What:  Ikea’s CDO interview on digital transformation and what it takes

Why it is important:  Even though she is coming from the tech world, the CDO reminds that tech is at the service of a vision, a purpose, and values supported by the company.

The HBR interviewed Barbara Martin Coppola (formerly at Google, Samsung and Texas Instrument) to understand the challenges of digital transformation in a legacy company. Ikea has tripled e-commerce in 3 years and digital transformation was carried at an intense pace. Since stores act as fulfilment centres, this led to a redefinition of goods flows, supply mechanisms and stores physical structure, and, more importantly, having to learn how to operate at 2 speeds (offline and online) with only one space to operate from. Martin Coppola reminds that digital transformation is not a goal per se, but a tool to transform business and making decisions.

In order to proceed, she makes an analogy with the iceberg: the visible part is what is done to interact with the customers, but under the surface, huge changes are made to the business and operating model.

E-commerce went from 7% of total revenue to 31% in 3 years, thanks to an holistic approach involving inventory management, logistics and fulfilment modernisation on several years.

Coppola Martin also reminds that nothing replaces the sense of purpose. For Ikea, the trust customers place in the company it key to its DNA. In order to keep that trust, digital transformation involved Ikea asking itself how to invent a new approach. As a consequence, there is a data control panel in the app that allows to change the privacy settings at any time. This allows to create a trustful relationship, as customers are able to decide what data they share while increasing the engagement.

Inside IKEA’s Digital Transformation

What: Comparing to last year, the retailer developed its capabilities to sell Chugen (July gift season) online, developing more omnichannel solutions to drive sales and manage traffic.

Why is it important: Thanks to new omnichannel solutions, Chugen’s season debut is promising at Isetan Mitsukoshi.

Isetan Mitsukoshi’s online Chugen shopping services make product videos available after scanning QR codes. In order to manage traffic in a responsible manner, the retailer also adopted a system in which customers can book appointments via a smartphone app to pick up gifts.

Department Stores Beef Up Efforts to Sell Chugen Online

What: The department store appoints Lisa Aiken, as part of its organizational transformation.

Why is it important: As a digital native, she will act as a fashion-forward expert to identify emerging brands, discover new trends and services across the fashion and lifestyle space.

This role is part of the merchandising and planning team transformation, reporting to Lana Todorovich, President and Chief Merchandising Officer of Neiman Marcus Group.

Aiken was recently Fashion and Buying Director at Moda Operandi. Earlier in her career at Net-a-Porter and MyTheresa, she built a reputation for bringing a modernized approach for luxury brands and fashion e-tailers.

Neiman Marcus Appoints Lisa Aiken in Newly Created Role as Fashion and Lifestyle Director

What: Online rental businesses are penetrating the mainstream further by venturing into white label solutions.

Why is it important: Fashion rental businesses were one of lockdown’s most unlikely winners, Hurr being one of the leaders and bringing Selfridges on board.

Rental pioneers including Hurr, On Loan and My Wardrobe HQ are all launching white label solutions this month, and everyone from major department stores, such as Selfridges, to contemporary brands, are jumping on board.

“The idea is that we’re powering the tech and the operations. It’s completely hands-off from the brand’s point of view, we do everything from using AI to power the smart-tagging of products to dry cleaning. Instead of having to invest millions of pounds into building their own rental operations after the pandemic, we’re telling retailers or brands ‘We’ve done it, and we can do it for you,'” said Hurr founder Victoria Prew. Selfridges is her first client.

Hurr has so far operated on its own platform, using both the peer-to-peer model and also stock from brands, which helps them to offer a greater variety and more depth of stock than a peer-to-peer only model.

In 2019, the company launched its first Selfridges concession and it was a hit. Ahead of Christmas, thousands of women used the service to rent festive pieces, according to Prew. It now has a permanent space within the department. Over the last year, the company had 2 million hits on its own site with people booking their rentals up to four months in advance, while still in lockdown, and driving what she said have been record revenues.

My Wardrobe HQ is another London-based re-commerce business debuting My Ventures, its own take on white label solutions across both rental and resale, to allow for bespoke solutions. “For some brands, rental is attractive as it provides a more accessible price point to a new Millennial audience, as well as a sustainable solution and marketing narrative. For others, resale is a more appropriate solution,” said Natalia Pawlak, the business’ COO.

“Blockchain is imperative for authenticity — we’re in a new age with all the buzz around NFT solutions from luxury brands such as Gucci. Gone are the days of certificates in boxes. Our blockchain solution solidifies item ownership and also provides the brands with automated recurring revenue which they haven’t seen before,” she added.

