Although the dramatic decline in sales compared to the previous year was due in part to last year’s rush in purchasing before a tax hike, it is nevertheless significant: Japan has lived through two clear peaks in Covid-19 cases.

In spite of stores remaining open, customers are wary of shopping when Covid cases fluctuate.

Takeaway:

We cannot assume that the pandemic is over yet so it is more urgent than ever to initiate new services and new ideas for customers to continue shopping and to feel comfortable and protected through the coming months which include the Christmas period.

What: implementing ship-from-store was a necessary test and try implementation during pandemic and lockdowns.

Why it is important: A Global Tranz survey shows that 41% of retailers were not prepared to shift store locations into fulfillment hubs, however, most of them had to do so to make the most of their closed stores and blocked inventory. The difficulties and costs associated with such an operation might not make it the ideal recipe for every retailer, or every location.

In the US, retailers were faced during the pandemic to a double challenge: what to do with goods blocked in closed stores, and how to fulfill orders from e-commerce channel when it is equally affected? As shown in the IADS White Paper (Global Pandemic and local department stores: learnings from Covid-19, released 2020), all retailers had to quickly adapt to ship-from-store operations, just like our members did. This created a bottleneck at two levels:

• How to manage the store and allocate needed resource to the ship-from-store operations: staffing, inventory technology, space, and apparently simple staples such as packaging (SM Stores got around this with their “Call to Deliver” initiative by simply using the store packaging and not the dedicated e-commerce one)
• How to manage logistics: according to Supply Chain diver, 74% of respondents to their study mentioned that they would be willing to externalise the outbound deliveries, as this is entirely different from inbound inventory management.

However, the right recipe remains to be found, as costs of operation in Ship-from-store is still today higher than other omnichannel or regular instore proceedings. For that reason, it might not be a path to be taken by all retailers, or for all their stores.

 Retailers face operational, logistical hurdles in pandemic-driven switch to ship from store

Over Black Friday weekend, the Swedish retailer will be hosting an event called Buy Back in 27 countries. Customers can bring in old Ikea furniture for the retailer to resell or recycle, in exchange for store credit. The event allows Ikea to promote circular economy and reach out to a new customer basis, who otherwise would have gone to another marketplace for second-hand furniture. “[…] second-hand furniture was a more established market than fashion but sales were traditionally conducted on an informal basis at yard sales, thrift shops and by sales to friends,” said Neil Saunders, managing director of GlobalData Retail.

Ikea hopes to become a completely circular company by 2030, meaning that all of its products are designed to be reused, repaired, upgraded, and recycled.

With resale, Ikea is trying to find new ways to acquire customers

Related item:

• IADS Exclusive - Ikea: How to keep growing and thriving at the same time

What: a partnership between a department store operator and a delivery service.

Why it is important: might be a way to reach out to more customers.

In September, John Lewis & Partners operator for food Waitrose launched a trial with food delivery service Deliveroo available in five shops. It has now expanded this partnership to twenty-five locations. The trial is very successful and is expected to last at least until November, to evaluate the potential benefit of a long term partnership. The launch on Deliveroo gives to Waitrose customers easy and convenient access to products, and will potentially draw new customers in.

WAITROSE AND DELIVEROO EXPAND TRIAL EARLY TO MEET HIGH DEMAND

Related items:

• John Lewis finalised its strategic review and comes with a new plan
• John Lewis Partnership progress report

The US supermarket giant is optimising its activity portfolio by selling 71 the 71-year-old UK supermarket group Asda to UK entrepreneurs involved in the petrol station business. Walmart bought the group in 1999 for a €7,39bn value, and is now selling it 21 years later for a total amount of €7,5bn. It had previously looked at merging it with Sainsbury, but this move was blocked on competition grounds. The new owners expect to invest €1bn over the next 3 years into revamping Asda and upgrading it to directly compete with German supermarkets Lidl and Aldi in the UK and continental Europe.

