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 

What: Due to the economic context, France is postponing by 4 months the implementation of a very visible measure related to environment.

Why it is important: It might not remain an exception and other countries might follow suit, even though the economical context is, for now, not encouraging. Be ready.

France was planning to ban receipt tickets starting 1st of January 2023, due to anti-waste concern (and as a part of a wider set of measures, including having shops keeping their doors closed when heating or AC is on). However, due to inflation and the fact that receipts are still important to customers, it has been decided to postpone the enforcement of this measure to 1st of April 2023.

The measure still allows customers to get their printed receipts (including bank card receipts, ATM receipts etc..) but on request. They represent 30bn pieces of paper a year, difficult to collect and recycle due to their size.

France delays ban on sales receipts due to inflation 

What: Reliance’s acquisition seems to be an answer to Shopper’s stop latest move.

Why it is important: Galeries Lafayette are set to open two new stores in India within 2024. India seems to be accelerating into becoming a serious rival to China when it comes to retail growth.

Indian conglomerate Reliance Retail has acquired the Indian division of German retail company Metro for $344m.

Metro entered India in 2003 and currently operates 31 stores with 3,500 employees, mostly in prime locations. It recorded $930m in sales in 2022 (ending September).

Interestingly, the market is accelerating and this move seems to be a response to Shopper’s Stop new store format that we reported here.

Reliance retail acquires Metro AG India for $344m

What: Fenwick has sold its London flagship store in order to focus on its regional stores fleet.

Why it is important: Strategic alignment requires difficult decisions and being able to get rid of symbols, in order to guarantee the perennity of the company.

Fenwick has sold its Bond Street building in London for an estimated amount of 430m pounds. The store, the fourth smallest in the fleet of 8 stores will remain open until Q1 2024. It currently makes half of the Newcastle historic flagship location.

The proceedings from the sale will fund significant investments in the other stores, especially the Newcastle and the Kingston upon Thames ones, as well as improve its digital presence.

Fenwick to close its London store 

What: A debit card now allows customers to perform their payments in cryptocurrencies.

Why it is important: Even though the model is unclear, retailers should be aware of their customers’ evolving needs and expectations when it comes to payments, especially the ones with their own credit card program.

Revolut, the “easy banking” app, adds a new feature coming on top of already all the specific elements its credit card already allowed customers to do (such as buying crypto directly or trading gold), as customers are now allowed to pay in crypto via their credit card simply by tweaking parameters in their app.

It is not clear from the article if this feature is ‘transparent’ for the retailer, however this move is an additional step towards democratization of payments via crypto, even though cryptocurrencies are currently out of favour.

Revolut adds crypto spending feature to debit card 

What: Frasers Group has revealed detailed plans for its new North East mega flagship which will house its major brands alongside a gym.

Why it is important: Back in August, Frasers revealed that the group had snapped up the former department store in the Metrocentre’s Red Mall, in which the Partnership agreed to a 15-year lease on the 130,000 sq ft unit which will include a 70,000 sq ft Flannels on the ground floor, and a 60,000 sq ft Sports Direct on the first floor, incorporating an area for Evans Cycles across 1,000sqft.

The new addition of the Everlast Gym will be on the first floor, according to the plans, plans show, taking up 33,800 sq ft of space including changing areas, two treatment rooms and a large reception area.

The new store is part of the retail giant’s plan to create several UK flagship sites bringing everything under one roof.

Frasers to open gym in new Metrocentre megastore

What: Alibaba is expanding its presence in Spain with the launch of Miravia, a new fashion, beauty, food and lifestyle marketplace.

Why it is important: Alibaba’s Miravia platform seeks to offer a different shopping experience to consumers, giving them access to the latest trends in fashion, beauty and lifestyle through innovative solutions, such as exclusive content created by influencers or virtual make-up trial tools.

Miravia also offers a wide variety of products in categories as diverse as beauty, fashion, body care, electronics, food, babies, pets and health, with big international brands, Spanish brands, and local young entrepreneurial brands.

Alibaba launches a new fashion and lifestyle marketplace in Spain

What: Nordstrom CEO cites strain across all consumer demographics affecting the shift in its merchandising mix as part of its plan to improve the retail group’s performance in 2023.

Why it is important: As a response to the uncertainty surrounding the next year with low-income households the most affected economically, clean inventories, improving Nordstrom Rack and elevating the customer experience are step one for the 2023 agenda.

At the beginning of 2022, Nordstrom announced its mission to simplify its outlet offshoot Nordstrom Rack’s focus “to great brands at great prices.” Thus, the company is looking to differentiate by offering brands not normally available in off-priced channels, and which customers can identify from the regular Nordstrom assortment.

Like many other retailers, Nordstrom is looking to clear out inventory in light of softening demand for clearance during the inventory glut.

Finally, the supply chain is a key focus for reactivity in the next year for Nordstrom and other companies hoping to survive a potential recession.

