What: Instacart is considering opening up to 50 dark stores to scale up its picking method

Why it is important: the evolution of a service offered to retailers into a potential solution to real estate questions

Instacart as a very simple business model: it offers to retailers a click and collect solution without weighting them with extra staff, as it crowdsources workers to shop in the physical stores and deliver to customers. However, Instacart is aware that this method needs to be improved, as it could be faster, more efficient and less prone to errors.

This is the reason why they have taken contact with providers of warehouse technologies with a plan in mind to open up to 50 dark stores across the US. This intention, publicly described as a logical continuation of the service initially offered to retailers by Instacart, is perceived by some as a will to become a retailer itself.

IADS Note: This stance is very similar to the one used by Farfetch in its time when they decided to pivot from a service offered to wholesalers to a new channels for brands.

Instacart Frames ‘Dark Store’ Exploration as a Service to Partners

What: a special after-hours event at selected Lowe’s stores for Valentine’s Day

Why it is important: retailers are going over backwards to bring customers back instore, and are resuming to experiential retail -strictly safe. Experiential retail was booming before the pandemic, and is now (more than ever) needed to attract people in; when they would rather stay safe and shop from home

Fifty couples will win the after-hours in-store experience 'Night of Lowemance' date and enjoy activities such as splash paint a large canvas together. "We’ve seen all of this great DIY energy that people have channelled throughout these long months,” said Marisa Thalberg, Lowe's executive vice president, chief brand and marketing officer. “We thought why not turn it into some romantic DIY energy and create something that has long-lasting benefits, which is the spirit of DIY in general.”

Part of the event will be digital (for couples who couldn’t get the store experience) and will feature Chef Kelli Ferrell showing how to make a charcuterie board and themed mocktail on pre-Valentine’s Day.

Recently 7-Eleven partnered with Airbnb to create a “gaming palace” where customers can spend the night enjoying video games.

Valentine's Day at Lowe's? 50 couples will win a 'Night of Lowemance' date

Related items:

• 7-eleven launches experience with Airbnb
• IADS Exclusive - Instore experience: the case of Showfields

What: a series of eco-friendly collections

Why it is important: sustainability has become an essential part in a business’ strategy, especially in retail. The fast-fashion group has been trying to upgrade its image these past years through various sustainable actions and commitments: recycling, organic materials, sustainable line (Conscious). Now the H&M brand is launching a series of eco-friendly collections called Innovation Stories

The brand concept will celebrate sustainability, modern design processes, and a circular fashion system. The first collection Science Story will launch in March and will introduce new materials in its production cycle, such as bio-based yarn derived from castor oil and Desserto, a plant-based alternative to leather produced from cactus plants. The collection will feature jeans, top and tracksuit among others. More collections will drop throughout the year. “Innovation Stories is a platform that pushes our experimentation to the next level. The initiative encourages our work with scientists and developers and puts a spotlight on our progressive ideas. Science Story is a homage to the years of research and experiments behind these incredible materials,” stated Ella Soccorsi, concept designer at H&M.

H&M's Innovation Stories concept drives it deeper into sustainability

Related items:

• H&M's Arket launches kidswear rental service
• H&M recycles jumpers in front of customers

What: The luxury platform should deliver its first annual profit this year

Why it is important: Marketplace model and uplift from Covid-19 have proven to be key to enter Chinese market

Last November, Farfetch got USD 1.1 billion from competitors Alibaba and Richemont (owner of Net-a-Porter) in order to push the luxury ecommerce platform into Chinese market. In addition, further endorsement came from Kering’s billionaire founder, François-Henri Pinault, who invested EUR 50 million via his personal holding company.

The fact that Farfetch founder José Neves had managed to collaborate with rivals was further proof that the pandemic had brought a reckoning in an industry that had once been slow to move online.

After casting doubt on Farfetch’s ability to turn profitable, analysts now estimate that sales should have leapt 60% in 2020 to reach USD 1.65 billion. Moreover, Farfetch has promised that the uplift from Covid-19 will help it deliver its first annual profit (on an adjusted basis) this year.