Walmart Sells U.K. Arm Asda To Britain’s Issa Brothers And Private Equity For $8.8 Billion

Asda bought by billionaire Issa brothers in £6.8bn deal

Kim Dong-kwan, the eldest son of Hanwha Group Chairman Kim Seung-youn and vice president and head of strategy at Hanwha Solutions Corp., was promoted to president in an unusually early group-wide executive reshuffle, moving a step closer to taking over the helm of South Korea’s 7th largest conglomerate from his father. Hanwha Group announced the younger Kim, 37, was promoted to president of Hanwha Solutions less than a year after he was promoted to vice president. Kim ascended to executive director position in 2015 before he was promoted to vice president after four years.

The Hanwha group operates department store Galleria.

What: following the spring lockdown, Harvey Nichols finally reopens store in Birmingham

Why it is important: one of the biggest player in UK decided to put on hold the reopening of one of the flagship located inside Birmingham’s Mailbox mall, even when it was allowed by the government and reopens just in time for the Christmas shopping season

Following the national lockdown in UK, Harvey Nichols closed all stores in March. But since stores got cleared to reopen in May, the retailer decided to keep its Birmingham store’s doors closed. People were sceptical about this long pause and fear was that the store would never reopen -especially after John Lewis announced it would permanently shut its Birmingham store.

Harvey Nichols COO Manju Malhotra said the company will now be “focusing on what we do best, which is providing a high level of personal service and an exceptional shopping experience, within a safe and comfortable environment”.

Harvey Nichols Mailbox store finally reopens

Related item:

• John Lewis closes 8 stores

Alibaba is spending $3.6bn to buy a controlling stake in one of China’s top supermarket operators as it doubles down on grocery delivery, a key growth engine for the ecommerce group during the pandemic. Alibaba is purchasing the shares from France’s Auchan Retail International.

Grocery and fresh produce delivery have become key revenue drivers for China’s ecommerce giants including Meituan, Pinduoduo and JD.com as shoppers avoid physical stores due to the coronavirus outbreak. Last year, Sun Art was the first traditional grocer in China to make its online delivery business profitable, according to Bernstein Research.

“Alibaba’s core ecommerce business is under pressure; its profit hasn’t grown much this year, [and] this will help,” said Li Chengdong of ecommerce think-tank Haitun.

Alibaba to pay $3.6bn to take control of Chinese supermarket chain Sun Art

What: Two new Nordstrom Local service hubs are opening in the Los Angeles area.

Why is it important: Nordstrom launched its first Nordstrom Local store in 2017 in Los Angeles in order to bring convenience to its community. Now more than ever retailers need to rely on convenience, local, and community.

The Local hubs, much smaller than regular Nordstrom locations, serve as supportive units for the full-line stores. Different services such as custom alterations, online ordering for in-store pick-up, easy drop-off returns, and more, makes this store attractive to new and returning customers. The pickup at a Nordstrom Local is deeply appreciated, especially in the L.A. area where distance is huge, and even more appreciated in times of pandemic.

The new stores will be located in Newport Beach (a 110sqm store at 2043 Westcliff Drive opening on 6 November)  and in Manhattan Beach (175sqm at 451 Manhattan Beach Blvd, opening in the coming month).  These expansions prove that even in competitive times, the right format can make the physical store concept successful.

"Opening Nordstrom Local service hubs in the Los Angeles area is part of the continuation of our market strategy in one of our largest markets to provide customers with greater access to merchandise selection and faster delivery while increasing convenience and connection through our services," said Ken Worzel, chief operating officer at Nordstrom.

Now Nordstrom Local service hubs count with five locations in Los Angeles area, which include Melrose, Downtown Los Angeles, and Brentwood. There are also two Nordstrom Local's in New York City, on the Upper East Side and in the West Village.

Nordstrom Expands Convenience for Los Angeles Customers with Two New Nordstrom Local Service Hubs

Related items:

• Nordstrom opens merchandise-free concept
• Nordstrom plots 2 more Local concepts
• Nordstrom to introduce two local hubs in New York
• Nordstrom Local debuts in NYC, to accept returns from Macy’s and Kohl’s

Macy’s CEO Jeff Genette was interviewed by NRF CEO Matthew Shay who asked him about the impacts of Covid-19 on the business as well as about the future.

