be accessible at any time via a dedicated application and a mini WeChat program.

L'Oréal Paris and Sephora deploy immersive retail in China

LVMH has announced the launch of Nona Source, the first online resale platform for “re-sourcing” exceptional materials from the Group’s Fashion & Leather Goods Maisons. Designed by experts from LVMH via its DARE intrapreneurial program (Disrupt, Act, Risk to be an Entrepreneur), Nona Source supports LVMH’s environmental strategy by rethinking sourcing and supporting the circular economy.

Nona Source offers emerging creatives and brands in Europe access to high-quality fabrics and leathers at competitive prices to encourage creative re-use of materials. Because stocks are located in France, the platform will for the time being deliver within Europe (including the United Kingdom).

LVMH presents Nona Source, the first online resale platform for materials

What: The UK retail landscape is hampered by a wave of unpaid rental dues which accrued during the pandemic

Why it is important: Even though negotiations are taking place, 1 out of 7 retailers still have to reach an agreement with their landlords, while the official support ends on June 30.

UK landlords claim that there is approximately GBP 6 billion in unpaid rent to be recovered since the beginning of the pandemic, and that a large majority of tenants have come to an agreement. However, some are resisting talks, including Frasers Group and Boots.

The British government support (bans on eviction and judiciary pursuits for unpaid rent) was enforced in March 20 and is expected to end on June 30. What will replace this set of protection is not clear for tenants yet, at a moment when all retailers are trying to get back to a normal pace of activity, after a 15-month period of difficulties.

Last May, the British Retail Consortium claimed that 2/3 of UK retailers were at risk of legal actions. Following discussions, 1 out of 7 tenants still have to come to an agreement, for a total GBP of 1,84 billion in rental value. Boots argues that retail footfall across retail locations have significantly lowered, impacting trade, while they stayed open during the pandemic. Frasers did not comment.

Frasers and Boots frustrate landlords with hardball rent talks

What: The data provides insights on how habits have changed, from preferences to online shopping, social media’s role in e-commerce and increases in the use of digital wallets and flexible payment options.

Why is it important: Consumers want to be in control of how they pay, and they have a desire for seamless digital shopping experiences regardless of which channel they are shopping in. The data also tells us that 70% of consumers are more likely to spend more at a retailer that offers their preferred payment method.

The survey, which looked at responses from more than 3,000 people in the U.S., U.K. and Australia, took place in December 2020.

According to the survey, while a majority of consumers still prefer in-person shopping, 62.5% reported doing most shopping online. Meanwhile, online nearly half of respondents reported they are discovering new products through social media at least once a month and 66.7% said they have made a purchase directly through their mobile phone at least once in the last month.

Both online and in-store, more consumers reported increased use of digital wallets. Overall, use of digital wallets in-store experienced a global increase of 24.5% online and 88.7% for in-store purchases since March 2020 with survey respondents overwhelmingly reporting that they would prefer retailers make digital payment options more available. Preference for using digital wallets in-store increased from 12.1% to 22.8%.

With Australia leading the way, merchants are increasingly adopting buy now, pay later, or BNPL, solutions to grow e-commerce as well. Forty-eight percent of Australian merchants, 20% of U.S. merchants and 11% of U.K. merchants currently offer BNPL options to customers. Merchants with a high average order value — generally USD 70 or more — should consider offering buy now, pay later solutions.

In terms of where consumers are shopping now, the report found shoppers are mainly visiting large retailers or branded e-commerce stores. Of those surveyed, 58.2% said they shop at department stores, hypermarkets or big-box retailers while 31.9% said they purchase directly from the e-commerce stores of their favorite name brands.

PayPal and BigCommerce Highlight Post-COVID-19 Consumer Behaviors 

What: The city’s landlords have begun discussing rent increases with tenants in advance of upcoming lease renewals as its retail sector emerge from two years of social unrest and the pandemic.

Why is it important: New or renewed agreements could be frozen for a year before increasing 5 to 10% in second and third years as the economy is further boosted by the return of tourists.