When the pandemic hit, the nature of Farfetch’s business meant that it could still deliver even when one region was shut down, unlike Net-a-Porter, which was paralysed last spring when its UK warehouse shut down.

Furthermore, Neves’s choice of a business model is key to eventually deliver profit as it differs from other online retailers such as Net-a-Porter or Matches Fashion and it’s crucial: Farfetch would not buy any inventory. Instead, it acted as a marketplace.

In 2015, the company also diversified by creating another business to provide technology, software and services to help department stores such as Harrods to run their e-commerce operations.

How Farfetch prospered in a pandemic year

What: Due to Covid-19 restrictions, it is estimated that CNY-related domestic trips will fall from the usual 3 billion people to 1 bn.

Why it is important: Analysts do not see it as a major threat to sales: at worst, Q2 2021 will compensate for the losses incurred during this traditional high season.

New pikes in the virus in China, leading to local lockdown, will impact domestic travels related to CNY by an estimate of -2 billion travellers. This is expected to impact luxury brands which see China as their sole growth reservoir at this stage.

However, this is seen as a temporary and inconsequential blip by duty-free operators, as this will not hamper the long-term perspective of an otherwise more than the healthy market. On top of that, e-commerce and local forms of revenge-spending will probably help to compensate for the lost opportunities very soon in the course of 2021.

Chinese New Year Sales Hang in the Balance 

What: operating results for the 13 and 52 weeks ended January 30, 2021

Why it is important: 2020 has been a severe year for retailers, who suffered loss in income due to the extended store closures around the world, and Dillard’s is no exception.

Dillard’s reported a net loss of USD 71.7 million for the 52 weeks ended 30 January 2021, compared to net income of USD 111.1 million for the prior year.

Dillard’s Chief Executive Officer William T. Dillard, II stated: "Our year-long efforts to control inventory and expenses and preserve liquidity have resulted in encouraging fourth quarter results. We ended the year with USD 360 million in cash and inventory down 26%. Retail gross margin improved 171 basis points, and operating expenses declined USD 123 million. […]"

Dillard’s, Inc. Reports Fourth Quarter and Fiscal Year Results

What: the retailer has no plan to sell its clothes online despite being hit hard by lockdowns

Why is it important: since the pandemic many retailers have enhanced their digital platforms and began to implement online strategies to survive during these difficult times. However, Primark decided to not go online because of the cost of managing the operations and processing high volumes of return, which would mean it could no longer offer low prices. Even customers have said they would like to have the opportunity to buy the clothes online.

If Primark doesn’t start to implement a strategy for today’s customer’s needs it could mean a risk of losing loyal clients since they're discovering new brands and ways to shop. Online players like Asos and Boohoo make it work because they are “geared up for it in terms of logistics” and reported soaring growth in sales this Christmas season, but since Primark value proposition as a fast-fashion retailer is low prices, the cost of going online would mean prices rise.

Primark refuses to go online despite £1bn lockdown loss 

What: After last year’s disastrous holiday, China is enjoying shopping again while travel is still restricted.

Why it is important: It is a reflection of the strong recovery of the Chinese market while foreign markets are suffering from the lack of Chinese tourists.

According to the Global Times of China, consumers are enjoying shopping fever for the Spring holiday, or Chinese New Year. Many shoppers who missed it last year, especially in Wuhan, are going on a flower buying spree, also because it will bring good luck linked to the Year of the Ox.

Since travel is still limited in the country, many people have been going to supermarkets and department stores in cities which would be practically deserted in the years before covid. Officials expect this to continue during the coming year and to reflect a strong economic rebound.

Global Times Lucky Year of the Ox fueling _revenge_ ..

What: Target’s All in Motion private label achieved the company’s goal over the first year.

Why it is important: Athelisure is still outperforming.

A year after Target launched All in Motion private label to compete with athletic powerhouses, the activewear label achieved the company's goal of generating USD 1 billion in its first year.

