What: sales continue to decline

Why it is important: recession in HK started before the pandemic, and retail sales have been declining every month since January 2019. The social unrest and protests in the streets were tough for retailers, and were followed by the pandemic that was another blow

The holiday season did not bring much benefits to HK retailers, and retail sales by volume fell a record 25.5% in 2020. Significant declines were seen across department stores, jewellery and clothing, and also in industries including food, alcoholic drinks and tobacco. However there is hope that Hong Kong’s economy will rebound in 2021, depending

on the rollout of vaccines. The retail sector, the F&B, and all the entertainment should revive, but with travels still on hold touristic activities will stay low for a while longer.

New Virus Variant Sees Hong Kong Retail Sales Plummet

What: the Chinese e-commerce group’s days of unchecked growth are likely over.

Why is it important: A return to previous growth rates cannot be achieved without government support.

Sales rose 37% as changing consumer buying habits boosted demand for online shopping. But the pace of sales growth has been slowing. For most quarters in the past five years, it was more than 50%.

More concerning is the potential damage from antitrust probes. The main focus of investigations has centred on e-commerce and fintech sectors — two of Alibaba’s core businesses. A massive regulator-led overhaul is underway at its digital payments affiliate Ant Group.

Unlike companies such as Tencent that can diversify sales and regulatory risks geographically by selling games globally, Alibaba’s focus is on China. For Alibaba, a return to previous growth rates — whether it is through new technology, marketing or pricing — cannot be achieved without government support.

Alibaba growing pains 

What: a cross-industry collaboration for the Chinese Market

Why it is important: we explored during the Cross-functional meeting dedicated to space productivity the kind of out-of-the box partnerships helping to generate additional turnover. This is an example.

Ikea teams up with Asus, manufacturer of gaming PCs, to develop a specially adapted range of furniture at very competitive level. Smartly, Ikea uses this collaboration to penetrate the Chinese market, with a well-focused price range.

Ikea teams with Asus to launch furniture for gamers

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• 7-eleven launches experience with Airbnb

What: without speedy approval, the retailer would have faced liquidation

Why is it important: the reorganising plan eliminates USD 450 million in debt and keeps the 291 stores open

Belk entered Chapter 11 with USD 1.9 billion in funded debt, a heavy burden for a retailer struggling in a "challenging commercial environment" even before the pandemic, according to Belk CFO William Langley.

Amid the lockdown orders and the depressed shopping at stores that followed reopening, Belk's sales fell 32% year over year in the months between March and December last year. Liquidity in April 2020 was down 70%.

Langley said the plan, which leaves Sycamore as the majority owner of Belk, had support from lenders representing nearly all of its term loan claims and would pay unsecured claims. The CFO touted the plan as a way to keep its stores open and 17 000 jobs in place.

The department store said it has USD 225 million in new capital and extended maturities to 2025.

Belk files for bankruptcy, eyes lightning-fast exit 

Belk exits bankruptcy

What: a new mall in Chongqing, the Oval, mixing art and retail

Why it is important: following the steps of SKP and K11, operators realise that enhance retail is key to generate and maintain traffic in store

IADS partner GDR UK reports the opening of The Oval, a new mall in Chongqing, China. Its specificity is that art is mixed in the retail experience: when visiting the premises, customers can see artwork displayed on their smartphone, and the centre of the mall, the OR, is a “multi-dimensional fashion complex”, half store, half gallery.

Interestingly, a significant part of the retail space is also dedicated to sport and fitness: running track, skate par, shooting club, indoor sports playground, bowling alley. We explore this trend in the upcoming Merchandising Meeting #2 on sport & lifestyle in April 2021.

