What: The trend of branded cafés and restaurants continues as more luxury fashion brands open food&beverage locations.

Why it is important: Consumer experience continues to be the goal of brands as brands and retailers shift towards well-being, hotels and restaurants.

Gastronomy can constitute a new lever for growth for brands by converting less efficient commercial spaces into areas dedicated to catering. This diversification also allows brands to enrich their offer and reinforce their image and lifestyle positioning.

Considering the pandemic, the rush into diversifying their income seems logical as the crisis forced brands and retailers to reconsider how to expand their audience while encouraging the customer to extend their presence in their spaces.  By creating a complete universe around the brand, it also manages to build better customer loyalty, capture their attention, and encourage a larger basket size.

Ultimately, the consumers also assist the brands outside of revenue through earned media posts on social media about the experiences in these spaces.

Fashion brands continue entering F&B

What: The fragrance category gets a shake-up as a new generation of brands addresses the trend of wellness, innovation, and sustainability.

Why it is important: In many cities, fragrance accounts for a large percentage of prestige beauty sales and is reported to be increasing. Credentials and marketing are falling behind successful campaigns which emphasize wellness and commitment to sustainable values.

Over the past decade, beauty brand acquisitions have been on the rise. Market research from the NPD Group notes that fragrance remains the “undisputed champion in beauty”. Strategic partnerships between fragrance brands and companies in other sectors have seen success as well.

As it is difficult to shift the needle in a crowded market, fragrance brands are betting on wellness, leaning into cultural hypes, and spotlighting sustainability. All of these tactics as well as harnessing influencers are drawing in young customers, whose spending is in flux as they are likely to have a fragrance wardrobe, rather than a signature scent, and are motivated by the experience of shopping and wearing the perfume.

Shifting consumer habits for fragrances

What: Following its first half results and success with Kering Eyewear, the Kering Group is looking to create value within the beauty segment.

Why it is important: While it remains unclear if Kering will launch through licensing or acquisitions, the group is well positioned to expand into the beauty segment.

Kering operates under a licensing model with Coty Inc. with whom they have expressed dissatisfaction in the past for having failed to capitalize fully on the segment. Now, with a free cash flow of 2.05 billion euros in the first half of 2022, Kering is well positioned to make acquisitions. The group announced in 2019 that its M&A search was back on, but it has struck only a handful of small deals since then.

While reports look good as many Kering brands had high sales increases and growth, Gucci, their top performing brand, slowed in comparison due to its exposure in China. The euro’s slide to parity against the U.S. dollar did boost top-line revenues for companies that sell many of their goods abroad like Kering’s brands. In addition, U.S. tourists have taken advantage of the cheap euro to splurge on luxury goods abroad.

Whether through launching a beauty line or diversifying the group’s portfolio with acquisitions, Kering maintains that entering the beauty segment is inevitable.

Kering looks to beauty 

What: Saks Off 5th is moving further into the second-hand market through its recent partnership with Rent the Runway by adding labels previously not carried on the platform and bolstering the current assortment.

Why it is important: The partnership enables Saks Off 5th to introduce brands it didn’t previously sell, expand selections from those already carried, and tap a rapidly growing segment of customers seeking more value.

As inflation increases, the partnership comes at an ideal time to offer consumers a sustainable and value-centric offer.  The expansion of Saks Off 5th previously present assortment also answers consumer demand by providing greater size, integrity and depth that is beneficial from a pre-owned perspective. Rent the Runway has an engaged customer in the resale market due to their strategy of broadening reselling and subscription services. Their mission is to introduce an even wider audience to the environmental and financial value of preloved fashion.

Saks Off 5th entered the resale market in 2020 with LXR & Co., a provider of pre-owned vintage handbags and leather accessories from luxury and premium brands. For this partnership, SaksOff5th.com has created a “pre-owned” section to house Rent the Runway’s second-hand items labelled with a distinct badge. Saks aims to include “predominantly in season” merchandise to only be sold on SaksOff5th.com.

Both Saks Off 5th and Rent the Runway mutually benefit from the shared audience and consumer trust in each brand’s respective expertise.