He emphasised the private label role in the assortment and how they have been increasing variability in the supply chain. Macy’s has reduced its suppliers by 50% in a year and is now sharing fabrics between genders, brands and age-groups. Changes are also being made in packaging to make it more sustainable.

One surprise that Macy’s experienced apparently was the fact that it was the neighbourhood stores which did well – it might have been a mistake to concentrate so much effort on the flagships suffering from the lack of travel and tourism.

The group will also further develop its off-price Back Stage format.

For the future, the big challenge is to perfect and develop the omnichannel model to offer convenience, speed and price to customers.

watch macy's ceo interview

Takeaway:

While the measures mentioned by Macy’s CEO are important, they are all things which department stores should be doing (and indeed were doing) anyway. Cost-savings in the supply chain and perfecting omnichannel are basic. It is just further improving the old department store model in preparation for what is likely to be a very different world.

It is comparable to the huge investments being planned by KaDeWe owners to create yet more stores, albeit lovely ones, (see report of GDI conference presentation by KaDeWe CEO) when what is needed is “a new approach to managing business that will satisfy a changing consumer”, as put by Walter Loeb in Forbes.

article: Macy’s CEO Jeff Gennette Talks About The Future

What: The e-commerce giant launches its Swedish website.

Why is it important: Amazon continues its expansion in Europe with a new webstore opening on the Sweden territory, with a selection from big European brands as well as local Swedish brands, confirming the importance of digital retail.

It is a great opportunity for Swedish businesses to sell on Amazon in order to reach more customers and expand. More than 30 categories can be found on the platform such as Consumer Electronics, Tools and Home Improvement, Sports and Outdoor, Toys, and Baby.

The opening follows one of Amazon’s largest investments in renewable energy outside the US, in Sweden.  Indeed, Amazon launched a project in Western Sweden that is expected to deliver 280,000-megawatt hours of clean energy annually and that will support Amazon Web Services (AWS) data centres in the country among others. A second renewable energy project, an onshore wind farm in Sweden, will begin operations in 2022. “These launches take Amazon one step closer to meeting its Climate Pledge commitments of achieving net-zero carbon emissions by 2040, ten years ahead of the Paris Agreement.” said the company in a press release.

Amazon.se launches in Sweden

In a bid to encourage its customers to recycle used garments, Swedish fast fashion retailer H&M is showing garment-to-garment recycling system Looop in their Drottninggatan stores in Stockholm. Shown for the first time, the container-sized machine recycles old textiles into something new in front of customers. Old garments are dissembled and assembled into new ones, and then cleaned, shredded into fibres and spun into new yarn that will eventually be knitted into new clothing. The system uses no water and nochemicals.

H&M also offer the possibility to their customers to use the Looop system to turn their old clothes into new ones with a fee of SEK 100 for members of the loyalty program (approx. EUR 10), and SEK 150 for non-members (approx. EUR 15). All proceeds go to projects related to research on materials.

Recycling System ’Looop’ Helps H&M Transform Unwanted Garments into New Fashion Favourites

Cooler weather helped to move some autumn items, but the lack of international shoppers continued to dampen sales. Fast Retailing said Uniqlo store stores in Japan increased by 10 percent last month versus September 2019. Customer numbers were up by 8.5 percent, and the average purchase grew by 1.4 percent. Isetan Mitsukoshi Holdings, Japan’s largest department store operator, said September same-store sales of its five department stores in the Tokyo metropolitan area declined by 35.5 percent on the year. The Mitsukoshi store in the Japanese capital’s Ginza district, which was a popular shopping destination for overseas tourists before the onset of the pandemic, saw its September sales fall by 47.8 percent. Takashimaya said sales at its 15 department stores in Japan dropped 36.1 percent in September versus 2019. The retailer’s Osaka store in southwestern Japan saw its sales fall by 44.7 percent, while the store in Tokyo’s Nihonbashi district recorded a monthly sales decrease of 41.7 percent.

