What: fashion retail I.T. Group to follow suit to Lane Crawford, Joyce and Swank, and delist from the HK Market.

Why it is important: the long-time partner of Galeries Lafayette in China has been struggling to cope up with a declining brand image

I.T has proposed, in partnership with CVC Capital Partners, to buy back its floating stock at a price of HKD 3 a share, leading to a total deal of HKD 168 m. Mr Sham, founder, will retain 50,65% of ownership, while CVC will own 49,35%.

I.T. has not been able to follow the online trend, led by Alibaba and JD.com, be it in HK or in PRC. They need to pivot the business in a significant way, which may explain why Mr Sham needs to regain control of the company in order to pursue these changes while limiting the pressure.

I.T Group founder and CVC plans to delist from stock market 

What: Milan store renovates its women floors with a EUR 6 million investment.

Why it is important: Logistical support is now key for department stores.

Milan's department store has invested over EUR 6 million in renovating the fourth and fifth floors, which together with the third floor, dedicated to footwear with brands of the calibre of Christian Louboutin, Jimmy Choo, Chanel, Bottega Veneta and many others, make up the offer dedicated to the universe of women. The first floor of Annex Rinascente has also undergone a major restyling.

Rinascente Milano renews its plans dedicated to women with an investment of 6 million euros

What: First insights from John Lewis who had only 3 stores opened for Black Friday

Why it is important: A record online sales day with interesting insights from the top sellers

On the busiest Black Friday day, John Lewis reports a 35% increase on e-commerce on last year. Overall, this represents a volume increase of 65% compared to last year. Interestingly enough, when it comes to the top sellers by categories:

• In electronics, John Lewis clearly attracted customers thanks to deal on otherwise non discounted products (Apple)
• Fashion is still lagging behind: the top sellers are commodities (umbrellas, underwear)
• Home and beauty reflect the homeworking trend and the impact of lockdown in the UK.

Johnn Lewis back friday 2020 update 

What: a ransomware attack forcing to close down stores.

Why it is important: are you prepared?

E-land is a major and well respected Korean conglomerate operating in retail malls, restaurants, theme parks, and others, as well as 59 stores and 60 brands.

It underwent on the 22nd of November a ransomware attack (a malware hacking a system and used to put the organisation under pressure to pay and eliminate the threat) which forced the company to close half of its operations, for an undetermined period of time.

According to the Korea Times, this kind of attacks against retail businesses has increased worldwide by 14% during the first half of 2020 and is expected to keep on growing due to the increasing weight of digital operations and teleworking.

Korean Retailer 'E-Land' Suffers Ransomware Attack—Almost Half of its Operations Face Shut Down!

What: Nordstrom sees earnings decline but remains focused on future growth.

Why it is important: Like other retailers, the company has been hurt by the lack of store traffic.

Third-quarter net earnings at Nordstrom dropped to US$53 million from US$126 million in the year-ago period, though the company cited sequential improvement in sales and earnings from this year’s second quarter. Earnings before interest and taxes came to US$106 million, a decrease from US$193 million during the same period in fiscal 2019, primarily due to lower sales volume, partially offset by realized expense savings. Total company sales decreased 16% to US$3 billion last quarter, from US$3.56 billion in the year-ago period. Sharing the results, CEO Erik Nordstrom emphasized that the company remains focused on its three priorities for growth:

• Building a market strategy that links store and digital assets to provide greater services, faster deliveries, more pickup options, and greater merchandise choices in key metropolitan areas.
• Fuelling growth of Nordstrom Rack, which represents one third of Nordstrom Inc.’s total business.
• To increase the velocity of digital sales (digital sales of US$1.6 billion represented 54% of total sales and increased 37% last quarter).

Nordstrom Sees Net Decline; Cites Improving Trends

What: another department store closing

Why it is important: the crisis has put pressure on retailers; and the less performing branches of department store chains are not spared by the restructuring plans

British retailer Marks & Spencer is closing its outlet at Raffles City Shopping Centre on 31 December, after 34 years of operations. The retailer’s 10 other stores islandwide will remain open. Marks & Spencer is part of the Dubai-based Al-Futtaim group, and so is Robinsons who also shut its Singaporean operations after 162 years earlier this year. The Marks & Spencer branch at Raffles City is the only one closing as the lease is signed under Robinsons.