Saks Off 5th partnering with Rent the Runway

What: Frasers Group has bought a 28.7% stake in Australian-based fashion marketplace MySale.

Why it is important: Frasers Group believes the deal will provide a “strategic partnership whereby end of line group products can be cleared via an established clearance channel”.

Fraser Group upped its stake in Hugo Boss. They now own 3.4 million shares of common stock, representing a 4.9% stake in Hugo Boss, and 18.3 million shares of common stock via the sale of put options, representing a 26% stake.

Frasers Group also bought Missguided for 20 million.

Frasers Group acquires 29% stake in MySale 

What: User-generated platform Xiaohongshu is the source of lifestyle trends for Chinese consumers making it an ideal entry point for international brands seeking authentic feedback.

Why it is important: With a large community of consumption-motivated users seeking new experiences and items, Xiaohongshu is a key partner in connecting brands with the Chinese consumer.

The organic user-generated content can also inform established brands on how to adjust their product lineup to meet Chinese consumer interest. Its popularity as the leading source of lifestyle trends and product recommendations helps guide many Chinese consumers in their purchasing decisions.

In recent years, international brands also have gained more consumer familiarity with increased time spent working, living, travelling and studying abroad. Thus, Xiaohongshu is ideal for international luxury and fashion brands seeking to uncover Chinese consumer trends, leverage the platform to raise awareness and nurture loyalty by directly connecting with consumers.

Xiaohongshu’s large community of consumers is the perfect testing ground for new things. This includes metaverse trends with the possibility to sell NFTs in its virtual space, R-Space.

Brands gain entry to Chinese market through Xiaohongshu platform 

What: Clinique has debuted a new retail concept in Macy’s Herald Square in Manhattan.

Why it is important: Clinique is rolling out a new retail concept that combines self-shopping, digital experiences, and in-person clienteling to create an experience that aims to redefine the brand positioning and DNA.

Digital features include Clinique’s ‘Clinical Reality’ technology that scans the faces of clients and offers a customized assortment of product recommendations. In the centre, the ‘Discovery Table’ offers new products and classic best sellers. Consultants are also available at the ‘Community Bar’ to assist clients when needed. Despite being able to scale the project across stores and location sizes, the biggest challenge for Clinique has been brand familiarity.

The goal of this new concept is to reshape the perception of Clinique by delivering an unseen experience that can attract younger consumers and reinvigorate the excitement in dedicated clients.

Clinique’s new retail concept in Macy’s

What: Glossier signs its first major wholesale deal with Sephora.

Why it is important: The first major wholesale deal for Glossier since it was founded in 2014 will dramatically expand the distribution of this DTC brand.

As a trendsetter for DTC and digital brands, Glossier’s partnership with Sephora marks a shift in beauty retailing. Online-only products are no longer a disruptive strategy as e-commerce is now an expected convenience for consumers. This move into Sephora stores will assist in Glossier’s ambition to scale the business larger than it could have alone.

The partnership comes with some perils as Glossier will need to adapt their previous experiential pop-ups into Sephora shop-in-shops. The price point is another discussion point between the beauty brand and retailer due to the positioning and target consumer of Glossier being lower than Sephora’s.

For Sephora, the partnership will entice younger consumers into its store. While for Glossier, the deal answers its consumer’s demand for the ability to shop products offline.

Glossier is coming to Sephora

What: Despite a decline in consumption, analysts expect fashion retail in Shanghai to recover by the end of 2022.

Why it is important: The apparel retail sector which accounts for 24.2 percent of total spending, fell 17.8 percent to 146.177 billion renminbi, or 21.86 billion USD, during a two-month lockdown. Shanghai’s foreign trade also dropped more than 14 percent in May to 275.934 billion renminbi or 41.26 billion USD. Dan Wang chief economist at Hang Seng Bank China believes that macroeconomic policies are expected to stay strong. Beijing has yet to abandon its growth target of 5.5 percent making a rebound more likely.