If the rental market is going to take the next step and go mass, brands and retailers will need to get more involved and put their own stock up for rent, according to Prew. Luxury players are now starting to see the opportunity too with discussions “coming forward five years,” said Prew, who thinks there’s no reason for apprehension – only a “mass market opportunity” to unlock a younger consumer base of environmentally conscious Gen Z-ers and Millennials. Rental is also more focused on trend or occasion pieces versus the brand classics customers prefer to invest in, so adopting the model won’t “cannibalise primary market sales” in any way.

Luxury Fashion’s Rental Market Is Ready for Takeoff 

What: A pop up dedicated to teen customers

Why it is important:  The concept seems pretty simple (pink & flashy décor, a stage for social events). If this is what it takes to lure in 11 – 15 years old, department stores should watch carefully how this popup fares.

Mango launches in early May a new test store on Las Ramblas, downtown Barcelona, aiming directly at 11 – 15 years old.

The brand displays on 200 sqm its teen range, launched six months ago, and features a stage to allow teens to record videos for Tik Tok and other social media.

The duration of this pop-up is not precised and the brand has not made any official communication on this topic.

Mango Opens Dedicated Teen Pop-Up Store 

What: Despite being the most digitally savvy generation, Gen Z loves to shop in physical stores, but differently from older consumers.

Why is it important: 81% of Gen Z prefers to shop in stores and more than half do so because it allows them to disconnect from social media, a Kearney survey found. That desire means retailers are going to have to focus on creating the feeling of community while offering a selection of products that appeal to Gen Z tastes.

In fact, 98% of Gen Z shoppers globally said they typically make purchases in a store some or most of the time, according to a survey by IBM. Three times as many Gen Zs said they shop most of the time in a store compared to the number who said they shop most of the time online. That may be because, Gen Z is one of the loneliest and most isolated of all generations.

Brands need to start dedicating space for these kinds of decompression zones if they want to attract the Gen Z shopper. A good Gen Z store should also be hyper-focused. When asked what they are looking for once they arrive in-store, three out of four Gen Z shoppers told Kearney a “well-curated store experience focused on a limited number of products” was extremely or moderately important to them.

For Gen Z shoppers, physical retail spaces are all about escaping the algorithm, to see things outside your filter bubble. In that sense, brands are starting to move away from rollout strategies and designing each of their stores with more modular, flexible concepts. This is key given a poor in-store experience has led one-quarter of Gen Z shoppers to skip making a purchase.

Stores of tomorrow need to trigger memories that are beyond the transactional approach. Given the luxury industry is predominantly about recruiting first-time shoppers, not repeat purchases, the role of stores continues to be very important.

![Gen Z 

What Gen Z want from physical retail 

This week the department store will add yet another string to its foodie bow with the opening of the Chocolate Hall. Timed to celebrate the 150 year anniversary of the opening of Harrods’ first confectionary counter, and marking the end of an extensive four-year refurbishment of the store’s food halls, the Chocolate Hall promises to be as much an experience as it is a retail destination.

Harrods has a new food hall

What: Called “Hudson’s Bay Charter for Change” it's a 10-year, CAD 30 million commitment through the retailer’s foundation to support five organisations focused on education, employment and empowerment.

Why is it important: Programmes are set to impact more than 300 000 lives.

Hudson’s Bay is partnering with five charitable organisations: Indspire, Black Youth Helpline, CEE Centre for Young Black Professionals, CPAC Foundation and MLSE Foundation.

Altogether, they will impact more than 300 000 lives through programmes beginning with scholarships and bursaries, initiatives with school districts and families to keep kids in school and initiatives to help immigrant upgrading their professional skills.

Hudson’s Bay Makes a Multimillion Dollar Commitment to Equality

What: HBC follows the steps of Macy’s and Kith and is the first retailer in Canada to back an inclusivity-oriented non-profit organisation

Why it is important:  Declarations are not enough anymore for retailers and brands to display their beliefs and values. Nowadays, commitments are needed to appeal to their communities of shoppers and this goes through adhering to locally relevant organisations. It might differ from a country to another, given local social and cultural context, however this is clearly becoming a norm.

The Canadian department store chain Hudson’s Bay announced it has joined the non profit organisation The 15 Percent Pledge. By doing so, the company (which operates 88 locations in North America) commits into displaying a minimum of 15% of black or indigenous people-owned brands in its assortment.

The 15 Percent Pledge, based on the fact that Black people represent 15% of the total US population, was launched in 2020 during civil unrest following the murder of George Floyd in Minneapolis. Runt the Runway, Sephora, Vogue, Macy’s or Kith are among the 22 companies backing this non-profit organisation.