Marks & Spencer shuts store in Singapore

Related items:

• Robinsons permanently closes stores in Singapore
• Robinsons at Jem closing down in August 2020

What: John Lewis will stop taking online orders outside of United Kingdom

Why it is important: in a moment where online retail is soaring, a big department store player has decided to focus its business on its home market and to cater locally only.

As stores will be reopening in UK following a new month of lockdown, John Lewis & Partners has decided to close its international business and put a stop to international online orders starting 9 December. Shipping costs are too expensive for the retailer, especially with the end of the Brexit transition period profiling (on 1 January 2021) -which will higher even more the costs. International sales don’t play a major role in the company turnover, and has fallen by nearly 17% compared to last year. A John Lewis spokesman said: “As part of our Partnership Plan for the next two years, in John Lewis we have decided to focus on areas of the business that will deliver products and services for our local UK customers. As such, we are no longer pursuing international expansion.”

John lewis stops taking non-UK online orders

What: a major deal between US department store Kohl’s and French beauty giant Sephora

Why it is important: following the new consuming habits, Kohl’s has been reviewing its assortment to become a “destination for active, casual, and beauty for the entire family”, betting on casual wear and beauty & wellness

The long-term strategic partnership will create a new era of elevated Beauty at Kohl's. The "Sephora at Kohl's" will be a fully-immersive, premium beauty destination of approx. 230 sqm. 200 corners are slated to open in fall 2021; and the partnership should expand into at least 850 stores by 2023 and on kohls.com. The news comes out while Kohl’s is completely rethinking its business, shifting toward a lifestyle and wellness segment, and while Sephora is phasing out US department store chain JCPenney.

Kohl’s and Sephora Announce Major Long-Term Strategic Partnership [...]

Related items:

• Kohl’s continues its shift with new Wellness Market
• Sephora wants out of JC Penney stores

What: A talk from Anne Pitcher at the CEO summit

Why it is important: Some of the key messages delivered give a hint of the Selfridges’ group strategy and could be very well examples to follow

After the BoF last week, Anne Pitcher gave an interview to WWD where, in addition to the reflection over 2020 and its consequences, she detailed some of her insights, which should be considered by other department stores:

• On sustainability: all stores are now powered by green energy, with a plan to reduce carbon footprint by 100% and greenhouse gas emissions by 64% within 2050. She also mentioned new ways to sell and shop, such as the Oxfam shop in shop (initially launched as a popup),
• On the role of department stores, “places for social and human experiences”, with a need to think beyond sales and look to hotels, museums and galleries, a position that we also explored earlier this year in various articles and the White Paper, to become houses of content and experience.

2020 CEO Summit_ Anne Pitcher and a Year of Radical Thinking at Selfridges

Related items:

• Selfridges Group’s boss on post-covid new directions
• Selfridges new retail concept

What: the reopening of a bankrupt US department store

Why it is important: Barneys New York filed for bankruptcy last year. After being bought out it will be reopening small outposts, including one inside an existing department store

After filing for Chapter 11 bankruptcy protection in August 2019, department store chain Barneys New York was acquired by Authentic Brands Group ABG and B. Riley Financial Inc. in November 2019. All stores entered liquidation and were closed.

Now ABG is planning to reopen two first stores early 2021. One will open inside Saks Fifth Avenue NYC’s flagship store -it was supposed to make its comeback last September as a boutique on the fifth floor of the Saks flagship, but it was delayed by the health crisis. A second small standalone shop will open in Connecticut. Fred, the restaurant within Barneys, will also be resurrecting sometime next year.

ABG has licensed Barneys’ name to Saks to run websites, pop-ups and the store inside Saks’ flagship location. ABG has six Barneys stores in Japan and plans to expand it into China and Korea in the next two years.

Barneys Returning to NYC Next Year Inside Saks Fifth Avenue

What: The group sets its sights on U.K. struggling Debenhams and Arcadia.

Why it is important: ABG believes in reviving retailers in critical condition.