Nordstrom’s 2023 Focus 

What: China is abolishing its zero Covid strategy likely due to a shrinking economy, but Covid increases may delay recovery plans.

hy it is important: China’s production and retail sales missed November forecasts, resulting in the country’s worst output data in six months, with growth at 2.2%, down compared to October’s 5%, and below expectations of 3.6%.

Al Jazeera reported China’s retail sales fell 5.9%, with the service industry especially hit. The slump in retail sales was higher than expected, with online sales of physical goods rising by 4% year-on-year, down sharply from October.

As the world continues to see inflation and higher cost of goods caused by the Russian invasion of Ukraine, demand for China’s exports also fell by 8.7% compared to 2021.

Covid surge dampens China’s retail reopening

What: Odakyu department store business has been considerably affected in 2022.

Why it is important: The bad performance is not linked to traffic or consumption as the transportation and the hospitality businesses of the same group are both rising on the same period.

Odakyu department stores, which belong to the Japanese railway company Odakyu Electric Railway, saw its revenue down -41.1% to JPY5.78bn, for the full year 2022. Interestingly, this is not correlated to traffic, as the total passenger traffic carried by the train division increased +5.6% and the hotel business division increased its sales by +90.3%.

Odakyu department stores are down -41,1% FY in 2022 

What: Korean department stores are entering in the second-hand business in order to remain relevant to younger generations.

Why it is important: Even in such a hot market, customers are becoming price-conscious and concerned about the environment. Second-hand is now a worldwide trend in department stores, even though the profitability of such operations remains to be proven.

Korean department stores are increasingly looking at second-hand items in order to attract younger and price-conscious customers. With that in mind, Hyundai has opened an entire floor dedicated to second-hand in its Sinchon branch (Western Seoul), after a sneakers-only resell store in the Hyundai Seoul which opened in February 2021 and proved successful in attracting new customers.

otte is testing the idea through popup stores, the latest one being a second-hand store called “Closet Share” in Busan in September, which sold out within two days. The company also invested in Joongonara, the largest e-market for second-hand products in Korea, for $23.04 million.

To be noted, Shinsegae also invested in another second-hand specialist last January.

Hyundai and Lotte venture into second-hand items stores 

What: Falabella announced that in the last meeting of the board of directors the resignation of Hernán Büchi Buc from his position as director of the company, effective December 13.

Why it is important: The departure of Hernán Büchi Buc follows the conciliation agreement approved this November in Chile by the Free Competition Defense Court and signed between the National Economic Prosecutor's Office and Falabella, to end the trial that began in December 2021 for allegedly Violation of the horizontal interlocking prohibition.

Falabella proceeded to appoint Ricardo Cruzat Ochagavía as the new director, who will replace Büchi Buc during the most recent board of directors meeting.

Falabella director replaced by Ricardo Cruzat

What: The John Lewis Partnership has revealed plans to build 1,000 rental properties on its land as part of a plan to diversify its business.

Why it is important: John Lewis Partnership plans to utilise its own property portfolio to build 5,000 out of 10,000 homes within the next ten years, which will be available in different sizes with short- and long-term tenure options as well as the option to be furnished by John Lewis.

The first three proposed sites include building over Waitrose shops in Bromley and West Ealing in Greater London, as well as replacing a vacant John Lewis warehouse in Mill Lane, Reading.

The project, which is subject to planning permission, includes commitments to affordable housing and sustainability tied to its 2035 net-zero pledge.

John Lewis looks to diversify through rental properties Source 1

John Lewis looks to diversify through rental properties Source 2

What: The cold weather in the UK is keeping Christmas shoppers at home resulting in increases in online shopping and declines in foot traffic.

Why it is important: Pre-Christmas footfall dropped 10.2%, down 20.1% compared to 2019 according to figures from Springboard.

The high street saw 15.7% fewer shoppers. Central London took a massive hit, seeing 31% fewer shoppers than the week prior.

Cold weather dampens UK footfall

What: Printemps opened a department store in Doha the last week of November, extending over 40,000 square metres on three floors which showcases 600 brands, 200 of which are exclusive to Printemps

Why it is important: Printemps’ newest location is the largest luxury department store in the Middle East and the group’s second-largest brand after the boulevard Haussmann flagship in Paris.

Touted to be the ‘next-generation’ of department stores, ultra-personalised product offers will utilize technology echoing Printemps’ recent launch in Web3 (Digital Fashion by Printemps). A VIP lounge will give customers privacy to use 3D services and holograms to interact with on-site personal shoppers and staff of the Haussmann branch in Paris from Doha.

As well, Printemps has partnered with M7 to create a talent incubator programme which offers a three-month mentorship to local designers that can eventually showcase their creations within the complex. Titled the ‘Doha Oasis’, the complex includes a 5-star hotel, amusement park, cinema, and Printemps’ 2,600 square-metre spa.

The store’s interiors have been designed by Canadian studio Yabu Pushelberg, which also designed the La Samaritaine complex in Paris.

Printemps Doha opens with innovative customer experience