What: Luxury brands and duty-free retailers are betting on e-commerce, trendier products, and a better shopping experience at airports to make up for the impact of the pandemic.

Why is it important: With the sales of luxury goods at airport shops down with the pandemic, since business travelers, Chinese tourists, and other big spenders are not traveling, airport retailers are testing new store formats and click-and-collect options to generate more revenue from fewer passengers. Concept stores featuring trendier products aimed at younger shoppers are competing with traditional duty-free shops.

Travelers returning to the airport for the first time since the pandemic will find a different retail landscape awaiting them past the security gate. The duty-free shops selling expensive liquor and cosmetics are still there, but they’re refreshing their assortment to cater to Gen-Z and pushing new websites and shopping apps.

Concept stores pitching lifestyle and contemporary fashion brands are popping up alongside mainstays like Dior and Prada. There are also more things to do beyond shopping, from workout classes to movie screenings.

Among the groups still missing are business travelers and Chinese tourists, historically two of the biggest spenders at airport shops. Instead, terminals are seeing young tourists, especially those making short trips, a group that will make up a majority of passengers by 2025.

These travelers aren’t big shoppers, preferring to splurge on food, drinks and entertainment before boarding their flight. On average, a long-haul Chinese passenger spends over $100 on luxury goods, compared to a short or medium-haul European passenger, who spends just $1, according to Mauro Anastasi, a retail and aviation partner at Bain & Company.

Airports are thus introducing experiences beyond shopping to cater to younger consumers. After passing through security at Baltimore-Washington Airport, travelers can make time for a pre-flight workout at Roam Fitness, borrowing Lululemon gym gear and running shoes and using showers stocked with Malin+Goetz products. At Heathrow, a pop-up Chanel store invited shoppers to try a range of the brand’s beauty products using augmented reality on digital screens.

The future of airport retail 

What: The founder of Showfields reflects on retail and the experience it should bring to customers.

Why it is important: The “inverted business model” where Showfields as a retailer treats brands as final customers and charges them a service rather than buying their product, is an alternative worth being considered for specific parts of department stores (concept stores, dedicated spaces, etc…)

Tal Zvi Nathanael, whom IADS CEO members have met via a video conference in October 2020, explains the concept behind Showfields and his new projects.

He developed Showfields in 2019 out of frustration as retail and the lack of “magic” as he puts it, into a project where surprises lie at the same time in the experience itself but also in the product selection. 60 to 100 brands, in their majority either not distributed or with a DNVB business model, are displayed and renewed every 6 months on the 3 floors of the 1,400 sqm-wide store, with an alternative model: instead of purchasing the products like in a traditional wholesale model, Showfield charges between $12,000 and $36,000 for brands campaigns, caters for the workforce and the VM, and provides data to brands.

There are 4 more stores to be open on the East Coast within 2022.

Showfields’ specific approach to retail 

What: Walmart will launch a beauty accelerator program dubbed Walmart Start to discover up-and-coming beauty brands.

Why it is important: Beauty accelerators have become a popular way for retailers to broaden their assortment and keep a pulse on innovation in the segment.

Walmart will choose five beauty brands to receive various resources and operational support to help prepare them for a potential product launch in store and online.

The beauty brands (which will be announced in May) are expected to launch in Walmart’s stores and online at some point between December 2022 and March 2023.

Other players that have their own brand accelerators include Sephora, Target, and Ulta.

Walmart launches beauty accelerator, Walmart Start

What: Remote work has become the norm for millions of people. Now, retail store associates are eager to join the revolution — and their employers are scrambling to make it a viable option.

Why it is important: The labour shortages are forcing fashion firms to rethink strategies for hiring and retaining workers in low-paying, low-mobility jobs. New technologies, including the growing use of social media and live streaming to sell clothes from stores, are helping some retailers lay the groundwork for associates to work virtually.

In the past two years, both Nordstrom and Neiman Marcus have launched apps that allow their sellers to send messages to customers, share product recommendations and complete their purchases. The apps proved their worth during the pandemic’s early days when they allowed some sales associates to avoid furloughs and connect with consumers online.

With widespread adoption still a ways away, store associates most often use remote selling apps from their brick-and-mortar stores themselves. At Neiman Marcus, some stores have been redesigned with “terminals” and other built-out spaces in the backroom where associates use tablets and cell phones to chat with customers, host styling sessions and even execute sales transactions without stepping foot on a sales floor.