Authentic Brands Group held talks with administrators over the weekend for both Debenhams and Arcadia, and is eyeing a deal to take over the troubled retail groups, with Debenhams currently under administration. If it is successful, ABG will make a significant step into the UK and add the department store chain and flatlining fashion empire to a list of “dead on arrival” retailers that it has snapped up in a little over a year, including Barneys New York, Forever 21, and Brooks Brothers.

Authentic Brands Group is not the only one interested in the bankrupt brands. Mike Ashley's Frasers Group has expressed several times its interest in both Debenhams and Arcadia. He also is used to buying struggling brands with the ambition to revive and elevate them, like he is doing with House of Fraser. Learn more about this business model in IADS Exclusive article dedicated to Frasers Group.

From Barneys To Topshop, Authentic Brands Looks To Build Retail Empire

Related items:

• IADS Exclusive - Business case: Frasers Group
• Debenhams will close
• UK Arcadia Group files for bankruptcy
• The rise and fall of Topshop: what went wrong
• Frasers in talks to buy Debenhams

What: Uniqlo to close at the end of this month its flagship in one of the best retail locations in Seoul

Why it is important: this closure, happening on a thriving retail market, is the consequence of political reasons and might show a return to regional, or national, retail.

Uniqlo is a very visible Japanese symbol in Korea and fell victim of the Korean customers’ boycott that started in July, following Japan’s decision to restrict exports of chipmaking materials to South Korea.

Uniqlo’s Seoul flagship to close

What: brand cooperation to dress an already existing F&B space at Selfridges.

Why it is important: Could that be an idea for department stores to be more attractive to top tier luxury brands?

Selfridges has proposed Fendi to dress up its champagne bar, located in the middle of the luxury handbag section. Fendi has decided to review the décor according to its seasonal colours, to put its logo, and to propose selected and made to measure delicacies (cocktails, coffee…)

At a moment when department stores are rethinking the way to improve space productivity (an IADS meeting is organised on 28-29 January on this topic), when IADS members are refurbishing their spaces (Palacio de Hierro), this move is interesting for 2 reasons:

• BtoC: It smartly uses the brand appeal to market space and gives customers reasons to come and spend time.
• BtoB: for the department store, being able to propose such a partnership goes beyond the typical negotiation on rent and commission rate and allows the brand to explore new boundaries it might not be able to do outside of the store (for obvious real estate costs reasons).

Fendi Caffe Pops Up in Selfridges

What: another department store chain closing.

Why it is important: department stores have been struggling for your to keep up with newcomers and the pandemic, forcing all stores to close for months, has just been accelerating the most declining ones. Now UK chain Debenhams is closing.

Debenhams filed for administration last April, and couldn’t find a bidder to save it. The department store is now set to enter liquidation, putting 12,000 jobs at risk. Debenhams has been struggling financially since before the financial crisis, but successive restructurings have failed to find a solution to save it.

The news comes just after UK retail group Arcadia Group fell into administration too, which was the largest concession holder at Debenhams, stocking the shop floors with clothing brands such as Wallis, Burton and Dorothy Perkins.

Shoppers will be able to buy items in stores and online, until all the stock is sold. The closures will not impact Magasin du Nord in Denmark, which continues to operate independently.

Debenhams: the rise and fall of a British retail institution

What: Small “Showroom” stores to reinvent retail.

Why it is important: The exemplification chosen by WWD is less important than its implication: if small “showroom stores” are performing well, how could they be articulated into a department store offers, instead of renting street shops?

WWD points out that Nike, Comme des Garçons, Arc’teryx are planning to open a series of smaller, digitally-enabled stores, across Europe, instead of pursuing a flagship strategy.

With the example of Norwegian Rain, WWD is going a bit further by explaining that the “showroom store” (where customers can only find samples to try and then order online, therefore reducing the need for retail space) is a good alternative to traditional models of retail.

For us at IADS, the main question is to know if this kind of model could be attractive to both these brands (to be located into the main department store) and stores (to have a one of a kind offer without the logistic hurdles going along with it)? If so, what would be the financial mechanisms to make it profitable to both?