Multi-purpose mall brings art and retail together in Chongqing

Related items:

• SKP-S
• K11 opens a new mall in Wuhan
• IADS Exclusive - Responding to Disruption

What: Walmart's membership program could already account for 7.4 to 8.2 million members

Why is it important: 30% of online grocery transactions come from Walmart while Amazon accounts for about 27%, down from 33% in 2019

Five months after Walmart's membership program was released, Consumer Intelligence Research Partners analysis indicates that it has garnered between 7.4 million and 8.2 million members. On the other hand, Cowen analysts estimate 12 million U.S. households have Walmart+ memberships and 69.6% use them at least once per week. Despite economic uncertainty, it seems Walmart shoppers are willing to spend the USD 98 annual subscription service (or USD 12.95 per month).

Members currently account for about 13% to 14% of total Walmart.com. Consumers that shop for groceries at Walmart.com spend almost double the average online Walmart shopper per year, the CIRP survey shows, at USD 1 900.

Walmart+ program gains traction 5 months after launch

What: SFW postponed from March to April, due to resurgence of Covid in China.

Why it is important: it is one of the few offline events scheduled this year. Due to its rescheduling, international brands with an offline planned activity decided to move it online.

Due to new outbreaks in Liaoning and Hebei, massive test and vaccine campaigns are carried out, in addition to partial lockdowns and safety measures, including rescheduling public events. This is the reason why SFW was rescheduled. International brands planning to have events during this week decided to move it online, such as Canada Goose, Cartier, while local retailers such as Lane Crawford and K11 are increasing safety measures.

Shanghai Fashion Week postponed amid new Covid-19 outbreaks 

What: China has become a showcase for the Geneva-based group’s online offerings.

Why is it important: China is expected to account for half of the group sales by 2025.

China has become a showcase for the Geneva-based group’s online offerings. For the overall luxury sector, China is expected to account for half of global sales by 2025. Many of Richemont’s businesses have been the first to experiment with the newest digital engagement tools on Tmall Luxury Pavilion, Alibaba’s dedicated platform for high-end goods.

Alibaba is the preferred online shopping destination in China today. The collaboration between the two companies started with a joint venture, aiming to develop the Net-a-Porter and Mr Porter’s business in China. Net-a-Porter’s flagship store on Tmall Luxury Pavilion launched in September. The success has proven the value of the platform in extending the presence of Richemont’s businesses in China, including Cartier, Montblanc, Piaget, IWC Schaffhausen and Jaeger-LeCoultre. Nine houses were launched on the platform, which shows a strong willingness to grow quickly and scale the collaboration.

Chinese clients are sophisticated and increasingly demanding, which is why some of the best experiences today are first introduced in China. Clients there are very tech-savvy and open to new technologies, which allows Richemont to elevate the level of interaction. They are also younger than the rest of the world, which requires an adaptation of communication tools and approach to the specificities of a younger generation. Chinese consumers also have a strong appetite for new experiences. This curiosity and capability to adapt constantly raise the bar for all brands. Innovative features can be quickly developed and tested in the market, also at a large scale.

Richemont’s idea is also to make greater use of ecosystem resources within the Alibaba Business Operating System, which offers a fantastic opportunity to elevate omnichannel experiences. Also, TimeVallée (Richemont’s innovative multibrand watch retail concept open to all high-end watchmakers) has signed a partnership with Intime, Alibaba’s department store chain. This provides access to Intime’s physical and mobile shelf space and offers an experience to more consumers, both online and offline.

Working with Alibaba allows a time contraction. What usually takes twelve months to bring a new experience, now condensed to one month because of the intensity and the scale of the network that Alibaba offers. Partnering with Alibaba also revealed the immense possibilities beyond tier-one and tier-two cities. Relying on brick-and-mortar is limiting consumers’ access to brands, and the partnership helped confirm a good amount of interest and opportunities in tier-three and tier-four cities as well.

Richemont CEO Jérôme Lambert Talks Refining Digital with Alibaba

What: after announcing a partnership with Shopify last June, Walmart.com opens to more third-party sellers

Why is it important: this partnership signals a heavy push towards growing its online presence

After reporting a 79% growth in e-commerce sale in the past year, Walmart's partnership with BigCommerce signals a heavy push towards growing its online presence and crowd of third-party sellers. Walmart's head-on competition with Amazon means that it is increasingly making moves beyond brick-and-mortar retail.