September Retail Sales in Japan are Mixed

Inclusive “solutionwear” brand Skims, founded by Kim Kardashian West, is available for the first time outside of America. The Europe launch is part of an exclusive distribution deal with Selfridges. The range, which includes over 200 styles from sizes XXS- 5X in nine tonal colourways, is available on Selfridges website as well as in the retailer’s stores in London, Birmingham and Manchester. Kim Kardashian West said: “Selfridges are known for their incredible fashion mix – making it the perfect place for UK based customers to discover Skims.”

Combined sales by South Korea's retail giants are estimated to have declined more than 2 trillion won (US$1.75 billion) on-year in the first nine months of this year on the fallout of the COVID-19 pandemic, a poll showed on 19 October.

Industry leader Lotte Shopping and its rivals Shinsegae and Hyundai Department Store are projected to have posted a combined 17.3 trillion won (US$15.2 billion) in sales in the January-September period, down 2.2 trillion (US$1.93 billion) won from the previous year, according to the survey by Yonhap Infomax, the financial news arm of Yonhap News Agency.

Local retailers have been hit hard by the virus outbreak as people refrain from visiting offline stores and instead resort to online shopping to avoid infection risks. In particular, the retail giants' duty-free segment has been battered by the pandemic as the number of customers sharply fell amid disrupted air travel.

Retail giants' sales dip over 2tr won this year amid pandemic: poll

Despite this year’s bumpy road for retailers, Inter Ikea Group has announced stable retail performance with EUR 39.6 billion of sales by franchisees (compared to EUR 41.3 billion in FY 2019). The group benefits the consumers spending more time home with online retail sales that have increased 45% this year, while the Ikea website has welcome 4 billion visits, expanding to three new markets this year (including China). Ikea plans to expand in new markets like Mexico and the Philippines during FY21 and will keep opening new locations in existing markets.

“The Ikea website, stores and other locations complement each other to create a great customer experience all the way around. We’re pleased about online sales growth, but also very happy that customers still love our stores. People want to touch and try our products or get personal help. As a result, we welcomed 825 million visitors to stores and opened 33 new locations this year,” says Inter Ikea Group CEO Jon Abrahamsson Ring.

Ikea delivers stable retail performance in a year of homecoming

Related item:

• IADS Exclusive - Ikea: How to keep growing and thriving at the same time

What: John Lewis Partnership is presenting a comprehensive plan, including many various proposals put together: retail, non-retail, e-commerce.

Why is it important: In spite of an ambitious plan to reach 60 to 70% of the business online, JLP did not present a plan including a massive restructuring of its retail network, which baffles specialists. In spite of closing down 8 units, there will be still 46 stores to cater to and make profits as well. We believe at IADS that some department stores will need to learn downsizing their retail network, in order to sell less but earn more money at the end of the day.

UK retail group John Lewis is planning to triple its previous saving plan until 2022, to €330m annually, in order to fund a €1.1bn investment plan split between e-commerce and stores, aiming at increasing profit from  €160m last year to €440m in 2025. In parallel, there is a plan to develop non-retail activities (housing, horticulture…), with a target of reaching 2/5 of total turnover within 2030. Observers are noting that the plan, ambitious on the e-commerce section (target: 60 to 70% of the total retail business) does not include a massive restructuring of the stores’ network, which raises questions. To date, only 8 stores are to be closed, with the layoff of 1,400 associates (out of 80,000).

WAITROSE AND JOHN LEWIS SET OUT BOLD PLANS TO REACH MORE CUSTOMERS

John Lewis To Build And Rent Homes, And Retail To Be 70% Online By 2025

John Lewis triples cost-cutting target

Hyundai Department Store Co. is readying to lure shoppers to its new outlet store, due to open on 6 October in Namyangju, a Gyeonggi city east of Seoul, with not only luxury fashion brands but also diverse art and cultural events inside the massive shopping complex. The South Korean retail giant announced that its fourth outlet store Hyundai Premium Outlet SPACE ONE will have 36,859-square-meter cultural and art facilities, almost 70 percent of its total shopping area of 51,365 square meters. Its cultural space is six times wider than the average art-related space of its premium outlets of 6,611 square meters.

