What: Adobe reports price drops for 14 out of 18 tracked categories, year-over-year and month-over-month.

Why it is important: While food prices continue to rise both online and in stores, online prices are dropping in major categories like electronics and apparel. The deflation of online prices is a welcomed relief for consumers who are pulling back on spending in response to the impending recession.

Consumers spent 73.7 billion USD online in July, down from 74.1 billion USD in June. On a year-over-year basis, however, e-commerce spending in July grew 20.9%. Online spending in July also decreased compared to May (78.8 billion USD) and April (77.8 billion USD).

Of Adobe’s observed categories, groceries, tools/home improvement, pet products, and non-prescription drugs experienced inflation last month. On a year-over-year basis, only seven of the 18 categories saw price drops: electronics, jewellery, books, toys, computers, sporting goods and apparel.

The price deflation online has been tied to retailers’ oversupply coupled with the need to address wavering consumer confidence and a pullback in spending.

Online prices drop 

What: Hermès sees the second-hand market as a threat that increases pricing and fuels counterfeiting.

Why it is important: Despite the growing second-hand market and larger rivals like Kering investing in the sale of its preowned merchandise, Hermès sees no appeal in adopting the trend.

Wary of second-hand dealers and compromising on quality to meet the quantity of demand, Hermès sees more threats than opportunities in the second-hand market. Engaging with resellers would also be detrimental to their regular clients visiting in-store.

While Kering has added second-hand to its strategy, LVMH is choosing to avoid participating in the second-hand market but has emphasized efforts to offer repair services for its products instead.

Hermès rejects second-hand market

What: Brands are adopting the popular new platform ‘BeReal’, which poses restrictions on posting that force a level of transparency and authenticity which is unlike other apps.

Why it is important: Tentative experimentation by E.l.f. and Pacsun has shown that there is a demand for brand presence on the app that is opening a new channel for selling and generating brand loyalty.

For brands, the app could be a great opportunity to connect with ‘superfans’ and build on brand loyalty by, for example, showing an inside look into the studios or offices. The app facilitates cross-platform sharing and does not threaten to replace other social media applications.

Users of BeReal have only two minutes to post after they have received a notification allowing them access to take a photo with both their front and back cameras. The result is intended to show a selfie and the location you are in, ultimately forcing users to show what they are doing, where they are and how they are feeling. The app has also openly shared that it is not interested in creating influencers, outright telling users to “stay on TikTok and Instagram” if they want to be famous.

The BeReal creators are surprisingly secretive and have yet to reveal anything about their growth plans, generating speculation on the platform’s longevity and potential monetization. Some believe a subscription service, similar to Patreon, could allow brands the ability to provide shopping codes and exclusive content through the app.

E.l.f. tested a coupon code post on BeReal and saw surprising success. They had no metrics or expectations for the post’s performance which was shared with 150 followers.

BeReal: the social media forcing brand ‘transparency’

What: Harrods has unveiled a new men’s grooming, fragrance and sunglasses destination on the second floor of its Knightsbridge department store.

Why it is important: The new space offers a new men’s proposition, catering for the first and final steps of a daily routine, creating a one-stop-shopping experience, including the largest men’s sunglass destination in Europe, alongside skincare and fragrance products.

The space also features a private room for customers to try on sunglasses or use the ‘Smart Shopper’ screen which allows for digital try-on. In addition to the sunglass offer, men’s grooming, skincare products and fragrance are designed to complement the Adam Grooming Atelier service also offered on the second floor.

There are several new brands coming to Harrods, including Retro Super Future, Dita, Cazal, Prada, Cartier, Oliver Peoples and Ray-Ban.

Harrods’ new men’s destination

What: The strength of the Gen Z Chinese luxury consumer is threatened by the rising youth unemployment rates while in the US inflation is slowing sales for younger generations.

Why it is important: Many luxury companies had adjusted their product offer to appeal to the growing Gen Z influence on sales; but, with inflation and rising unemployment, their contribution to the overall financial growth for the sector is in question.

Focusing on core Gen Z luxury consumers less likely to be impacted by inflation or unemployment seems like a logical move. But the concern is over those would-be buyers that had factored into reports that a fifth of all luxury spending by 2025 would be made by Gen Z.