Walmart also teamed up with Shopify last June to bring 1 200 third-party sellers to its marketplace by the end of the year. Shopify merchants won't pay to list their products on Walmart.com, but once they make a sale, the retailer will charge a "referral fee."

While Walmart doesn't outline how much it makes from its other business ventures, Amazon's net sales through third-party commission, fulfilment and shipping fees nearly doubled since 2018. Amazon's third-party seller services account for 20.8% or USD 80.5 billion of its net sales in the fiscal year 2020.

Walmart opens its marketplace to BigCommerce merchants

What: major beauty brands increased their 2020 turnover thanks to digital marketing innovations.

Why it is important:  La Mer realised 50% of its 2020 turnover thanks to live streaming, leading to 200% increase.

La Mer, Lancome and Estée Lauder each surpassed USD 15,5 million turnover at Ali Baba’s own Intime department store, in spite of store closures. Intime, with its own e-commerce app Miaojie, encouraged its sales staff to become livestreamers, recommending and selling products via platforms. La Mer increased sales by 200% thanks to this strategy.

Beauty Brands See 2020 Sales Grow at Alibaba’s ‘New Retail’ Department Stores 

What: The department store announced a plan to grow its activewear sales from 20% of its business to at least 30%

Why it is important: Kohl’s aims to become the retailer of choice for active and casual lifestyle

Kohl's on Monday announced a tie-up with Eddie Bauer to launch this coming fall.

An assortment of the outdoor brand's seasonal gear and year-round products for women, men and kids will be sold "in as many as 500 stores" and online, according to a company press release.

The partnership furthers the retailer's strategy, announced last year, to grow activewear from 20% to at least 30% of its sales, "which includes driving growth in the outdoor category," per the release.

Kohl's turns to Eddie Bauer as outdoor sales surge 

Kohls Announces Partnership with Eddie Bauer 2021

What: the reduction of office spaces

Why it is important: with the pandemic and the emergence of remote working, Nordstrom sees opportunities to rethink its office work post-pandemic

The department store will leave the offices on Seventh Avenue in Seattle, reducing office space to two downtown Seattle buildings. “As we think about returning to our corporate offices later this year, we find ourselves with the rare opportunity to reimagine how these teams will work and collaborate in the future,” the company said. “While we will not be a fully remote headquarters, it’s clear remote work can and should continue to play a part in how we operate […]”

Working from home is one of the trend that was forced to emerge during the pandemic and that is here to stay; now workers, even in retail, need to adapt to this new reality.

Nordstrom to move out of one downtown Seattle office tower

Related item:

• IADS Exclusive: Adapting to new consuming habits

What: A USD 5.7 billion loss related to the sale of Asda group

Why it is important: Due to the retailer hyperactivity online and ability to upgrade its operations, the financial loss did not affect the share price

Following Walmart’s announcement of selling UK Retailer Asda last October, the end of the fiscal year allowed it to put a price tag on such a divorce: USD 5.7 billion, in non cash loss. Walmart announced that the earnings per share will be reduced by 20 cents in 2021. However, interestingly, this did not impact the value of the share on financial markets.

Walmart Reports $5.7 Billion Non-Cash Loss Related to Asda Sale 

What: new giant shopping store in Seoul.

Why it is important: is it really a different concept providing more than shopping, or is it yet another large, albeit spectacular and updated department store?

Korean department store Hyundai is opening a new shopping mall next month on Yeouido in Seoul to test the concept for the future. The new building, called "The Hyundai Seoul," stands eight stories tall and extends another seven levels underground. The flagship store has a floor space of 89,100 sqm and it is the biggest department store in the capital area. It will compete directly with the International Finance Centre mall on the same street.

Hyundai Department Store said the new facility is different from others in that it offers not only shopping but also cultural spaces and areas for relaxation. It is decorated in futuristic and nature-friendly concepts including a 12-metre waterfall, an indoor botanical garden, and robots which give directions and can take visitors’ body temperature.