Hudson’s Bay has become the first Canadian department store

What:  Walmart is focusing on low prices as customers become more interesting by increasing value for money, than convenience

Why it is important:  Walmart is reporting a similar behaviour already noticed by IADS members when they are able to reopen: traffic instore is slightly lower, but average basket rises to the point of compensating the lost traffic, while e-commerce soars.

Walmart posted a total revenue of USD 128,31 billion on Q1 2021, +2,7% compared to the same period last year. In the US, digital sales increased +37%, store sales increased +5% (traffic decreased -3,2% but average basket increased +9,5%). Every segment is performing well, with the exception of international sales (-8,3%) due to divesting moves.

The company anticipates that 2021 will be less about convenience, and more about value and price. This is the reason why Walmart is planning to double down on low prices this year.

Walmart Releases Q1 FY22 Earnings

Walmart Full Report earnings

What: Retailers and brands are investing in store fulfilment and smaller and more nimble warehouses near shoppers to meet customer demand more sustainably and efficiently.

Why is it important: Micro-fulfilment strategies mean retailers can ship and deliver goods faster, but overhauling a distribution network is a daunting and expensive task for retailers.

To facilitate this transition, a number of tech companies are helping brands get up to speed.

PredictSpring has built a mobile point-of-sale interface for store associates to prepare a package for click-and-collect or e-commerce shipment. These types of tools will soon become as ubiquitous and necessary as payment systems and e-commerce platform.

A key component of micro-fulfilment is rethinking the role of the retail store, which now needs to function like a warehouse and bricks-and-mortar shop. Large beauty and fashion brands have a prolific real estate footprint, so they want to leverage that says Maggie Barnett, COO of ShipHero.

PredictSpring predicts that soon, any metro area with more than one million people will see that the majority of orders are fulfilled from stores, rather than warehouses. Flexibility at checkout in how customers can receive their orders, including buy online, pickup in store or ship from store, is increasingly important.

This puts a further burden on retail associates, who are already expanding expertise to include video shopping consultations, personal styling and online customer service inquiries. A key concern among ShipHero’s customers, is the ability to train associates to scale these services, including packing and shipping e-commerce orders.

Relying on stores more to fulfil online orders also changes the role of the warehouse. Flexe connects brands with a network of more than 1 500 warehouse locations in North America who have free space. Brands can be set up within three weeks, don’t have long-term commitments and can specify packaging. For example, if a brand like Nike wanted to do a drop with two-day or same-day delivery, it could set up temporary fulfilment locations outside of key cities.

Storing products closer to the customer is more important than ever, but allocating inventory can become a “bottleneck”, says Ben Eachus, co-founder and CEO of Flowspace, a logistics platform. Something that can help is inventory visibility, where individual products are tagged to show exactly where they are at any given time.

Forget mega warehouses

What: Saks.com received asset-based credit arranged by Bank of America and a secured term loan arrangement by Pathlight Capital.

Why it is important: The capital will allow Saks.com to become even more competitive in the luxury e-commerce market.

Saks is preparing for growth in its new life as an independent e-commerce business, separate from the brick-and-mortar origins. Although they are two separate entities, the digital Saks assures that it will still have a seamless connection to the Saks Fifth store chain.

With the new facility and term loan, Saks hopes to use the new capital to increase its stronghold in the growing e-commerce luxury market.

Saks.com generates USD 1 billion in sales and was able to pick up younger shoppers amid the pandemic. The retailers indicated that there will be some investments in building a hybrid retail and marketplace platform.

The digital Saks raises $465M in debt capital to fuel growth 

What: One, a store opened in East Hampton New York, is leaning on DTC brands for nimble inventory and restructuring the traditional wholesale payment model.

Why is it important: New wholesale business models are emerging, with a more equal financial split between store and brands. Another alternative retail concept, Platform, was reported by IADS last month (link below).

One store carries a chic mix of fashion and homewares, but it’s underpinned by online, DTC brands as well as an unusual deal to sell fine art curated by Artsy. Many, if not most, of the brands carried there are able to quickly fulfil One’s orders from their own DTC distribution channels. The model leans heavily on a form of consignment that shares a higher portion of proceeds with brands when goods sell.

Anna Mason, a London designer whose collection is sold at One, acknowledges that the model poses a significant risk because she isn’t paid until her fashions sell. She can make more profit, though, because she receives roughly half the sales. She also notes that One, without the risk of a big buying commitment, is willing to carry a broader selection of her label, which leads shoppers to see more of her work and remember her brand name.

One doesn’t anticipate participating in the discount fashion economy. One’s clients should not wait for inventory to go on sale. Pieces that don’t sell go back to the brand, which may put it on sale on its own site, or deploy it to another e-tailer or retailer.