Some brands have chosen to adapt by focusing on entry-level products and digital garments which have seen continued success despite the unfavourable economic conditions. However, real and virtual entry-level products call for high levels of creative investment at an affordable price point that do not dilute the brand.

Finding success in offering the right assortment of entry-level products at the right price will help mitigate the potential economic restrictions imposed on Gen Z consumers today.

Uncertain future for Gen Z’s luxury industry contribution

What: US retail giant Kohl’s has revealed a new sub-brand under the name ‘Sonoma Community’ as part of its private label flagship brand, ‘Sonoma Goods for Life.’

Why it is important: The new brand will build on the work of Kohl’s Diversity Design Council (DDC), a group of associates who create authenticity in the retailer’s products through their collective experiences and cultures.

The new sub-brand will launch during Hispanic Heritage Month, featuring apparel and products that highlight Hispanic and Latino culture and traditions. Throughout the year, Sonoma Community will offer seven collections reflecting different cultures, including Lunar New Year, Black History Month and Women’s History Month, with artwork created by either the DDC or external guest artists.

Kohl’s celebrates diversity with new private label

What: Tommy Hilfiger is moving into a “360°” resale program in the US in partnership with ThredUp.

Why it is important: The resale service offers loyalty rewards customers can use in the brand’s network of stores or on the sale platform by providing a simple method completed through digital services eliminating the need to bring clothes in-store.

Customers will be able to receive credit for purchases with Tommy Hilfiger by printing shipping labels via a dedicated portal to return men's and women's products stamped Tommy Hilfiger, but also products of any brand when it comes to women's and children's clothing.

The partnership is a step toward Tommy Hilfiger’s goal to make the brand fully responsible by 2030 by incorporating circularity into the product life cycle.

Tommy Hilfiger launches second-hand program with ThreadUp

What: High volumes of unsold merchandise after supply chain issues and uncertain client demand post-pandemic do not guarantee success for value retailers.

Why it is important: Following the reactions to pandemic-related issues, retailers now hold high volumes of merchandise which can be a big opportunity for off-price sellers as inflation looms.

The landscape seems to be perfect for off-price retailers, however, the pandemic caused a similar ordering boom. As these companies’ core customers were flush with stimulus cash from the government, value retailers also are seeing rising inventory levels and sales drops. Just like traditional wholesalers, off-price must be agile and strategic when buying merchandise.

In addition to navigating their own inventory overload, off-price retailers will need to compete with second-hand and resale channels that also target a price-conscious shopper.

In order to compete, off-priced retailers should look to improve their operations by incorporating digital functions. Ghost, a platform connecting brands to the right buyers, appears to be optimizing the process.

Threats to off-price retail

What: Traveling exhibition SUPERFUTURES curated by Berlin’s Reference Festival has partnered with Selfridges to bring the immersive exhibition of 13 experiential spectacles and surreal interventions by leading artists, brands and thinkers.

Why it is important: Throughout 2022, SUPERFUTURES will exhibit the concept of ‘tomorrow in the making’, inviting visitors to Selfridges to co-create the future through a year-long discovery period.

The exhibition presents a vision of a hybrid future, serving as a generative portal between the world-as-is and a predicted world-to-come by artists and creators with unique backgrounds. Staged within the familiar Selfridges retail environment, the installations have been designed to disrupt, provoke and inspire customers.

The partnership is representative of Selfridges’ commitment to reinventing retail to create a more sustainable future.

Selfridges hosts the SUPERFUTURES exhibition

What: Simon Property Group surprised many analysts when it decided to acquire and operate brands since the beginning of the pandemic

Why it is important: A landlord becoming a retailer is not unusual: in the department stores world, NK in Sweden is one of the most recent examples. However, SPG is raising the model to an unprecedented scale.

Simon Property Group has invested recently in J.C. Penney, Authentic Brands Group (Brooks Brothers, Aéropostale, Lucky Brand, Forever 21…). David Simon, the chairman, reports that this is still a small and high profile part of a business otherwise based on real estate.