Hyundai Department Store to test future business model

What: Shopify checkout and payment processing system are now integrated into Facebook platforms.

Why it is important: By providing its Shopify Pay option on social media, Shopify reinforces its central position for brands, encouraged to use their solution for their e-commerce developments.

Shopify operates the technology that powers many branded websites, and to ease customers’ experience from site to site, has developed Shopify Pay, a system that stores credit card and personal details (on Shopify’s servers) so that users do not have to enter them twice when shopping different brands.

Now, Shopify Pay (60 million global users, to be compared to 377 million for Paypal) is an option available on Facebook and Instagram, allowing customers to enjoy m-commerce (a market estimated to USD 36 billion this year) with the data they have stores on Shopify. It is expected to increase the return rate of customers, by erasing any friction point. Critics point out that, for now, Shopify Pay is not know enough to be a game-changing option.

However, one thing is sure: Shopify becomes a more and more central player for brands and retailers, by increasing its reach and customer services across the board.

Shopify Expands Its Checkout System to Facebook and Instagram

What: Previously announced restructuration plan bears fruit

Why it is important: The brand turns to a more DTC-focused model and skips athleisure category

Turnaround is still the word of the day at Under Armour, with CEO Patrik Frisk saying on a fourth quarter conference call that the brand will return to profitability in 2021. The company beat its own expectations, as it works to rebalance its cost structure and move toward stronger growth.

Under Armour is committed to exiting between 2,000 and 3,000 wholesale doors, in 2 to 3 years’ time. This will leave the retailer with closer to 10,000 wholesale doors. With that comes a focus on DTC, which grew 11% in the quarter thanks to a 25% rise in e-commerce.

The shift to profitability also includes the shift to a more DTC-focused model (pursued by rival Nike as well), as Under Armour looks to move toward a more full-price, premium positioning with its consumers.

Under Armour will also focus on performance products in spite of athleisure mega trend. The athleisure question is never one that Under Armour sees itself answering, doubling down instead on its performance-based positioning.

PR: Under Armour Reports Fourth Quarter And Full Year2020 Results

RD: Under Armour plans a returnto profitable growth in 2021

What: Sears quietly disappears

Why it is important: it dangerously hurts the overall health of shopping centers

Transformco, the owner of the Sears and Kmart banners, is moving to close more stores after years of steady retrenchment. Sears stopped issuing official store closure announcements two years ago. After the October 2018 bankruptcy filing by its parent company, Sears has continued on its path to retail oblivion.

End of January, Sears quietly posted “temporary store closing” positions at 10 of its remaining locations on the company’s website.

Sears Holdings began 2019 with 489 full-line Sears department stores in operation. Today, that figure drops to just 36 locations after this latest round of closings.

It’s unknown how much longer Sears can continue in its present state. Online reviews for the 36 remaining Sears stores include comments such as, “kind of empty,” “this place looks bare,” and “looks like they could fill up the store with some inventory.”

Forbes: Sears closes 10 more stores

Retail Dive: Sears closes 13 more stores

Related items:

• Old Sears locations become vaccination centres
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What: Significant growth of e-commerce leads Walmart to heavily invest on a new class of sales associates

Why it is important: There are some lessons to learn for IADS members in these times of redefinition of stores and roles: how to ‘market’ a new position to potential recruits, but also handle the attached working conditions. Both Amazon and Walmart are starting to face criticism on this topic.

Walmart has increased its number of “personal shoppers'' to 170,000 this year, doubling the number from 2019. However, the title does not relate to the same position than in Europe or other department stores. At Walmart, this relates to the staff in charge of filling in digital and curbside pickup orders (see our former article on the topic here), hired en masse by the retailer who also pays them higher than the minimum wage.

However, given the fast pace of growth of e-commerce and the success of Walmart +, some workers start to complain about working conditions.

This is one of the fastest growing jobs at Walmart 

What: US department store reports better-than-expected quarter with digital sales headed to USD 10 billion

Why is it important: Macy's made money for the first time in the pandemic

Signs of a recovery are beginning to emerge. Last Macy’s report issued in November 2020 was already announcing better-than-expected quarter results thanks to a massive shift to online shopping.