The fashion sector’s rebound is predicted to recover by the end of the year but will rely on the confidence of young and wealthy consumers. The second half of this year is likely going to show some acceleration in economic recovery, yet the labor market will remain weak. Luxury spending is limited by rising layoffs, slower income growth, and mounting employment pressure for younger generations as unemployment rates reach an all-time high in the last four years.

Discounts remain in line with the season, as many brands are hesitant to meet the current consumer confidence by lowering discounts further. Kenny Chan, chief executive officer of IT China, remains confident in brands tapping into mainland China.

Bain and Kantar has also released a recent report advising brands to use 2022 to prepare for a strong rebound in 2023 validating an overall optimism around the Chinese market.

Shanghai consumption dropped 18 percent from January to May

What: Predictions for the coming holiday season leave retailers cautiously preparing for uncertain loss.

Why it is important: Uncertainty around inflation, geopolitics and labour market strain is making retailers especially cautious in their holiday season preparations.

Agility will be a key skill for retailers navigating unpredictable losses in the coming months. Interviews with retailers, vendors, consultants and industry analysts have indicated an extended season with increased promotions and price breaks starting even earlier than in 2021. Second quarter spending by American customers is decelerating as many took advantage of Amazon Prime Day and back-to-school sales to get ahead on holiday shopping.

Eveningwear, dresses, party outfits and related categories for jewellery, footwear and beauty are expected to see good sell-through while casual apparel, loungewear, electronics and home categories are predicted to drop. In addition, 83% of shoppers will seek out sustainable brands and products this holiday. Retailers will test NFT drops, and 46% of shoppers said they would consider purchasing NFTs.

Being able to respond to the replenishment of best-sellers and the ability to manage the quantity of merchandise that’s not selling, will determine which retailers succeed this holiday season. Department stores and nimble off-price retailers will be best positioned for stable performance during this unpredictable season.

Holiday promotions come early this year

What: Fashion brands in France struggle to return to pre-pandemic levels of activity for the first half of 2022.

Why it is important: New behaviours of customers that were induced by the health crisis still persist today and are leading to lower traffic and conversion rates as well as consumer trade-offs that are being made against clothing.

Retail Int. for the Trade Alliance reports that sales are down 5% compared to the same period in 2019 for fashion brands in France. Store turnover is at a decrease of 9% compared to 2019. While the rise of e-commerce is up 68% compared to 2019, the trend’s plateau in 2021 only offsets the decline in physical stores by half for this year.

January of this year saw poor performance due to new variants of Covid-19 and a hopeful recovery in February was stamped out by the start of the Russian-Ukrainian war. May saw a spring upturn helped by favourable weather. However, the month of June showed a drop-in activity of 13% (vs. 2019).

The beginning of the discount period (from June 22 to July 2) saw a drop in sales of around -19% (vs. 2019), accompanied by a drop of 28% in traffic. While an increase in the average basket is observed (+12%), there is no visible increase in the conversion rate. The Alliance du Commerce reported that men’s fashion performed well, the children’s segment performed decently, and complicated trends for the women's and lingerie departments. Footwear is having a difficult period.

Consumer behaviour remains affected by the pandemic with consumers going in-store less frequently and favouring shopping outside cities. Outlets have seen an increase in sales of 8% over the period. Retail parks are also holding up well. And as tourism begins to increase, popular city districts are seeing an improvement in foot traffic and sales.

On average, fashion players have increased their selling prices by 4.1% as consumers are in search of good deals. Yet with brands still reeling from increased costs within the supply chain, the challenge to meet the consumer in the middle becomes a difficult balance.

The new minister of trade, SMEs, crafts, and tourism is looking to tackle investment support for brands, changes in taxation (additional depreciation, reduction in CVAE and Tascom, tax credit), capping of commercial rents, and financing assistance (reinforcement of loans offered by the BPI in particular).

Fashion sales remain low for the first half of 2022 

What: An unique Formula One experiential retail space inside Selfridges to draw in fans, collectors, and visitors.

Why it is important: Selfridges will be the first to have a location of this kind. The space will include a real F1 car that will be available for purchase, a distinguishing attraction for high-paying customers. Selfridges plans to tap into Formula One’s growing audience which has increased 13% since 2020 to a global TV audience totaling 445 million people.

