What: The U.K. retail industry is disappointed in the reversal of a tax-free government policy that will affect tourists’ shopping behaviours in the country and cost the sector USD1.36 billion.

Why it is important: The decision leaves the UK as one of the only European countries not to provide a tax-free shopping scheme to encourage tourism.

The tax-free scheme would have enabled overseas tourists to get a refund on the VAT paid on goods bought on the high street or in malls, at airports and other departure points, and exported from the U.K. in their personal baggage.

The policy would have delivered growth to accelerate post-pandemic recovery, and a significant boost to UK manufacturing as it forms part of the ecosystem of the sector and supports jobs across the country.

Tourists may now prefer to shop in other cities like Paris, Madrid or Milan instead of London because they can receive the return of the VAT; the policy would have helped to strengthen the UK’s position as a top destination for international shoppers. As well as other cities gaining GBP5 million a week from high-earning British spenders who can make cheaper purchases on the continent.

Walpole, a company which represent the UK luxury industry, said this is their immediate priority, they are asking the government to do a full economic review and will work closely with the new Chancellor to reach an outcome which supports the sector and the countless jobs and industries it supports.

Policy reversal slams hammer on UK tourism and British high street- Source 1

Policy reversal slams hammer on UK tourism and British high street- Source 2

What: Frasers has reportedly sent out letters to brands and suppliers that no fur products are to be supplied as they move towards fur-free.

Why it is important: Following numerous protests by the animal rights coalition, PETA, along with the organization’s investment in the business in 2020 to bring the discussion of fur-free to Frasers’ boardrooms, the group has announced it will move to end sourcing fur-based supplies and products.

The strategy is part of PETA’s shareholder campaign, which has seen it invest in an array of clothing companies to gain access to shareholder meetings.

Frasers Group to go fur-free

What: Peek & Cloppenburg has opened a store in Brussels this month, marking its return after the company withdrew over 20 years ago.

Why it is important: Located in the Westland Shopping Center with a sales area of close to 3,800 square metres, the new store represents Peek & Cloppenburg’s resilience in expanding into the Belgium market.

The highlight of the new location is its sports area which targets a young demographic that Peek & Cloppenburg hopes to attract.

Peek & Cloppenburg expand in Belgium

What: This is the second collection of luxury hotel brand The Ritz, done in partnership with Frame, a trendy fashion label.

Why it is important: Through collaborating with the trendy fashion label Frame, the Ritz seeks to bring a new and younger vision to the hotel brand through a branded luxury fashion offering.

A range of about twenty items from pyjamas to sports jackets, jeans and pet items accent the heart of the collection which seeks to deliver high-end basics featuring the institution’s logo.

The Frame X Ritz Paris line is sold in the Frame chain with 15 stores in the UK and US, major retail sites like Net-a-Porter, Moda Operandi, Louisa Via Roma and Frame’s Tmall Flagship store. The collection is also in several retailers such as Harrods, Le Printemps, Le Bon Marché, Holt Renfrew in Canada and NK in Sweden.

The brand recently opened a large pop-up boutique at Bergdorf Goodman during New York Fashion Week.

Frame X Ritz Paris transforms the hotel into a luxury fashion brand

What: Inflation has started to be visible in the US and reflects in a new channeling of the instore traffic.

Why it is important: There is a contraction of the market, as every class of customer is starting to worry about its spending power, even though luxury customers are less affected than middle-class. The winter season is going to be a stress test for many retailers inside and outside the US.

In the US, all companies are not affected in the same manner. Placer.ai has analysed the foot traffic and determined that the when it comes to mass retailers, Dillard’s has been the most affected in terms of traffic between June and September, compared with Kohl’s, Macy’s and Belk.

Nordstrom was also the most affected in the luxury market, and Saks Fifth Avenue was the only one which was able to grow its YoY traffic between June and September. Mid-range retailers are favored by customers while luxury stores keep the top end of their clientele, which is not that affected by financial woes. As a consequence, this impacts the foot traffic as only the core customers for each segment remain loyal.

In the US, Saks Fifth Avenue is the only department store growing its foot traffic 

What: Klarna is launching an app that integrates e-commerce functions, shoppable content and improved consumer-to-retailer connections through digital optimization.

Why it is important: Social commerce appears to be a continued focus as Klarna announces the launch of Klarna Spotlight and its creator platform that connects content creators and merchants to scale and optimize campaigns.

The smart search functionality of the app is aimed at consumers, to cut time on searching for the lowest deals. Features also include shoppable video content, delivery tracking, digital receipts and “seamless” returns to establish the BNPL company as a leader in e-commerce and a ubiquitous connection between brands and shoppers.