On 23 February, Macy's said that it turned a profit for the first time in the pandemic, making USD 160 million during the 13 weeks ending on January 30, down from USD 340 million during the same stretch a year ago.

But Macy's is still struggling. Net sales dropped to USD 6.8 billion from USD 8.3 billion during the same quarter last year. Sales also fell to USD 17.3 billion in the year that ended on 30 January, posting a net loss of USD 3.9 billion.

Neil Saunders, managing director at GlobalData Retail, said in a note to clients that the results were a "marked improvement" and show that Macy's is "slowly climbing its way out of the depths."

Macy's believes this coming year will be better than the last one. It expects "continued pandemic-related challenges in the spring season," but with "momentum building" in the second half of the year. The company, in particular, is betting on strong growth online in the coming years. "We anticipate annual digital sales to reach USD 10 billion within the next three years, and that digital will become an even more profitable contributor to our business," CEO Jeff Gennette said.

Macy's made money for the first time in the pandemic 

Macy's Inc Reports Fourth Quarter and Full Year 2021-02-23

Macy’s Considers New Debt Sale to Aid Post-Pandemic Recovery 

What: More than 400 leading figures send a letter to the Prime Minister demanding urgent action.

Why it’s important: British brands might not be able to afford selling in the EU anymore.

The UK’s GBP 35 billion fashion and textile industry is facing “decimation” as a result of red tape and travel restrictions thrown up by the new post-Brexit trade agreement with the EU, Boris Johnson has been warned. In an open letter to the UK’s prime minister, leading fashion industry chief executives and icons said that Brexit was strangling the complex international supply chains and relationships that underpinned their industry.

“With 42% of all export sales coming from the EU, the costs and administrative burdens of trading in continental Europe mean many of our members — not least the SMEs — have concluded they simply can’t afford to continue selling to those countries,” said Helen Brocklebank, the CEO of Walpole.

The Cabinet Office said it was working closely with businesses in the fashion industry to adjust to the new trading environment and was aware that some businesses were facing challenges.

UK fashion industry facing ‘decimation’ over Brexit trade deal 

Brexit & Fashion_ An Open Letter to the UK Government

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• Brexit forces Debenhams to shut Irish webstore
• John Lewis stops overseas online order
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What: Online customer service during a pandemic-driven lockdown has proved a challenge.

Why is it important: Premium goods need premium service.

Selfridges is curated, luxurious and service-orientated but taking this experience online during a pandemic-driven lockdown has proved a challenge as has been seen from customer grumbles about delivery delays, mishaps, and slow returns

With department stores suffering so much with their traditional bricks and mortar outlets facing the on/off lockdowns - brands like Selfridges needed to pivot and focus on their online offer. But could it be that this highly decorated store is struggling to deliver to its exacting standards in the same way online?

Sales at the business have said to be resilient during the pandemic thanks to what is reported to be an investment in its online capabilities. The Times reported that sales in the year to February 2020 were up 7% to £1.97 billion, but since Covid-19 hit, operating profits had fallen 10% to £88 million. Selfridges has reportedly endured the “most difficult year” in its 113-year history after such a significant drop in profits.

The big draw to Selfridges department stores has been very much around the experience - from the installation of cinemas to more spectacular galleries such as the Wonder (which were opened by the soul and Motown legend - Mr Stevie Wonder – naturally).

Is it simply that the e-commerce is the issue, the operations, the call center, the culture - or all of it? Calling the helpline can be a frustrating experience, as customers are referred back online with their service issues and the wait time to speak to a service team member can be lengthy (up to 30 minutes).

Anne Pitcher is certainly seen as the driving force behind Selfridges success, and also launched the Project Earth initiative in which the group wants to raise the bar on industry standards in sustainability, extraordinary customer experiences and restless innovation. Hopefully an immediate focus for Selfridges is also inclusive of a review of the current experience for their distanced customers, some who clearly feel that very basic customer courtesy is not being met.