All in Motion is the 10th Target’s private label. It was developed in-house, with an eye toward sustainability, quality and inclusivity. And consistent with the “more for less” Target mantra, many of the core workout items are about 75% less than comparable Athleta and Lululemon offerings.

When All in Motion was launched, Target’s design team sweated alongside over 15 000 consumers of all age to learn what they liked and disliked about their gear. It’s this kind of dedication and customer insight that has been responsible for their success with private labels.

All In Motion Becomes Target’s Tenth Billion Dollar House-Brand

Target's activewear brand generates $1B in first year

What: e-tailers using Shopify are now able to create ad campaigns for TikTok

Why is it important: French e-tailers using Shopify now have access to TikTok’s 100 million European users

The addition of the new “TikTok for Business” tool on their Shopify dashboard will allow online retailers to create and control ad campaigns, therefore to reach new customers and boost sales.

Comparing to 2019, Shopify France has seen a 61% growth in 2020. By the end of 2020, Shopify had more than 1.7 million merchants in 175 countries. TikTok and Shopify partnership has previously been launched in the USA, then in Italy, Spain, Germany and the UK.

Le partenariat entre TikTok et Shopify s’étend en France et dans d’autres pays européens

What: UK will no longer offer tax-free shopping to tourists.

Why it is important: UK will be the only country in Europe not to offer a tax rebate.

Before Brexit, tourists would claim back 20% of the purchase price of all goods over GBP 135 (USD 185). Worried that visitors from the EU, who are now third-party nationals, would start claiming back VAT, the British government scrapped the VAT rebate.

In 2019, foreign visitors bought GBP 3 billion worth of goods from fashion and other luxury stores in the UK – and spent another GBP 3 billion staying in hotels and eating in restaurants. “These people – who mostly come from China – have contributed a huge amount to the British economy but will simply make the choice not to shop in the UK because it is less advantageous to them,” says Paul Barnes, the CEO of Association of International Retail.

“We are now the only country in Europe offering no VAT rebate, so why would tourists not go to Paris instead, if they can save thousands of euros on luxury goods there and nothing here?” French officials are already rubbing their hands at the prospect of tempting Chinese customers across the channel. France has recently dropped its minimum spend required to recoup VAT from EUR 175 (USD 210) to EUR 110 and is said to be investing in new luxury space in central Paris and at the city’s Charles de Gaulle airport. It is also looking into making visas for Chinese nationals easier to obtain.

Brexit may kill London as a luxury shopping destination (...)

What: Prada struck an unusual deal with Net-a-Porter, by selling its products via dropshipping

Why it is important: No more stock to buy for Net a Porter, reduced margin… is that the future of department stores?

Net a Porter was until very recently significantly different from Farfetch, as 100% of its sales were direct, under wholesale terms. This had to collide at one point with major luxury brands, eager to regain control of their distribution (and margins), such as Prada, who now sells directly up to 90% of its total turnover.

Prada went even further by forcing Net a Porter to accept a drop-ship model in order to keep the brand: Net a Porter will earn a commission on sales of Prada products, which will be shipped directly from Prada’s warehouses without having to be handled physically or financially by Net a Porter.

The perks are clear: less investment on inventory, reduction of financial and seasonal risk… but with a margin decreasing from 50-60% to 20-30%, which would not be enough to run a store for instance.

More importantly, this model can work with the cooperation of brands only if they see an interest to it, which is to be able to reach an “audience”, a “community”. As usual, the retailer’s positioning and specificity are crucial for its very own existence in this particular scheme.

Is Net-a-Porter’s Unconventional Prada Deal the Future of Wholesale

What: The retailer's Shop for Good initiative involves pop-ups, merchandise, windows and a focus on equity and inclusivity.

Why is it important: how Bloomingdale’s commits to support diversity and inclusivity.

Bloomingdale’s restarts its biannual Shop for Good campaign by celebrating and supporting the National Museum of African American History and Culture, the Black Artists + Designers Guild (or BADG) and American Ballet Theatre’s Representation and Inclusion Sustain Excellence program (or RISE).