Following the British Grand Prix in Silverstone, Selfridges unveils a Formula One experience to tap into the F1 frenzy. The permanent retail experience is meant to be a destination for fans, collectors, and visitors. Smarttech Retail Group and The Memento Group have linked together to include a 2022 season F1 show car with unique memorabilia and collectibles to draw interest and visitors to the Selfridges London flagship. There will also be a virtual F1 driving experience in-store.

Selfridges’ Formula One experience in London flagship

What: Sephora and the BuzzFeed Inc.-owned media brand are partnering for six months to produce beauty-focused content that can be found on Complex’s channels.

Why it is important: Sephora is tapping into the audience of Complex with the intention to uplift minority communities and show a commitment to their diverse brands and clients.

The “Beauty Beyond the Surface” hub will feature editorial and video series from recognizable names and faces in the lifestyle and sneaker space focused on the storytelling of personal beauty and style journeys. Bringing style and beauty together, this is Complex’s first official venture into the space. Sephora sees Complex’s lack of beauty coverage to date as an opportunity as opposed to a hindrance.

The partnership will entail a mix of online articles and videos, with content published on a weekly basis centred on a non-traditional approach to beauty journalism that targets BIPOC women.

Sephora teams up with Complex Networks

What: The Chinese government plans an economic support package to stimulate the economy into recovery after strict lockdown measures have left market growth across sectors in contraction.

Why it is important: The luxury retail market is expected to see lacklustre growth as the housing market suffers and COVID-19 restrictions continue to affect China’s overall GDP.

According to a Barclays report, the investment bank continues to favour luxury names with a strong portfolio such as LVMH and Richemont. Luxury sales in Asia-Pacific are expected to climb by around 5% in the second half of 2022. However, cities such as Shanghai, Xi’an, Macau, and Hainan’s Haikou started imposing COVID-19 lockdowns in recent weeks, as the Chinese government is sticking to its zero-COVID-19 policy.

Despite being the world’s second-largest economy, China has the weakest GDP growth since the coronavirus outbreak, only 0.4% year-over-year in the second quarter. Retail sales grew 3.1% in May compared to the same time last year, while in the first half of this year, retail sales contracted 0.7% year-over-year. Apparel retail (clothing, shoes, hats and knitting textiles sales) rose 1.2% year-over-year to 119.8 billion renminbi, or 17.7 billion USD in June, but dropped 6.5% for the first half of 2022. Due to COVID-19-related lockdown measures in recent months, Beijing’s GDP dropped 2.9% in the second quarter from a year earlier, and Shanghai’s contracted a sharp 13.7% in the same period.

To reach the goal of 5.5% GDP growth for 2022, the Chinese government has unveiled a broad package of economic support measures to stimulate the economy, including tax cuts and funnelling money into public infrastructure projects.

Slow retail recovery due to China’s weak GDP

What: H&M teams up with Camp to create a family experience centred around sustainability.

Why it is important: With the importance of consumer engagement combined with H&M’s growing family customer base, the retail chain decided to partner with another children’s retailer, Camp.

Two attractions, “The Style Cabin” and “The Upcycler”, will be housed in Camp’s Columbus Circle store where families can upcycle materials into toys and accessories. “The Upcycler,” a pedal-powered station that uses kinetic energy, will tally up accrued mileage in support of donations to The Learning Tree. The two brands surprisingly don’t have any goals for sales generation or brand interest but instead are focusing on education and engagement. There won’t be any H&M merchandise sold at the Camp Columbus Circle location

It is unclear if H&M will partner with different retailers for future installations. The focus, for now, is on this initiative and its reception. The word-of-mouth metrics and physical attendance will be used as key barometers to measure the success of the activation.

H&M teams up with Camp for activation

What: LVMH is struggling to offset Chinese lockdowns with European and US sales leading to a slower growth compared to 2019 quarter reports.

Why it is important: Despite strong performance in Europe and the US, LVMH fails to offset declining sales due to China’s Zero-Covid policy.