He stressed that these investments have already paid for themselves. He remains confident that the high-income customer is in good shape, and they want to be in brick-and-mortar stores.

SPG second-quarter net income has slipped from $617m in 2021 to $497m 2022, and occupancy rates rose from 91,8% to 93,9%, with 2,200 leases representing 700,000 sqm signed during the first half of 2022.

Retail pays off for Simon Property Group (WWD)

What: Balenciaga partners with Reliance Brands to enter the Indian market.

Why it is important: Luxury brand Balenciaga has signed a deal with Reliance Brands Limited to tap into the developing luxury fashion market in India.

This is the second franchise deal with a Kering-owned brand for RBL, making them an exclusive partner to Balenciaga.

RBL believes Balenciaga is at the forefront of the digital realm with an international cult following. With India’s luxury fashion consumer having shifted to a move expressive use of fashion, Balenciaga’s ability to adapt and reinvent itself through collaboration is the source of the deal’s potential success.

Balenciaga plans to bring the brand to India

What: After almost 20 years as managing director, Anne Pitcher announced her departure in addition to the completion of the reportedly 4 billion pound deal for Central Group and Signa Holding to jointly take over Selfridges and its portfolio.

Why it is important: Central Group and Signa Holding plan to create a leading luxury omnichannel platform and reshape luxury retail through the acquisition by updating the F&B offers, integrating the e-commerce platforms and redeveloping the hotel sites.

The deal includes the Selfridges Group’s portfolio made up of 18 department stores, including Selfridges in London, Manchester and Birmingham. As well as locations de Bijenkorf in the Netherlands; Brown Thomas and Arnotts in Ireland, and their associated e-commerce platforms and the properties in London, Manchester and five locations in Ireland. The Selfridges’ portfolio will be integrated with Central and Signa’s combined existing portfolio of 22 luxury department stores and two new stores opening soon in Dusseldorf and Vienna.

Anne Pitcher will remain on the leadership team until the end of the year to ‘ensure a smooth integration.’

Anne Pitcher resigns as Selfridges acquisition is finalized

What: Korea’s top three local luxury department stores are expecting continued “revenge spending” after enjoying notable sales growth over the past three months.

Why it is important: Local department stores in Korea have seen strong growth post-pandemic guiding plans to build up the luxury and furniture offer expected to grow to 20 trillion won.

Lotte, Shinsegae and Hyundai Department Store achieved all-time high business performances in the second half of this year, thanks to increased sales in various sectors, including sports, domestic fashion and kids. Growth in sales of luxury goods and furniture has also contributed significantly to the major department stores’ all-time-high figures.

The three department stores have been focusing on building their furniture offer through their own furniture brands. The goal is to prepare for the growth of the local market expected to reach the size of 20 trillion won by 2024.

Last year, Lott took over the local interior and furniture brand Hassem, while Shinsegae has Casamia and Hyundai Department Store acquired e-commerce mattress company Zinus in March.

Korean department stores see positive growth in Q2

What: The US makeup conglomerate saw some growth despite pandemic supply disruption but plans cautiously for 2023 as inflation looms.

Why it is important: Record inflation, supply chain disruptions, the strengthening US dollar, risk of a slowdown in many global markets, and the headwind from recent Covid shutdowns in Hainan all factor into the makeup company’s predictions of growth slowing 3-5% year-over-year in 2023.

Net sales for the group rose 9% to 17.74 billion USD for the year ended 30 June 2022, driven by the Americas and Europe, the Middle East and Africa. However, the sober outlook for 2023 could be linked to the 23% drop in net sales in the Asia Pacific region. Overall, net sales slumped 10% year-on-year to 3.56 billion USD in the fourth quarter.

The company ties the reduced capacity caused by the pandemic’s restriction as a major contribution to the declining skincare sales. Fragrance performed well as did makeup. Some attribute increased sales of makeup and beauty products as a result of recession-related consumer behaviour increasing a desire to feel confident in uncertain times.

Reports are that Estée Lauder continues plans to buy Tom Ford in a 3 billion+ USD deal.