Bloomingdale’s began its partnership with the museum in summer of 2020, when it mobilized its stores and customers to raise funds for the museum. Bloomingdale’s featured American Ballet Theatre dancers in its 2020 virtual holiday benefit, and the retailer works with BADG to explore new designers and collaborators.

The philanthropic campaign entails installations at all Bloomingdale’s stores, windows at the 59th Street flagship and a Shop for Good pop-up that doubles as a storytelling hub.

Bloomingdale’s Shop for Good campaign “elevates the voices of diverse and inclusive creatives across fashion, art and culture,” said Frank Berman, Bloomingdale’s executive vice president and chief marketing officer.

The shop also goes virtual at Bloomingdales.com/shopforgood, starting 1 February.

Bloomingdale’s Campaigns for Causes

Related items:

• Nordstrom reaffirms commitment to diversity and inclusion
• Macy’s highlights black brands and creatives
• Neiman Marcus celebrates Black history month

What: Fashion and beauty brands are leaving the mall.

Why it is important: The mall hit hard as it was mainly relying on Asian tourists.

More than a dozen stores closed in Tokyo's high-end Ginza Six mall this week, as the coronavirus pandemic kept big spending foreign tourists and other luxury shoppers away from Tokyo.

The luxury retail complex opened in 2017 with around 240 stores, as a symbol of the Ginza district's revival and as a popular destination for Asian tourists.

Ginza shopping district had struggled with shoppers' shift to other areas such as Omotesando. While Isetan Mitsukoshi sales are -30% in 2020 compared to 2019, Mitsukoshi Ginza store is -50%.

Stores close in Tokyo's high-end mall amid travel bans, Real Estate

What: a sustainable collab between the upscale department store and luxury shoe label

What it is important: one of the biggest challenges for department stores is to stay relevant and offer exclusive products to win over the hearts of customers. One way to do so is through exclusive collaborations with renowned brands and labels. This particular collaboration mixes exclusivity with sustainability

The new capsule collection features pieces for women and men, inspired by signature styles from the Louboutin archive and launched online -the physical store still being closed. The particularity here is that all items are made from upcycled denim. Louboutin said that “denim is like black, always present somewhere, it’s a classic. It’s rare to not see it in a crowd”.

The collaboration is part of Selfridges Project Earth: reinventing retail, by giving denim jeans another life and reducing waste.

Selfridges and Louboutin launch upcycled denim capsule

What: Ikea rolls out system to sell spare parts.

Why it is important: It fits into a trend towards repairing and reusing goods which is also finding its way into fashion.

Ikea will offer spare parts to customers worldwide, allowing them to repair their furniture and to prolong the life of its furniture as part of a big sustainability push. Ikea provided customers with 14 million spare parts in the year to August 2020 but will now develop a system to be rolled out on its website this year.

Ikea is aiming to become a climate-positive and circular company by the end of the decade, cutting more emissions than it produces, while facing down critics who complain that its cheap products encourage excessive consumption and a throwaway culture.

The initiative fits with many others and forms part of a general trend towards repairing and mending which is finding its way into the fashion world.

Ikea to sell spare parts in sustainability push

Mend and make new — how the pandemic reigniteed a repairs revival 

Related items:

• Ikea: How to keep growing and thriving at the same time
• Sustainability series #1: the cost of being good

What: Nordstrom celebrates Black History Month

Why is it important: how Nordstrom responds to activists’ push for back-owned brands

Last August and further to the Black Lives Matter movement, Nordstrom committed to:

• increasing Black and Latin representation among its managers by at least 50%,
• delivering USD 500 million in retail sales from brands owned by, operated by or designed by Black and/or Latinx individuals,
• increasing charitable donations to organizations that promote anti-racism to USD 1 million per year for the next five years.

Six months later and in honour of February's Black History Month, Nordstrom is preparing to celebrate Black-owned brands and amplify their voices through various merchandise categories in store and online.

Committed To Community: Nordstrom Celebrates Black History Month [...]