Klarna's enhanced app for consumers, retailers and content creators

What: John Lewis partners with Hurr to launch a ‘dress for hire’ rental service as part of the department store’s continued efforts to cater to shoppers suffering from the cost-of-living crisis.

Why it is important: The partnership also acts to offset the environmental impact of John Lewis while hopefully securing a slice of the rental clothing market set to reach 2.3 billion pounds by 2029.

In 2020, the retailer launched a furniture rental service and earlier this year in May the retailer announced its subscription service for rented children’s clothes in partnership with the kidswear rental platform, Thelittleloop.

John Lewis partners with Hurr

What: Falabella has confirmed the donation of up to 4.8 tons of clothing to the Fundación Banco de Ropa to benefit up to 6,500 people.

Why it is important: Falabella has allied with the Fundación Banco de Ropa as part of its ‘+Green’ strategy focused on the circular economy, conscious brands and sustainable operations.

In addition, Falabella Peru has donated more than 1,800 clothing items, 50% of which have been allocated to the NGO Remar to benefit women in Peruvian territory who are economically vulnerable and in violent situations.

Falabella donates 4.8 tons of clothing

What: To give a well-needed boost to tourism, Hong Kong has announced a 500,000 airline ticket giveaway worth 254.8 million USD as well as dropped inbound quarantine requirements.

Why it is important: Luxury and retail markets will likely see a boost in business in 2023 due to Hong Kong’s plan to support an increase in tourism.

The ticket giveaway and the removal of all remaining travel restrictions will begin in 2023 as part of the city’s plan to attract visitors from around the world.

The airport authority had purchased the tickets from Cathay Pacific back in 2020 as a pre-emptive measure to boost tourism once restrictions eased.

Hong Kong offers free flights to boost tourist economy

What: Germany’s retailers struggle with consumers’ reluctance to spend due to fears about rising inflation.

Why it is important: The Wiesbaden authorities adjusted the statistics to account for price increases in real terms, which showed that revenues had fallen 1.3% from July to August, and a 4.3% drop for August, year-over-year.

Food trade revenues fell to their lowest levels since January 2017. Real declines in sales also appeared in the trade of textiles, shoes, household appliances and building supplies, as well as internet and mail order business.

Gas stations were the outliers in August with a 14% increase due to the tank discount motivating many drivers to fill up.

Retail revenues drop

What: LVMH has signed a three-year contract with Chinese developer Hang Lung Properties that will see the groups working together to reduce energy use and environmental impact.

Why it is important: As part of LVMH’s overall reduction plan, the group aims to measure and track energy consumption at its stores and source 70% of its materials within 300 miles of those stores in partnership with Hong Kong-based real estate developer Hang Lung Properties.

The Chinese developer will cut its energy consumption by 18% by 2025 across its 100 shopping malls.  This follows LVMH’s overall energy reduction plan, which aims to cut consumption by 10% worldwide by October 2023 while China aims for total carbon neutrality in 2060.

LVMH is currently seeking out similar agreements with property groups in the U.S. and Europe.

Duty-free sales soar in Japan following the borders reopening 

What: A similar evolution to that of the customer journey is happening in the workplace as employees now require a personalized experience and benefits packages which address the specific needs of each associate.

Why it is important: NMG’s People team has used advanced analytics to drive a renewed focus on four key pillars of the associate experience: total rewards, flexibility, career development, and ESG.

These focuses have had a notable impact on recruitment and retention, with Bloomberg recently reporting that workers are now willing to trade 5% of their compensation for more flexibility. The business’s remote working culture, known internally as the NMG Way of Working, also encourages associates to integrate life and work to accommodate their professional and personal commitments in a way that prioritizes health and well-being.

Neiman Marcus Group transforms the associate experience

What: Unibail-Rodamco-Westfield (URW) has unveiled Westfield Rise, its in-house media, brand experience and data partnerships agency.

Why it is important: Rise “will be able to serve the advertising and media industries in a bespoke way to create durable and measurable partnerships and explore new tailor-made opportunities”. The “client-centric approach, powered by data-driven insights and metrics, will serve brands, agencies and media buyers by delivering compelling off- and online media campaigns and marketing activations to our incredibly engaged audience”.

Rise is meant to be “a one-stop-shop for brands and media-buyers to create measurable campaigns across URW’s platform which includes a network of 1,700 digital billboards, 170 brand experience locations, and a range of online advertising capabilities.

Rise offers clients access to a fully GDPR-compliant platform “leveraging qualified audience data on the company’s massive footfall, including 550 million yearly visits in Europe, along with 40 million consumers online”.