Estée Lauder Companies foreshadow slowdown

What: The FT reviews the recent trade-off made by Richemont in abandoning its majority stake in YNAP

Why it is important:  The financial newspaper raises the case of the actual possibility to sell luxury goods online at a profit. It argues that the validation of this business case has not been reached in 20 years so far.

The Financial Times reviews the deal recently made by Richemont and Farfetch in which Richemont cedes the majority stakes in Yoox Net a Porter to the luxury marketplace operator, writing off a total of €2,7bn spent over the course of two decades, in exchange of 12% of Farfetch’s shares.

The FT reminds that Farfetch’s shares are currently down 87% since the start of 2021, and Mytheresa’s are -66%. For the financial newspaper, this is the proof not that Richemont has been unable to manage at the same time the profitability of its own brands (Cartier and Mont Blanc among others) and the development of the online activity, but rather that there is not, so far, any validation of the fact that luxury can be sold online at a profit.

The Financial Times’ take on the Farfetch/Richemont deal 

What: Bloomingdale’s will open its second smaller store concept “Bloomie’s” in the greater Chicagoland area at the end of 2022.

Why it is important: The existing Bloomingdale’s Old Orchard location in Skokie Illinois will close once the Bloomie’s location opens.

The new 50,000-square-foot Bloomie's store will open at Westfield Old Orchard in Skokie, Illinois, and will feature a broad curation of soft home categories. The clearance of the former Bloomingdale’s location will begin clearance on September 6th and is expected to fully close at the end of October.

Bloomingdale’s opens second Bloomie’s location

What:  Fenwick, a former IADS member, appointed a new CEO early 2020. For the first time, he takes the opportunity to reflect on his achievements and ongoing issues.

Why it is important: John Edgars is the first non-family member to be appointed CEO of Fenwick, which has had a specific development in the past, with all stores being independent from each other (a feature that was dropped in the 2000s).

John Edgars, Fenwick’s CEO who was appointed early 2020, gave a lengthy interview to WWD, reviewing his achievements and concerns since he took the position, a few months before the pandemic. He is the first non-family member to hold the position in the 140-years-old organization.

For him, he started with a clear mission: to survive during the pandemic, until reaching some kind of stability in the summer of 2020, when he started to review the business model (with a focus on full price), products quality (including new brands), customer service and of course, online sales (95% of womenswear is now available online, through dropship, concession or wholesale). New brands allowed Fenwick stores to attract a new, younger clientele, which was also lured in with a new F&B offering, including a vegan restaurant in London.

Owning the real estate is, for him, a key feature which helped the organization to go through the pandemic and a point that is not questioned today.

Interview of John Edgars, CEO of Fenwick

What: Nordstrom soberly looks to the second half of 2022 with decreased guidance following their most recent report.

Why it is important: While Nordstrom has seen solid Q2 earnings, the decelerating consumer demand has led the company to lower its 2022 forecast.

The report is viewed by media outlets as more hopeful than Target, Kohl’s and Macy’s reports that showed inventory gluts and revised downward forecasts for 2022 overall. The Nordstrom offering of higher-end merchandise and apparel for office work, special occasions and going out has been seen as a benefit to operating at a stable level during the economic downturn.

Nordstrom highlighted capital investments, primarily in supply chain and technology capabilities, and priorities in reducing leverage and returning cash to shareholders. Net sales in the second quarter reached 3.99 billion USD, a 12% increase from 3.57 billion USD in the year-ago period.

Nordstrom revised its 6% to 8% revenue growth to 5% to 7% for 2022 overall.

Nordstrom reports 12% total company sales increase

What: Macy’s lowers 2022 guidance following their Q2 reports showing deteriorating consumer discretionary spending influenced by the macro-economic downturn.

Why it is important: Macy’s Inc., lowered its forecast for the overall year 2022 citing inflation’s impact on sales and consumer behaviour which caused top- and bottom-line declines.

Operating income dropped to 399 million USD last quarter from 597 million USD in the year-ago period. Net income for the quarter ended July 30 fell to 275 million USD (diluted earnings of 0.99 USD per share) from 345 million USD a year ago (1.08 USD per share).

The company has said it is well positioned to navigate the uncertain landscape as they have gained new customers and have continued strength in its luxury offer. The Q2 results still beat expectations.