Activists Pushed Retailers to Back Black-Owned Brands. Here’s How Nordstrom Responded.

What: The Bike Shop by Smartech is now a permanent feature of the LG floor in Selfridges.

Why it is important: this demonstrates focus on environment, health and wellness is expanding.

In July 2020 Selfridges launched its first-ever bike shop in The Corner Shop of its Oxford Street store. The collaboration with Smartech saw the space transformed into a one-of-a-kind electric vehicle destination complete with e-bikes, apparel and exclusive gear. Born to revolutionise an ailing world, its existence demonstrates a new era of urban travel combined with innovation like no other. After the successful Corner Shop preview, The Bike Shop by Smartech is now a permanent feature of the LG floor in Selfridges.

Customers can discover and try the best bikes and accessories in the industry from the likes of Mate X, Angell and Superstrata. Smartech has curated a collection of the very best in e-vehicle innovations from up-and-coming entrepreneurs reinventing the cycling industry. There is also a selection of push bikes from Veloretti and Tokyo Bike. The products available rotate weekly and are available to test drive in a dedicated zone in the Selfridges car park. For customers unable to get to store, the range will be available to order at selfridges.com and smartech.buz

Rob Smith, head of partnerships at Smartech, says: “As we emerge from another lockdown into the ‘new normal’, we’ve seen an increased focus on health and wellness, looking after the environment and most importantly safety, with people avoiding public transport where possible.”

In its technology predictions for 2020 in December 2019, before the global pandemic and the resulting spike in bike sales, Deloitte foresaw a rise in popularity of cycling, especially e-bikes, predicting that by 2023, the total number of e-bikes in circulation around the world… should reach about 300 million, a 50% increase over 2019’s 200 million.

Selfridges creates permanent bike shop and EV destination at Oxford Street store with Smartech 

What: the acquisition of Topshop, Topman, Miss Selfridge & HIIT by British e-commerce giant Asos

Why it is important: following the collapse of UK retail group Arcadia in December 2020, and after many speculations on who would buy the bankrupt group out (Frasers Group, Authentic Brands Group), online player Asos eventually acquired four of the group’s strong fashion brands. With the move the online retailer is expanding its brand portfolio and its reach over UK’s retail landscape.

Nick Beighton, Asos CEO, commented: “The acquisition […] will help accelerate our multi-brand platform strategy [...]” The acquired brands were already sold on Asos.com and will join Asos Venture Brands portfolio alongside others (including Collusion, AsYou and Reclaimed Vintage), retaining their established brand and customer positioning. According to the press release, ASOS has acquired the intellectual property assets of Topshop, Topman, Miss Selfridge and HIIT; but does not mention the physical stores.

Acceleration of ASOS Brands strategy - Acquisition of Topshop, Topman, Miss Selfridge & HIIT

Related items:

• UK Arcadia Group files for bankruptcy
• The rise and fall of Topshop: what went wrong
• Business case: Frasers Group

What: another push in digital from a department store operator

Why it is important: online retail is becoming a crowded scene and, like for physical spaces, retailers need to distinguish themselves from the competition to stay relevant

Hudson’s Bay will open a digital marketplace on its existing website thebay.com later this year. The department store is inviting small and large retailers to apply to join the platform. HBC will accept merchandise offers across categories already existing at the store, and new category introduction.

PR: Hudson’s Bay Puts the Call Out to Vendors to Join Its Marketplace

Retail Dive: Hudson's Bay to launch online marketplace

What: Best Buy in the US to reduce space allocated to customers, in favour of digital orders fulfilment.

Why it is important: They plan to reduce by up to 50% the store space, altering also one of their initial key features, the width of assortment.

US Electronics retailer Best Buy decided to take the bull by the horns after seeing its online sales tripling last quarter and decided to roll over a plan to reshape its stores. Their retail surface will be reduced by up to 50%, and the free space will be allocated to digital orders fulfilment capabilities. This also will lead to a new definition of roles among salespersons, including some layoffs that will be announced in the future.