Hong Kong’s economy grew by 7.9% in the first quarter of 2021 — the biggest quarterly growth in 11 years and the end of six quarters of recession. Retail sales are also gaining pace; sales in the first four months of 2021 have grown an estimated 8.5% year-on-year.

Earlier this year, rents in Hong Kong fell to their lowest levels since 2003 and brands from Prada to Rolex shuttered key boutiques over the pandemic. Major retail streets including Causeway Bay’s Russell Street faced an all-time high vacancy rate as a result of the exodus.

Hong Kong Retail Landlords Mull Rent Increases 

What: John Lewis leverages the success of its rental initiative to expand it, geographically and product wise.

Why it is important: Rental stands among the new options at hand for retailers to generate additional recurring revenue. IADS member Beco, among others, is already quite advanced in this kind of programme.

John Lewis, which launched a partnership with Fat Llama last year to rent furniture (including desks and office chairs, which were among the top pieces to be rented), extends the move by increasing the number of references available for rent. We reported this partnership in our Exclusive on Subscription Retail.

Leveraging on Fat Llama’s ‘flex rental’ scheme, John Lewis extends in addition the service to the rest of England, as it was previously limited to London. As before, rented products will be available for purchase at the end of the rental period, at a price netted of the payments made so far.

John Lewis expands furniture rental service following successful trial

What: The Business of Fashion wonders about the relevance of La Samaritaine’s opening in 2021

Why it is important: There is little doubt that La Samaritaine is a business model conceived to be thriving with tourism. But what if tourism, and tourists, change by nature and spend less during their travels? This is an option that is considered by Bain & Co.

La Samaritaine opened its door mid June after 15 years of works and EUR 750m invested, generating an intense coverage in press all around the globe. However, analysts are wondering about the timing and the long term rationale of such a move.

Even if La Samaritaine’s officials maintain that the store is also intended for local customers (which remains to be seen – read our exclusive here), the brand selection, product offer and DFS overall supervision tend to suggest that the bulk of the business will be done with tourists… when they come back. The article makes the usual speculations on the relevance of the department store format and predominance of e-commerce, but makes an interesting point regarding tourism: even though they will for sure come back, will they still be inclined to spend during their travels? Bain & Co projects that 30% of luxury purchases will take place in China by 2025 (tourism is expected to recover by 2024 only,  according to McKinsey).

La Samaritaine is however well positioned to be a landmark building to be an mandatory stopping point for tourists, such as Harrods, Le Bon Marché or Galeries Lafayette Haussman, the second most visited place in Paris after the Eiffel Tower and not mentioned in the article. However, there is no mention either of the Harrod’s initiatives in China, with its stores cum showrooms open in Shanghai and Beijing.

This kind of vision, opposite to La Samaritaine’s, raises questions re. its future profitability. The article speculate that this is only possible with companies such as DFS, able to spread profits and losses over the world, including la Samaritaine’s operations.

LVMH’s Billion Dollar Retail Bet

What: John Lewis takes an unprecedented step in the UK retail landscape in terms of employee support when it comes to parental leave.

Why it is important: To make the retail career attractive again, some perks are required. This will involve additional spending and investments from Department Stores HR.

John Lewis is offering its 80,000 workers a new package, effective this autumn, regarding parental leave for birth: all parents-to-be with a minimum of one year in the company will be granted a paid leave of six months, or 26 weeks (full pay for the first 14 weeks and then 50%). This package will be proposed to both men and women, and is thought to contribute to the fight against the gender pay gap, according to Dame Sharon White, the chairwoman of the group.

In the UK, mothers-to-be are legally entitled to 90% of their pay for the first 6 weeks, and then the lower between GBP151,97 per week or 90% of their pay, for the next 33 weeks. Fathers-to-be are entitled to the same money, but with one or two consecutive weeks’ leave maximum.

John Lewis to offer equal parental leave to all staff 

What: A joint White Paper from Bain & Co and Alibaba on Chinese customer loyalty

Why it is important: Although China is a specific market, some trends might be reproduced in other ones, such as the group-buying options provided to customers from lower tier cities, leveraging digital capabilities.