Sales in fashion and leather goods rose 19% in the second quarter compared to a 30% rise seen in the first quarter. While sales in Europe and the US were up 48% and 22% respectively, Asia dropped 8%. Normal levels still seem uncertain for LVMH in China.

LVMH is still optimistic about the US dollar strength and American tourist shopping, but will remain vigilant regarding geopolitical tensions, health restrictions and recession trends.

LVMH growth slows 

What: K11’s first flagship project in the Chinese mainland will bring art and culture into a retail hub covering 228,500 square metres.

Why it is important: Located in Prince Bay, Nanshan, Shenzhen, the new 'K11 Ecoast' serves as K11’s first flagship project in the Chinese mainland to comprise the K11 Art Mall, K11 HACC multi-purpose art space, K11 Atelier office building and the 'Promenade.’

The K11 HACC multi-purpose art space will combine a variety of contemporary arts and creative culture to offer an exhibition and activity platform for artists, designers, and art organizations. So far, partnerships have been established with leading art and cultural institutions like MoMA PS1, the Centre Pompidou, the New Museum of Contemporary Art, and the Palais de Tokyo.

The complex’s projected completion is set for 2024, boasting it will be dedicated to promoting a sustainable, circular lifestyle and the integration of environmental protection.

K11's new Shenzhen retail precinct

What: Ulta is bringing a curated selection of products to Allure’s in-person and online beauty stores.

Why it is important: The importance of immersive and experiential retail is demonstrated by this partnership between two beauty industry leaders, Condé Nast’s Allure magazine and Ulta Beauty.

The Ulta shop-in-shop will be open from July to September in Allure’s New York bricks-and-mortar store. This partnership will be the first time Allure has partnered with a retailer, however, they have already hosted 500 in-store events like masterclasses and panels. Along with a curation of products that change month to month, Ulta will host and plan events to generate consumer visitation.

Allure’s move to retail is representative of an increasing trend among media outlets focusing on converting readers into customers. While Ulta’s strategy is to meet customers across channels beyond traditional retail. This has been demonstrated since August 2021 as they began a rollout of Ulta shop-in-shops in Target stores across the U.S.

This partnership will expand Allure’s retail selection while widening Ulta’s audience.

Partnership between Ulta Beauty and Allure magazine’s retail store

What: Cognac brand Hennessy will launch a permanent retail shop in London department store Harrods next week, with an exclusive ‘one-of-a-kind’ bottling up for grabs.

Why it is important: The brand’s first standalone Hennessy Boutique will open in early June 2022 on the lower ground floor of the department store in London’s Knightsbridge.

The boutique will feature the brand’s entire collection, including rare Cognac blend Hennessy Paradis.

Hennessy will also unveil a new expression, crafted exclusively for Harrods using some of its rarest eaux-de-vie. It will be presented in a limited edition dame jeanne bottle, created in collaboration with artist Nelly Saunier.

The boutique will also provide an exclusive personalisation service, called Hennessy Hands. The service will offer leather bottle tags that can be added to the neck of a bottle, and a collection of personalised and handmade options and colours, including embossed gold or silver initials.

Harrods to open Hennessy boutique

What: Major retailers may be on an Amazon-like path when it comes to returns, allowing customers to keep refunded merchandise.

Why it is important: With fuel prices at record highs and ongoing supply chain turmoil, retailers are struggling to adapt and are doing whatever they can to lessen the pressure on themselves.

Retailers are struggling with excess inventory, and sorting it all comes at a high price. Returns add a significant burden to that storage challenge. According to a survey by the National Retail Federation and Appriss Retail, retail returns hit an average of 16.6% in 2021 — up from 10.6% the year prior — adding up to more than $761 billion of merchandise that's likely to end up back in stores and warehouses.

Target, Walmart, Gap, and American Eagle Outfitters are among the retailers that are toying with the idea of letting customers keep refunded merchandise, following Amazon’s ‘returnless retuen’ policy for cheaper items years ago.

Target and Walmart are considering dramatic return-policy changes

What: Neiman Marcus is lifted up thanks to a refreshed base of luxury shoppers.

Why it is important: Younger, omnichannel and shopping in all stores, sensitive to marketing and buying leading brands: the dream?