This last point set aside is also the strategy that is followed by IADS member SM Store, who is “rightsizing” its retail surface in order to find the right match between physical retail and digital capabilities.

Best Buy tests smaller shopping areas to focus on e-commerce 

What: A new line launched by the retailer in the midst of the hardest year ever.

Why it is important: Private labels are a significant contributor to margin, when well executed. Dillard’s decided to go a step further by collaborating with a fashion brand for the design and style.

Dillard’s teamed up with US brand Toccin to create a 60s and 90s inspired collection of dresses and prints. With a USD 199 average price, the collection is thought to be radically new and fresh on the floor, in order to bring fresh air in Dillard’s offer (and possibly lure in fashion-oriented customers). Inclusive sizing, deliveries in drops, thought to be worn both at home and at the office, this new collection embeds in its core many of the characteristics of modern fashion brands.

Interestingly, in spite of the challenging context, Dillard’s seems to invest on its private label business to differentiate from competitors, as it already launched earlier this year an activewear line.

Also, the topic of Private Labels is of importance for IADS members too. Do not hesitate to look at thevideo and resources related to the meeting organised on 15 January 2021 on this topic.

Dillard’s Offers Exclusive LDT Dress Line From Toccin NY 

What: Macy's has launched a series of initiatives to support Black-owned businesses and further inclusivity

Why it is important: how Macy’s responds to activists’ push for back-owned brands

Macy’s Inc. is putting the spotlight on Black-owned brands and Black creatives in its stores and on its website, and encouraging donations to support Black Girls Code and the United Negro College Fund.

“As we honour Black culture and Black brilliance, we are intensifying our commitment to the growth and advancement of Black-owned businesses, creators, changemakers and young talent — who are all woven into the fabric of the Black experience,” said Shawn Outler, Macy’s chief diversity officer.

Throughout February, which is Black History Month, customers can round up their in-store purchases to the nearest dollar amount and donate the change (up to 99 cents) to benefit Black Girls Code, which focuses on technology education for African American girls to join STEM fields, and UNCF (the United Negro College Fund), which focuses on getting African American students ready for college.

In other initiatives, Macy’s, with Cosmetic Executive Women’s Indie 26, is launching 11 Black-owned, award-winning beauty brands in February. Store windows this month will be displaying art by artists coming from pop, hip hop and graffiti culture.

In March, Macy’s will launch “Icons of Style” collaborations with Black creatives and brands found only at the store. The retailer is also continuing its Workshop at Macy’s program this spring, helping diverse and female-owned vendor businesses scale up at retail.

PR: Macy's honors black history

WWD: Macy’s highlighting black brands and creatives

Related items:

• Nordstrom reaffirms commitment to diversity and inclusion
• IADS exclusive: diversity, a strategy of silence

What: A reflexion on what should be a permanent concern: a responsible approach to AI in retail.

Why it is important: There are already hundreds of Artificial Intelligence (AI) platforms and enterprise solutions on the market today, each aiming at solving different issues and improving Customer Experience (CX). However, they are not without risks – for customers, but also, in the event of a breach of trust, whether real or perceived, for brands and their reputation.

Referencing a recent BCG survey, Ricardo Saltz Gulko, Managing Director of Eglobalis, a global consulting firm specialised in customer experience strategies, identifies 3 focus points that should be considered where technological developments in commercial practices are concerned:

• Balancing the need to collect data for analysis and the implementation of technologies that can be perceived of as intrusive. People are already ambivalent: they often appreciate AI-enhanced experiences but fear exposure and a mismanagement of their personal data.
• Customers’ demand for responsibility and transparency. They will give – or withdraw – their trust to companies and brands according to the ethical principles these have set forth and show they truly uphold.
• Ensuring the protection of customers, as well as employees, against the inherent technological risks of AI. Businesses could establish up front procedures and guidelines to remedy AI-related contentions to mitigate these problems, but ultimately, this would better fall under the purview of global regulatory bodies.

Prevent Risks to Your Customer Experience & Brand – by Adopting AI Responsibly