Bain & Co and Alibaba released a joint White Paper, “Hyperlocal Retail Brand Growth”, analysing the evolution of the Chinese market, from mom & pop to hypermarket (2000 – 2010), then the massive digitalization (2010 – 2020) and the current competition for customer loyalty. It anticipates a stronger and fiercer competition as the e-commerce market is going more mature, meaning that the focus is not anymore on customer acquisition, but increasing the share of customer spending, thanks to hyperlocal retail, including proximity e-commerce and online to offline sales.

Interestingly, in China, only 15% of customers are loyal category shoppers, dedicated to one specific brand in a given category, and contribute to 20% of the said brand’s sale. 60% are much more spontaneous and tend to increase their options, thus being less loyal to brands and retailers.

There are different preferences according to the regions: in top tier cities, customers favour one-hour delivery, while in lower tier cities, customers prefer to opt for group-buying, in order to lower the prices, instead of paying a premium for speedy deliveries.

In 'new era', hyperlocal retail to be future, finds Bain study

Relove, a combination of a second-hand store and restaurant, opened on the 3rd floor of Stockmann in Helsinki.

Relove will offer all day breakfast and vegetarian dishes in an oasis like environment. In the shop, there are premium and luxury brands, timeless classics, vintage, and trendy products.

Relove founder, Noorq Hautakangas, is happy to see that department stores are shifting their traditional concepts to embrace the demands of conscious customers.

Relove Second hand & Cafe 

What: The group is developing plans to convert all 22 fur salons into "customised for modern luxury experiences."

Why is it important: The change follows the company’s establishment of an Environmental Social Governance team.

The Neiman Marcus Group will discontinue selling products containing animal fur by early 2023. The new policy eliminates animal fur products from the Neiman Marcus and Bergdorf Goodman stores and websites and calls for shutting down the fur salons at both divisions. Neiman Marcus has 21 fur salons in stores; Bergdorf’s has one fur salon.

To replace a significant fur business, NMG will convert into spaces “customised for modern luxury experiences,” without specifying what those experiences would be. The company added that it plans to work with luxury brands creating “new and innovative ultra-luxury concepts that satisfy the discerning tastes of luxury customers.”

Neiman Marcus Group Goes Fur Free

What:  A new location in Paris fully dedicated to sustainable fashion

Why it is important:  Sustainability is not an option anymore, for anyone in fashion, to the point of becoming a staple for most customers.

LVMH, Kering, Woolmark and others are backing up this new project, which just opened in Paris 10th arrondissement, and houses 40+ young labels, all united by their sustainable approach, be it in design, creation, production or trade operations.

It will be, once completed, also boasting a vegan restaurant and a jazz club. It is seen as an ecological accelerator for the fashion industry, and has made partnership with other similar ventures, such as Nona source, the LVMH deadstock initiative. This EUR 5m initiative has been designed by Chaix and Morel (who also designed the new Saint Laurent headquarters).

CEO Maeva Bessis points out that this initiative also aims at making executives from more established brands about sustainability, by operating a cool place where things  happen, in addition to nurturing new labels.

France's new fashion incubator La Caserne opens in Paris

What: Shoppers Stop reported a Q4 sales drop of 10%.

Why it is important: Despite reporting some recovery through omnichannel sales, the retailer is still seeing impacts of the pandemic on revenue.

Shoppers Stop, which operates 84 department stores in 44 Indian cities, as well as 127 specialty beauty stores for brands including M.A.C, Estée Lauder, Bobbi Brown, Clinique, Smash box and Jo Malone, saw sales largely recover in the fourth quarter of India’s fiscal year, from January to March, declining 10% from the same period a year earlier.

Quarterly sales revenue reached  USD 113 million with EBITDA reaching USD 1.44 million. Omnichannel sales grew by 188% and private brands’ volume grew by 38% in the fourth quarter year-on-year.

Indian Department Store Shoppers Stop Sees Q4 Sales Drop 10%