Unibail-Rodamco-Westfield launches in-house retail media agency

What: The Belgian company is back to profitability after having lost more than €20m in the past two years.

Why it is important: The company is in a similar situation experienced by Magasin du Nord a few  years ago, by being profitable and growing but owned by a parent company deeply in trouble.

Belgian department store chain Inno is back to profitability after ending 2020 with a loss of €10,1m and 2021 in similar numbers. In 2022, the department store company expects to end the exercise with a positive EBITDA of €10m.

This is the result of 21 strategic projects, some of which were detailed in the IADS Exclusive article dedicated to Inno, including its own procurement strategy, dedicated ERP, and the company expects sales to rise to €350m in 5 years, up from €314m this year.

Since most of Inno’s operations are disconnected from its owner, Galeria Kardstadt Kaufhof, the difficulties experienced by the German parent company do not have any impact on Inno.

Inno is back to profitability after 2 years 

What: After a 40% drop in sales during 2020 due to the pandemic, 2021 was much better; their revenue rose 28% to GBP653.4 million but is still not the same level of revenue that they had before Covid hit, with GBP852.9 million.

Why it is important: The rise in revenue is a start and reflects the end of lockdowns, greater confidence among shopping going into physical stores and the slow return of international tourists.

During the year the company took several steps that strengthened its balance sheet, receiving investments from its immediate parent company adding up to a net GBP50 million.

And the recovery of UK retail got under way with international tourists returning to the country in relatively large numbers and British shoppers also feeling more confident about going into stores.

On the downside, the cost-of-living crisis is affecting British consumers and the past two months have seen a wider downturn in UK retail. It’s unclear yet whether the more affluent shoppers who makes Selfridges a regular habit are still shopping in large numbers.

Selfridges’ sales bounce back post-pandemic but remain loss-making

What: Selfridges is opening a must-visit destination for its London flagship by creating what has been dubbed the biggest Christmas shop to date for the department store.

Why it is important: Located on the fourth floor of the Oxford Street store, the Christmas shop will be 20% bigger offering lights, ornaments, advent calendars, gift wrap and cards alongside personalization services.

According to the luxury department store, 50% of the decorations will be exclusive to this location and 60% will be part of the Project Earth label as more planet-friendly options.

Website analytics showed that Selfridges website searches for decorations rose 60% while advent calendar searches have risen 60%.

Selfridges biggest Christmas shop to date

What: Travel retail is experiencing strong momentum.

Why it is important: Lagardère Travel Retail (Aelia, Relay, Buy Paris, Duty-Free) saw revenues jump by 77% as tourists began travelling again.

This excludes tourism from China. Revenue soared in non-Asian zones, but the growth remained limited to +6.1% in Asia.

The company generated sales of 2.8 billion euros in the nine-month period against 2 billion euros at Lagardère Publishing, extending the airport retailer’s share of total company revenue and providing more certainty that the airport business has found its feet again.

In France, where Lagardère Travel Retail also has railway station stores, revenue grew by 63% as air and rail traffic rebounded, with both domestic and intra-European journeys increasing. The Americas had slower sales momentum of 33% driven by domestic travel in the United States and a long-awaited recovery in Canada.

This lift means that travel retail is again the star of the show after huge declines during the worst of the Covid-19 pandemic.

Travel retail is back after the pandemic hit hard

What: Asian tourists are coming back to Japan now that borders are reopened and they contribute to a surge in travel retail sales.

Why it is important: Chinese tourists are still unseen and they remain vital for the economy to fully recover.

The Japan Times reports that the duty-free sales have soared by twenty times compared to 2021 now that the border closure was lifted in October 11. Many overseas luxury shoppers are reported to be seen in the department stores floors, which, in order to be able to accommodate such a surge, have equipped their employees with a number of translation machines.

Tourists are coming mainly from Hong Kong, Taiwan and South Korea. Mainland Chinese nationals are still scarce, however, which is a concern for the overall level of recovery, since the sales level, even though they improved, remain still far from the 2019 levels.

Duty-free sales soar in Japan following the borders reopening 

What: While the pandemic’s travel restrictions led to increased domestic luxury shopping in Asia, the recent loosening of travel constraints is likely to cause a dip as consumers begin buying abroad again with malls and department stores fearing a permanent loss of local customers.

Why it is important: Local retailers and Western brands are increasingly pushing for a greater presence in combination with added incentives to leverage the growing consumer power of Asian shoppers while attempting to mitigate the threat of returning international travel.