Rethinking the US multibrand retail

Related Item:

• Is Los Angeles’ Platform the future of retail?

Untapped Creatives, a platform for luxury, sustainable designs made between the U.K. and Africa, will debut in-store at the Oxford Street flagship and online, with fashion and beauty brands.

The products are often made to order, or done in small runs, and employ artisans in the countries from which the crafts or materials originate. Proceeds from some of the sales go to African charities.

Selfridges Makes Space for British, Black-Owned Fashion, Beauty Brands

What: Poshmark has partnered with Snap to create a social shopping experience called Poshmark Mini.

Why it is important : Poshmark is extending their reach to Gen Z consumers by allowing them to shop on social platforms.

With Poshmark Mini, users can browse curated products, attend virtual shopping events (Posh Parties) and shop top-selling brands without leaving Snapchat.

Snapchat has had its sights set on shopping through the app since 2016. Snapchat is popular among Gen Z consumers (aged 10 to 24), which Poshmark would like to leverage.

Poshmark and Snapchat previously partnered to create Snap Kit in 2018, which let Poshmark users share and sell their listings on Snapchat.

Poshmark, Snap team up on social shopping experience

What: From 1 September, Stefano Della Valle will succeed Vittorio Radice at the helm of the European arm of Central Retail Corp.

Why is it important: Radice will take on the role of non-executive board member and he will continue to be involved in the company’s decision-making process, dealing with stakeholders and overseeing Central Group Europe’s new openings in Wien, Dusseldorf and Basel, as well as the transformations of the units in Zurich and Geneva.

Della Valle will take on the role of CEO of the retail company, which operates Rinascente in Italy, the KaDeWe Group in Germany, Magazine Zum Globus in Switzerland and Illum in Denmark.

After turning Selfridges around between 1996 and 2003, Radice joined Rinascente in 2005 as CEO. Della Valle first joined Rinascente in 2006 as CFO, and in 2017, he was promoted to the role of Central Group Europe COO. Before landing at Rinascente, he worked at Deloitte and covered several executive roles in the Prada Group across Italy and France.

Central Group Europe Promotes Stefano Della Valle as CEO 

What: Saks.com will test the marketplace format in an effort to accelerate growth and expand its offerings to customers.

Why is it important: In creating a marketplace, Saks will be challenged to determine what brands and products, not previously carried, will resonate with the retailer’s audience and will buoy, not detract from, the Saks luxury image.

Last March, the parent HBC split the Saks Fifth Avenue stores and saks.com operations into stand-alone companies. Changes occurred since then, including launching everyday free shipping and free returns, advancing the digital stylist program, expanding Saks Limitless, an invitation-only program providing top saks.com shoppers with exclusive benefits and perks, and launching Saks Live, a livestream events platform. Marketing online expenses also ramped up to acquire new customers and to increase traffic.

Saks stores continue to work together with e-commerce to deliver an easy shopping experience, providing buy online, pick up in store service, and handle exchanges, returns and alterations.

Saks Fifth Avenue had a strong Q1 performance across all channels with total sales up significantly over 2019. Specific to the e-commerce business, Saks’ gross merchandising value exceeded expectations, up double digits versus 2019, with signs of an ongoing upward trajectory. Since March, site traffic is up 79% and new customers are up 84% to 2019. Saks stores total sales were reportedly higher than 2019.

To strengthen the dot-com’s capital structure, two financial steps — a syndicated USD 350 million asset-based, five-year revolving credit facility and a USD 115 million senior secured term loan — were completed to ensure liquidity and flexibility to drive growth.

Saks.com To Test a Marketplace, Investments Ahead 

What: Zara enters a very competitive market in the US

Why it is important:  Beauty is a traditional market for department stores providing a significant share of their margin. Any new player is potentially a new disruption to deal with.

Zara beauty is launched simultaneously on-line and in select stores, with a full assortment of formulas for eyes, lips, face and nails, developed by 9 different talents and partners. It aims to make the most of their millennial customer base and enter an already crowed – and competitive – market:

• Sephora is moving out of JC Penney and opens 850 stores in Kohl’s stores, plus 60 new free-standing locations,
• Ulta Beauty will add 30 new units to their 1,275 store-base,
• Macy’s has acquired 60 Bluemercury stores in 2015, expanding them to 183 this year and 213 in one year’s time,
• Amazon is reported to eye at this market too.

Zara Beauty launches

What: The store will open in New York This Summer.

Why is it important: Google takes a leaf out of Apple’s play-book of operating physical stores and providing in-person services to boost sales.