Ten years after it opened its first store in Dubai, Bloomingdale’s will now let you shop online. The platform is available in the UAE, Saudi Arabia and Kuwait. Customers in the UAE will get same-day delivery within the Emirates, while customers in Kuwait and KSA will get express shipping. Alternatively, customers in the UAE and Kuwait can skip the wait and click and collect from physical stores. Bloomingdale’s has also introduced an iOS app for the region, letting you shop on the go.

Bloomingdale’s Middle East launches online store

Shinsegae of Korea has announced a shift in shareholding within the owner family:
Chairwoman Lee, 77, handed down an 8.22 % stake in E-Mart to her 52-year-old son Chung Yong-jin, vice chairman of Shinsegae Group, and an equal share in Shinsegae to her 48-year-old daughter Chung Yoo-kyung, president of Shinsegae Department Store.
The gift raises Yong-jin’s share in E-Mart from 10.33 % to 18.55 % and Yoo-kyung’s share in Shinsegae from 10.34 % to 18.56 % to make them the single largest shareholder in each retail entity. The second-biggest shareholder is National Pension Service that owns 13.15 % shares in E-Mart and 13.05 % share in Shinsegae. Ownership structure in Shinsegae is relatively simpler than other family-owned chaebol names in Korea.

The group separated E-Mart and Shinsegae in 2011 by putting the son and daughter in charge of different business units. According to commentators, the equal inheritance reflects Lee’s will to prevent sibling feud over management by splitting their roles and responsibilities.

Canadian department store operator Hudson’s Bay is partnering with Canadian designer platform Inland to house emerging national and BIPOC brands (Black, Indigenous, and People of Color). For the launch, the partnership features 40 brands, and new brands should be added regularly to the list. Starting 2 October, the assortment is available across Canada through the newly launched Inland online shop, available through thebay.com; the partnership will run until 31 December 2020.

Originally, Inland was a bi-annual pop-up event showcasing fashion and accessory from Canadian labels; this year it expanded to include a curated selection of brands available through an online marketplace.

Hudson’s Bay Debuts Partnership With INLAND To Support Canadian And BIPOC Designers

Related item:

• IADS Exclusive - Diversity: a strategy of silence

What: events and initiatives on stores parking lots.

Why is it interesting: one way for retailers and landlords to respond to the decreasing store traffic in the wake of the pandemic.

A parking lot has never been a great attraction, but amid the pandemic, with the emphasis on outdoor space to remain safe, shopping malls and garages are sharing their parking lots to tenants and vendors for open-air stores and events. Brick-and-mortar retail has been hit hard and landlords are happy with any solution that can bring some foot traffic.

Happenings on parking lots can go from shops to distribution centers or even Covid-19 test stations. Ahead of Halloween, some are setting up haunted houses or hosting shows for people to enjoy from their cars.

This summer, IADS member Breuninger organised a live theatrical show in the parking lot of their Stuttgart store, for customers to watch directly from their cars. The night included dinner, served directly in the clients’ car.

Parking Lots See More Action Than Adjoining Shops

Related items:

• Breuninger gives the lead to Walmart for entertainment
• IADS Exclusive - Walmart: thinking outside the (big) box

What: A 10 years review of major department stores moves on the US market

Why is it important: Another proof, if this was needed, that the pandemic was actually just an accelerator on the problems experiences by the US market. Another illustration as well that the US market had difficulties which were quite specific, and that the international news coverage about department stores is biased by the weight of the US market in the industry.

Retail Dive reviews all major moves from department stores players in the US over a decade. Reviewing it, it is striking to see to what extent the market was addicted to a network sizing race in order to bury in the numbers reported to shareholders the inability to adapt to major changes, i.e. e-commerce and customer evolving behaviour.

Department Stores’ decade of decline

Macy’s is to take a stake in Swedish buy-now pay-later group Klarna as part of a partnership under which the US department store chain will offer its customers the possibility to split up online purchases into four interest-free payments. The US department store chain has struggled to cope with the rise of online shopping and is hoping for a boost from its partnership with Klarna, which is popular with younger shoppers because it allows them to receive goods and return them before paying for them.

Macy’s and Klarna announce new five-year partnership to provide more payment options