The reliance brands have established on this demographic necessitates a greater understanding of the new consumer behaviours to properly invest in different regions for local or intra-Asian travel. According to predictions, Asian shoppers are expected to account for over half of the global luxury goods market. The pandemic had accelerated the luxury industry’s efforts to serve Asian customers where they live, work and socialize across regions. The loss of international tourism also led many retailers to focus more heavily on local consumers.

Local Asian luxury shopping threatened by a return to travel

What: Stockmann has reported its results for Q3 and the nine months to the end of September with the company hailing its revenue growth and the Stockmann division reaching break-even.

Why it is important: Despite these results, margins and profits fell but the company kept its guidance unchanged, still expecting an increase in revenue and a better operating result compared to the previous year. This is based on the assumption that there’s no major change in consumer spending during the latter part of the year, as well as assuming that higher inflation and supply chain challenges will continue.

In the latest quarter, revenue rose from €237.8 million to €244 million, which was an increase of 4.2% in local currencies. That said, the gross margin fell to 56.8% from 59.5% and adjusted operating profits dropped to €22 million from €32.9 million. The overall operating result was €6 million, down from €32.7 million a year ago, and net profit fell to €0.6 million from €22.9 million.

In the nine months, revenue rose to €709.1 million, an increase of 15.4% in local currencies. The gross margin was down in this period as well, although less sharply with a drop to 58.1% from 59.1%. Adjusted operating profit rose to €53.7 million from €38.6 million and reported operating profit was up to €130.3 million from €31.5 million. Net profit rose to €84.1 million from €12.6 million.

Stockmann revenue rises but profit is dented in Q3

What: Falabella.com has sealed a deal with the Association of Entrepreneurs of Chile (Asech) to benefit small and medium-sized companies in the country.

Why it is important: Small and medium-sized companies can now benefit from Falabella.com’s channels to reach all of Chile and support its economic recovery.

In addition, more than 50,000 Asech member SMEs will have access to various training courses, logistics and marketing services, media campaigns and data analysis tools to develop their businesses.

Falabella promotes SMEs with the Association of Chilean Entrepreneurs

What: Sparks Pay has been launched with M&S Bank to roll out across M&S.com and the M&S app, allowing users to apply for a new digital credit account and borrow up to 500 GBP for purchases.

Why it is important: Shoppers will get up to 76 days of interest-free borrowing on their first order when they pay the balance in full and up to 45 days for later transactions with a potential annual interest rate could be 23.9%.

M&S launches Sparks Pay allowing members to borrow GBP 500

What: CommerceNext and The Commerce Experience Collective released a poll showing that inventory issues and consumer concerns over inflation will increase the cadence of markdowns.

Why it is important: Retailers are planning to step up the pace of promotions this year due to bloated inventories and consumer concerns over inflation.

After a year of repairing supply chains and staffing up warehouses, retailers are heading into the 2022 holiday season generally optimistic but facing new challenges that include inflation-spurred consumer attitudes and marketing ROI difficulties.

According to the report, 32 of the retail executives polled said they would increase the number of promotions. But markdowns are not the only worry this year. As Web3 rolls out with its cookie-less functions, changes in consumer privacy, which includes the implementation of California’s Privacy Rights Act and other laws, are also causing retailers anxiety.,

An omnichannel strategy will be essential for building customer loyalty that lasts especially in the upcoming competitive holiday season. For example, marketers can use SMS which ensures shoppers have a singular brand experience even as they shop across multiple channels, seamlessly connecting the buying journey.

Holiday promotions are expected as inflation affects consumer spending 

What: John Lewis has hired a new profile in order to revamp its collections and brand perception.

Why it is important: Even though the price point remains important (good quality at a very good price), no retailer is immune anymore to the need of showing customers fashionable and desirable offers.

The days when things could be at a very good price but did not have to follow the trends are over, and this can be felt across all department stores companies operating their own private labels.

John Lewis, which is still struggling to recover both from its initial difficulties and the Covid-19 pandemic (the company posted a net loss of £99m in H1 2022), has launched a turnaround strategy called the “Partnership Plan”, which aims to reach £400mn in profits by 2025. This plan includes the recruitment of a Director of design for fashion, Queralt Ferrer, who started in 2022.

Ferrer has been working for Massimo Dutti and Marks&Spencer before joining John Lewis, and therefore boasts the right experience for the challenge. She will have to deal with a long-standing, albeit diluting, affection from Bitish customers for a retailer brand which is now seen more as a national treasure than a company trusted for the trends it proposes.

According to the Financial Times, the first collection for women’s has generated sales growing +38% compared to the previous year, and new services have been launched: clothing and accessory rental, resale and recycling services.

Can John Lewis’ first fashion director deliver both style and sales?