Alphabet Inc’s Google said on Thursday it would open its first physical store in New York City this summer, mirroring a retail approach that has helped Apple Inc rake in billions of dollars in the last two decades.

The Google store will be located in the city’s Chelsea neighbourhood near the its New York City campus, which houses over 11,000 employees.

Google, which has set up pop-up stores in the past to promote its products, said it would sell Pixel smartphones, Pixelbooks and Fitbit fitness trackers along with Nest smart home devices at the retail outlet. Visitors will also be able to avail customer service for their devices and pick up their online orders at the store.

Google To Open First Physical Store in New York This Summer 

What: IT splits its business in two and focuses on the retail operations

Why it is important:  A long-term partner of international retailers (Galeries Lafayette, Dover Street Market), I.T.  missed the digital turnaround a decade ago and has suffered from the recent situation in Hong Kong, now forcing it to focus on the retail business in priority.

Famous HK-based I.T. multibrand business is delisting from the HK stock exchange, and splitting into 2 entities: the A Bathing Ape streetwear brand (acquired a decade ago) and the store operations, including partnerships with Galeries Lafayette and Dover Street Market.

I.T. has notoriously lagged behind in terms of e-commerce penetration (like many other HK-based retailers such as Lane Crawford and Joyce) and suffered during the 2019 protests. It is estimated that they lost 32% of turnover in the first half of 2020.

I.T. Delists From Hong Kong Stock Exchange

What: Total consolidated sales for the first quarter of 2021 hit KRW 2.2 trillion (USD 1.9 billion).

Why is it important: Analysts expect sales to grow more than 90% year-on-year in 2021.

Total consolidated sales for the first quarter of 2021 hit KRW 2.2 trillion (USD 1.9 billion), while net profit reach KRW 89 billion (USD 78.8 million). Fashion in particular has been booming in Shinsegae’s network of department stores, with luxury, womenswear, menswear and sportswear marking year-on-year gains of 58%, 25%, 35% and 37% respectively.

Subsidiary Shinsegae International, which imports and distributes global fashion brands like Celine and Stella McCartney, reported a 21% sales boost for fashion and an 18% spurt for beauty.

Shinsegae’s duty free business, however, continues to see its airport business suffer, with sales down 92% year-on-year.

Shinsegae’s Q1 Luxury Sales Up 58% as Demand Soars

What: Malls are replacing anchors (large department stores and retailers) by experiential spaces to drive traffic.

Retailwire reports that malls are betting on big, immersive entertainment experiences as a footfall-drawing scheme, such as a mall in Houston which replaced a 4,000 sqm Bed, Bath & Beyond by an interactive art museum, or another setting up an augmented reality experience on the former premises of a home décor chain.

Experts are dubious on the fact of being sure that this will be enough to cure the malls’ woes and issues. Analysts point out the fact that events and experiencial spaces, even though they generate traffic, might not help to convert said traffic into footfall in adjacent stores.

More than a theme-park, malls must get back to their initial function of drawing customers, families and communities with entertainment, experience and meaning. A farmer market might be more effective in that sense than an art museum.

Malls, Needing A Comeback, Replace Anchors With Immersive Experiences

What: The luxury department store has acquired a temporary license to host “micro weddings” for a limited period this year for up to 20 guests.

Why is it important: Selfridges ventures further into offering unprecedented services and customer experience.

The venture into wedding came as the answer to the growing trend for alternative and smaller-scale wedding celebrations after the COVID-19 outbreak halted wedding plans,  which makes finding a wedding venue in 2021 challenging.

Ceremonies will take place in the retailer’s new Wedding Suite on the fourth floor, which will be decorated according to couples’ chosen packages, and parties will continue at its restaurant, the Brasserie of Ligh. To mark the occasion, there will also be a wedding takeover in Selfridges’ ever-evolving Corner Shop.

Selfridges Turns Full-Service Wedding Venue 

The French department store has recruited senior luxury executives Laurence Nicolas and Mathieu Staat who join the management board.

Laurence Nicolas will head the Boulevard Haussmann flagship and Mathieu Staat will manage the department store’s omnichannel strategy. Both executives will join the management committee.

Nicolas, a luxury retail executive with a business degree from Neoma Business school, started her career as a consultant. She was formerly executive vice president of Sotheby’s jewelry and watches activity and previously worked at Cartier and developed the watches and jewelry activity at Dior.

Staat, who studied at French business school ESCP, developed digital marketing and client relations activities at French hotels group Accor and was most recently digital director for Sephora in Europe and the Middle East. The executive also worked in marketing for French chain Fnac and cosmetic label L’Occitane.

Printemps Recruits Laurence Nicolas And Mathieu Staat