This Norwegian Rainwear Brand Is Testing Compact Stores 

Based on a report from the Center for Global Policy and corroborated by Reuters and others, a number of international media have been reporting the issue of forced labour of the Uighur population in the cultivation and processing of cotton in Xinjiang province, a source of around one-fifth of world cotton production.  Media reports have been published over the last 6 months alleging that major brands were tainted by forced labour in their supply chains including Adidas, Amazon, C&A, Calvin Klein (PVH), Gap, H&M, IKEA, Marks & Spencer, Nike, Patagonia, Ralph Lauren, Puma, Tommy Hilfiger (PVH), Uniqlo (Fast Retailing) and Zara (Inditex).

It has been argued by representatives of the apparel industry that the scale of the issue is such that the consequences could disrupt the global apparel supply chain. Indeed, once cotton from the region is mingled with cotton from other sources, it could show up in final products made all over the world including Bangladesh, Vietnam, Cambodia, Indonesia, Ethiopia, Kenya and even Haiti and Centra America. Now the BBC has published video footage which would appear to confirm the link between large detention centres and huge factory production sites in the Xinjiang Uighur Autonomous Region.

M&S in the UK has been targeted partly because it is large but also because it publicly prioritises “ethical buying” as part of its brand and image. Boohoo, H&M and Nike have recently denied using cotton produced by forced labour.

reuters: UK to big brands: do more to avoid forced labour in China's Xinjiang

[video] BBC News: New evidence of Uighur forced labour in China’s cotton industry

Related items:

• IADS Exclusive - Sustainability series #2: The Higg Index
• IADS Exclusive - Sustainability series #1: the cost of being good
• IADS Exclusive - Sustainability: department stores’ destiny

What: in an interview, Adidas CEO announced a new retail concept and opening plan to be unveiled in March 2021

Why it is important: Although Adidas online sales increased, stores are seen as a complementary, and necessary, tool to online, as customers need to see and feel products.

Adidas posted a 51% increase yoy online on Q3 2020, following a +93% on Q2. Overall, estimates for 2020 are at EUR 4 billion, to be compared to EUR 1 billion in 2016. These excellent results do not change Adidas CEO Kasper Rorsted’s opinion on stores: they are needed as a place to see and feel the products. He hinted at a new retail concept to be unveiled and rolled out next March.

Adidas will keep opening new stores despite Covid e-commerce surge

What: a C to C resale platform from an ecommerce player

Why it is important: digital shopping has accelerated during the pandemic. Now French online store La Redoute, part of Galeries Lafayette Group, is opening a space on its website dedicated to the sale of second-hand fashion between customers. Not only this move will reinforce the brand’s digital operations, it is also a good way to offer sustainability options (at bargain price) to its customers.

Dubbed La Reboucle, the new section will allow for consumers to sell and buy second-hand clothing, and is accessible through La Redoute website and app. It follows the same business model as Lithuanian pure-player Vinted. The resale trend has also been accelerated with the pandemic as people are looking for sustainable way to get fashion. The platform will accept articles from any brands, and not just La Redoute private brands or items purchased on the website.

The new service launches mid-December for consumers to put items to sell, and transaction will begin in January 2021.

La Redoute déploie "La Reboucle", son offre de seconde main

Related items:

• IADS Exclusive - Sustainability: department stores’ destiny
• IADS Exclusive - Sustainability series #1: the cost of being good
• IADS Exclusive - Sustainability series #2: The Higg Index
• Vinted buys competitor United Wardrobe

What: a top nomination at the British department store

Why it is important: the industry is moving fast, and corporate nominations are strategic in this time of crisis

Andrew Keith, former President of Hong Kong luxe department store Lane Crawford, has been appointed Managing Director of UK Selfridges starting February 2021. He will report to Anne Pitcher, managing director of Selfridges Group. Keith spent 25 years in the Hong Kong area and was President of Lane Crawford since 2011.

Blondie Tsang will become the new President of Lane Crawford and Joyce, starting next January.

Andrew Keith Named Managing Director of Selfridges & Co.

Related item:

• New president at Lane Crawford, Joyce

What: the major US player, which has been under protection law for months, entered into an asset purchase agreement to exit bankruptcy

Why it is important: department stores, especially in the US, were already struggling before the pandemic. Several filed for bankruptcy amid the covid crisis, including JC Penney. The latter has been acquired by mall operators to pave its way out bankruptcy.