Geoffroy van Ramedonck, the CEO of Neiman Marcus, has noted that upper-income shoppers have lifted results in the department store company, and took note of 5 new traits :

• They are on average 7 years younger (60% of the customer base is Gen X, Millenials or Gen Z),
• Acquired customers spend at least $10,000 a year, and 1 out of 6 comes back within 90 days,
• They are buying top 20 brands that are up 70% from prepandemic levels,
• They are everywhere (no store is left behind),
• They are sensitive to brand activations such as the Prada popup which generated $10m in 2 days.

According to van Ramedonck, overall sales are up +30% vs. Q1 LY.

5 things Neiman Marcus’ CEO discovered about luxury shoppers 

What: Report reveals a surge in the direct-to-consumer subscriptions market during the pandemic-induced e-commerce boom.

Why it is important: There are a total of 225 million subscriptions in the U.S. from USD 61 million consumers, which is 3.7 subscriptions per person. The total annual revenue of the d-to-c subscription market is now USD 27.6 billion.

The direct-to-consumer subscription model has been around since 2004 with smaller businesses using this as an opportunity to test the model out, but no massive story or success came from it. The next noticeable subscription was the launch Birchbox in 2010 which allegedly put subscription boxes on the map.

The report revealed that between 2010 and 2012, similar companies emerged, which included Ipsy, Blue Apron and Dollar Shave Club. From 2011 to 2015, d-to-c subscription companies experienced a 4,461 percent increase in revenue.

The report also analyzed the current composition of d-to-c subscriptions in the market and classified it into three segments:

• Replenishment services: (32% of the market) grocery, grooming, toiletries and pet supplies. Ex: Dollar Shave Club, Olipop, Quip
• Membership subscriptions: (13% of the market) subscription to a product plus access to membership perks. Ex: Peloton, Thrive Market, NatureBox
• Curation-type subscriptions: (55% of the market) curated monthly boxes of apparel, accessories, snacks and cosmetics. Ex: FabFitFun, Birchbox and Cratejoy

The report also provides some insight on the triggers for consumers to subscribe, to continue to pay, or unsubscribe. The triggers for remaining involved in the subscription model are mainly experience-based and financial incentives. Triggers for cancellations include a preference for buying the product on a need basis, finding a better subscription, and dissatisfaction with the product or service.

The impact of the D-to-C Subscription Market 

What: Walmart plans to build four new high-tech fulfillment centers over the next three years that would include automation, machine learning and robotics while also collectively employing more than 4,000 new workers.

Why is it important: Through the four new fulfillment centers alone, Walmart could offer next-day or two-day shipping to 75% of the U.S. population.

Walmart has partnered with Knapp, a fulfillment tech company that will develop an automated high-density storage system that streamlines a manual, twelve-step process into just five steps.

The centers use an automated storage system to house products — once they are received, unpacked and placed in specialized “totes” — in millions of designated locations. When a customer purchases an item, the system retrieves it automatically and creates a custom-fitting box.

Walmart plots 4 new ‘next generation’ fulfillment centers

What: An alliance of major fashion brands including H&M have announced that they are pausing the use of the Higgs Index tool to measure garments’ sustainability after critics described it as greenwashing.

Why it is important: The Higg Index was once seen as a creditable label that many brands are using to promote sustainability efforts. It is now being criticized as an aid to greenwashing and being advised against as it does not enable consumers to make more informed decisions.

The Norwegian Consumer Authority (NCA) warned H&M Group two weeks ago against using the Higg Index to support its environmental claims. It added that if it was still using such marketing by 1 September, it would risk economic sanctions.

Even though the NCA did not investigate H&M they did investigate another Norwegian brand Norrøna who was also using the index on their website. The NCA concluded that the data was in fact misleading to consumers and the claims unsubstantiated.

Many sustainability activists have been rejoicing after the announcement as they felt this methodology does not cover all aspects of product sustainability.

Other retailers that are currently using the index are: Nike, Primark, Walmart, Boohoo, Amazon and Tommy Hilfiger.

Fashion brands stop using sustainability index tool over greenwashing claims