Macy’s lowers guidance

What: Ryan Ross is appointed as Neiman Marcus Brand president to help accelerate growth strategy.

Why it is important: Ryan Ross, former president of William Sonoma with extensive omnichannel retail experience, is filling this new dedicated brand role.

Representative of Neiman Marcus Group’s ‘Revolutionizing Luxury Experiences’ strategy, Ryan’s contribution is expected to further the group’s positioning for sustainable growth. His experience optimizing customer-centric experiences and achieving rapid growth will be beneficial for accelerating growth.

Despite the new role, there will be no change to how Neiman Marcus operates or manages relationships with brand partners. However, David Goubert, Chief Customer Officer, Neiman Marcus, will depart the company for personal pursuits.

Neiman Marcus appoints new brand president

What: The beauty industry is beginning to find its place in web3 through experiential spaces and experimentation with virtual reality, DAOs, blockchain CRM and other community-building strategies.

Why it is important: Until recently, beauty brands relied on partnerships with esports and games to enter the metaverse, but now they are establishing their own virtual communities with growing sales.

According to a 2022 global survey by Accenture, 48% of respondents are interested in purchasing virtual makeup looks in the next 12 months, and 38% have already purchased virtual makeup. Some brands have released NFTs that grant access to physical products, while others have focused on virtual storefronts to connect and encourage shopping for physical products online or booking virtual consultations.

Brands are building on these experiential strategies to build communities in the metaverse and encourage connections through DAOs and Discord servers. Nyx Professional Makeup will release a whitepaper on its DAO later this month with the hopes that its transparency will encourage other beauty brands to reference it for their roadmaps.

Other applications of metaverse beauty include digital makeup for video calls, inclusive and fantastical beauty filters or beauty looks for avatars. Roblox’s head of fashion and beauty partnerships states that beauty plays a major role in identity and self-expression on the platform.

Virtual spaces are a key method of community engagement which can take place in stores or through experiences that promote the brands’ products. YSL is going beyond community-building and leveraging blockchain technology to directly message NFT holders about new offers and exclusive purchase opportunities.

Metaverse beauty expansion

What: Hotel turned shopping mall, JC Plaza has moved in across the street from rival retail location Plaza 66 with an aim of differentiating by offering new luxury labels and local brands favoured by GenZ.

Why it is important: The 215,000 square foot, five-story retail location is Chinese developer Baohua Group’s first shopping mall project.

Across the street is fierce competition, the Plaza 66 flagship mall of Hang Lung Properties which has been established as the most important luxury retail mall in Shanghai for over 20 years. JC Plaza sees the competition as being built around LVMH and French luxury houses which have guided their goal to become a “home to Italian luxury brands.”

Additionally, JC Plaza emphasizes its “exquisite Shanghai lifestyle” positioning by offering local Chinese designer brands in a shopping mall context as well as new names. The department store also houses Michelin-star hotel Moose, which serves local Huaiyang cuisine.

JC Plaza opens in downtown Shanghai

What: The change in the perception of off-price retailers and an influx of orders following months of delays have improved the beauty assortment for customers looking to save money.

Why it is important: Covid created an ideal environment for off-price retail stores to have a more complete assortment of beauty products, as well as normalized bigger brands using these distribution channels. Ultimately, as inflation shifts consumer spending habits, off-priced retailers are well positioned to meet customer needs.

Brands have begun adapting their strategies to create off-price channel-specific products. However, the longevity of this ideal environment for off-price retail is uncertain, with issues of product expiration and counterfeiting likely to increase.

Consumers flock to off-price retail for beauty

What: JCPenny has named Stephanie Plaines CFO, bringing her decades of experience in using data to improve performance and profitability.

Why it is important: Plaines brings over 20 years of having worked as CFO for other companies with a successful track record of high-performance strategic and financial leadership.

As the new CFO, Plaines will be responsible for the financial strategy, real estate, capital deployment, credit services, sourcing and procurement, treasury, and accounting for JCPenny. The company is hoping to utilize her strengths in data-forward financial planning and value creation in their mission to develop its digital capabilities and transform the company’s performance.

Stephanie Plaines named new CFO of JCPenny