JCPenney filed for Chapter 11 bankruptcy protection on 15 May and closed 154 stores this summer. Now it has entered into an asset purchase agreement with retail real estate giants Brookfield Asset Management Inc., Simon Property Group and other lenders. The deal will allow the retailer to move forward towards the completion of the financial restructuring plan ahead of the holiday season.

JCPenney Signs Asset Purchase Agreement, Charting Course for the Future

What: A virtual series replaces in-store events.

Why it is important: Virtual events become part of a longer-term hybrid event strategy going forward.

With the pandemic forcing stores to close for months and shoppers reluctant to return when they did reopen, it required the marketing team to come up with an alternative. In the case of Bloomingdale’s, it’s called On Screen, a series of virtual events that are intended to mimic the “buzz and animation” the in-store events had evoked among customers.

Around 80% of the events are limited to the store’s top customers. When shoppers on this “curated list” express interest in participating, they are sent a package in advance that they can use during the event. The other 20 percent of the events are more inclusive and offered to a larger audience. That includes the beauty tutorials and makeup lessons where 800 RSVPs a day are not uncommon.

Bloomingdale’s Engages Shoppers Through ‘On Screen’ Series

What: Walmart, Kohl’s And big drug chains look for wealth from health.

Why it is important: health and wellness is growing as a strong trend.

More and more retailers are expanding their efforts in providing goods and services to keep both their customers and their bottom lines healthy. While CVS may have been the first to discover this hook years ago more recently big national chains like Walmart, Kohl’s, Rite-Aid, Walgreens are upping their game in this area.

Of course, the pandemic is the new driver of this movement as infections reach record numbers in what is stretching into the ninth month of the pandemic in the U.S., but this has been building for years. Both the aging baby boomers and the now largest demographic in the country, the millennials, are increasingly focusing on their health.

Walmart, Kohl’s And Big Drug Chains Look For Wealth From Health

What: In consistency with its 5-year plan unveiled earlier this year, the retailer continues its shift to become a more agile, profitable, and sustainable company by cutting 1,500 jobs at its head office.

Why is it important: the cuts will save the business GBP 50 million and lead the way for an agile and flexible head office.

The partnership follows the course of its plan to bring the business back to sustainable profits by 2025, which requires to become “a leaner, simpler and faster business”. In order to do so, it is cutting jobs amid its head office team. Sharon White, chairman of the John Lewis Partnership, said: "Our Partnership Plan sets a course to create a thriving and sustainable business for the future. To achieve this we must be agile and able to adapt quickly to the changing needs of our customers.” Whenever it is possible new roles will be given to the sacked partners and compensations for the others.

As the group revealed plans to cut head office jobs, these new layoffs add to the 1,300 redundancies announced in July this year after the business announced close eight John Lewis stores and four Waitrose outlets.

The partnership also announces management shifts, with a new Executive Director of Finance and the axing of the Executive Director for Customer Service position.

Read more in the press release below.

JOHN LEWIS PARTNERSHIP ANNOUNCES NEXT PHASE OF HEAD OFFICE CHANGES

Related items:

• John Lewis finalised its strategic review and comes with a new plan.
• John Lewis is repurposing its property estate
• John Lewis to cut jobs and close stores

What: John Lewis is converting part it its real estate to homes and offices.

Why it is important: the move is relevant of how the real estate issue should be swiftly addressed and gives a hint of the changing face of high streets.

John Lewis is now turning landlord with plans for homes across 20 of its sites and this week got the greenlight to convert almost half of its flagship Oxford Street store into offices. The repurposing of its property estate says much about the crisis gripping bricks and mortar retail, as stores grapple with the toxic combination of the pandemic and competition from online rivals. It also hints at the changing shape of the UK’s high streets.

According to the Local Data Company, the number of retail units in the UK fell 7 per cent between 2015 and July this year, as 32,500 more stores closed than opened. The number of shops lost each year has grown steadily. Even so, 2020 stands out: there has been a net loss of 7,834 units in the first half of the year, ahead of every other full year on record and not far short of the 9,169 lost in 2019.

Kingfisher puts physical stores at heart of online sales push