Customer Service Shambles At Selfridges And Harvey Nichols

What: an outdoor show is displayed across Selfridges’ flagship store windows.

Why is it important: a way for Selfridges to stay connected to customers during lockdown.

While galleries remain closed, and the streets of London remain hushed, a photography exhibition is breathing new life into the city’s retail heart. ‘A Return to Nature’ is a joint outdoor show by photographers Marco Kesseler and Cameron Bensley and is displayed across Selfridges’ flagship store windows.

The exhibition celebrates the beauty and fragility of the natural world, our relationship with it, and sparks a dialogue around the impacts of climate change.

‘A Return to Nature’ is both a celebration of the natural world and a plea for its conservation. The exhibition – which is also available to view online – offers city dwellers a chance to embrace the great outdoors while the city’s busiest street remains fallow.

Selfridges brings nature to Oxford Street during lockdown

What: digital demand was nearly 60% of owned business during the holiday season

Why it is important: CEO Marc Metrick gives perspectives for 2021

In his quarterly letter sent to vendors, Marc Metrick explains the following about Q4:

• More customers shifted their spending online and responded positively to Saks’ revamped online experience,
• The decision to delay designer sale break was successful in driving more full-price selling,
• Key markets such as Detroit, Atlanta, Boca Raton and Philadelphia were up double digits to 2019,
• Men’s, women’s accessories, kids and fragrances were the top-performing categories across all channels.

In 2021, Saks will:

• Introduce new personalization initiatives including the reveal of an “online preference centre” which will enable shoppers to find and save the newest arrivals of their favourite brands, offering a dedicated landing page with personalized products based on browsing behaviour,
• Amplify clienteling efforts through automation,
• Amplify the recently launched “customer council”, a cross-functional team focused on further improving the customer experience including executives from marketing, digital, finance, store operations, distribution and logistics,
• Redesign SaksFirst loyalty program, starting with the introduction of new rewards and benefits, such as early access to sales and in-home styling sessions,
• Continue with off-hours and virtual styling appointments and same-day delivery.

According to Marc Metrick, business is expected to ramp up over the course of 2021 despite uncertainty due to the pandemic.

Q4 at Saks Stores Down, Digital Up 

What: Nordstrom plans to surpass 2019 sales in spite of a 20% drop in 2020, thanks to online and off-price.

Why it is important: While they started investing two decades ago in digital, putting them ahead of local competition, they realised that they needed to double-down on e-commerce capabilities. This goes through a technological improvement (improve the product discovery) and a business model shift, as finding new ways to partner with brands would allow them to increase their offer (including categories where they were not present, and lower-priced segment).

Norstrom’s strategic plan aims to increase sales in 2021 by 25%, surpassing 2019 and includes:

• A maintained focus on high-level omnichannel customer service, including expanding BOPI service to all Nordstrom locations, from Nordstrom local and Nordstrom Rack outlets for now,
• Widen the price range: keep its luxury positioning while also increasing its off-price offer (Nordstrom rack) by adding more lower-priced products, and make the most of its online capabilities (which still raises the question of making this profitable, as, BOF points out, even leaders TJ Maxx and Marshalls have not found a way to do so),
• Become less reliant on the wholesale model and boost e-commerce: Nordstrom will add new online business formats proposed to brands (drop-ship, e-concession, sharing revenue scheme) to reduce wholesale from 85% to 50% online, and encourage brands to increase the offer presented online from 300,000 SKUs to 1,5 million, especially on categories where they missed opportunities, such as home goods. The question raised by such a strategy is to know how a specific point of view will be maintained, which would be the reason why a customer would favour Nordstrom other more generic, and powerful, players such as Amazon,
• Leverage discovery tools to personalise customers recommendations by connecting profiles across platforms, after having centralised its analytical capabilities in 2018.

Analysts consider Nordstrom as the best-positioned American department store in terms of potential recovery once the virus crisis is overcome.

Don’t Call It a Department Store

Nordstrom brothers confident of overcoming trouble in store