Retailers are also increasingly experimenting with livestreaming which will account for USD 26 billion by 2023 in the US. On the landing page for certain products on its e-commerce site, Nordstrom features videos of sales associates describing the feel and fit of a garment, even offering styling advice.

Retailers are also encouraging associates to embrace an influencer mindset. Neiman Marcus is piloting a program to formalise the social media content processes for style advisors. If retailers were to formally require store associates to post on social media, they may need to update their compensation packages accordingly. They will also need to invest in teaching workers to take on these tasks.

Even as some retailers experiment with remote work for sales associates, complicated challenges around compensation, scheduling and company-specific needs mean the industry still has a ways to go before it’s a widespread reality.

Can store associates work remotely?

What: After reporting their fourth quarter earnings The RealReal is not expected to be profitable until the end of 2024.

Why is it important: The company has reported that the net loss for the company has increased to USD 236 million compared to last year which was USD 176 million. As resale marketplaces are an interesting circular business model to watch, it seems that profitability in such a business model takes time.

The RealReal did see some improvements with an increase in gross merchandise value with a total USD 437 million and net of sales by 50% reaching a total of USD 1.48 billion.

The RealReal claims that regardless of these claims they will have a healthy and strong upcoming year for 2022.

The RealReal net loss continues

What: A new concept placing the Ikea brand as a community space in malls.

Why it is important: Ikea is testing several store formats and brand formulation iterations. By doing this, they are gathering data from different sets of customers, and also exploring options that could serve as examples for other retailers looking to expand their store format portfolio.

Ikea is planning the opening of a new store format in Hammersmith mall in London, and this format is planned to be extended to the US and Canada. Interestingly, they are adding a new format to the traditional big box format (which will also be the format used for their first city centre store in the former Topshop location in London) and the “close to you” convenience store.

This new concept, called “Livat” (lively gathering in Swedish language) is specially adapted to malls with a reduced product offer (1,800 available to take away and 4,000 on display), only self-service checkouts options, and designed to be community spaces where people like to gather.

Ikea opens urban London mall with San Francisco and Toronto next 

What: Second-hand makes a place for itself at Monoprix and installs product corners at 58 stores in France.

Why is it important: The second-hand spaces at Monoprix will host fashion and home items.

For the ready-to-wear side, french company “Entremains” will provide a curation of vintage clothing from luxury brands in ten Monoprix addresses.

“Once upon a time” was also asked to provide second-hand clothes for babies and children with a Monoprix stamp. They will be in the corners at 25 points of sale. For the home department, items from the home universe, picked up by Selency, will be on sale in 25 Monoprix units.

Monoprix installs 58 second-hand spaces

What: Walmart has built a tech platform that powers its last-mile delivery ecosystem.

Why it is important: The retailer has increased the number of digital orders coming from its stores by 170% in the last year, leading it to scale its automated market fulfillment centers, tap machine learning and test autonomous delivery.

Walmart’s retail tech that supports its fulfillment operations is built around its own marketplace and uses automation and machine learning to turn a large number of factors into unable data. The seamless communication across the entire delivery process allows the retailer to replenishment at a shorter cycle, gain close-to-real-time insights of inventory and ultimately react to customer demand. Thus, increasing the shopping experience for customers.

The next phase of Walmart’s store integration and evolution is adding more market fulfillment centers to stores. The retailer has also been testing drones and autonomous vehicles to fulfill order in the last mile.

Walmart steps up automated store distribution

What: The vice president of Walmart Fulfillment Services (WFS) Jaré Buckley-Cox announced that the third-party fulfillment business went through a 500% growth in gross merchandise volume last year.

Why it is important: Last year, Walmart added about 20,000 new sellers to its U.S. marketplace after only launching roughly two years ago. The expansion of the fulfillment services program has been key in "bringing more sellers to Walmart's marketplace” with a 90% retention rate for sellers joining the marketplace.

The program has been quite successful for both Walmart (which with this program is able to add to their advertising business which hit USD 2 million last year), but also the sellers themselves. The current sellers who are currently involved with the program have reportedly experienced a 50% sale growth for items. New members are also able to receive free storage and a 10% discount on fulfillment for the first 90 days for those who sign up before May of this year.

WFS is just one of a growing suite of supply chain and other services Walmart is offering to third parties. The goal for Walmart, along with creating a new revenue source from sellers, is to increase its online assortment with the prediction of reaching over 200 million items by the end of this year.

Walmart's third-party fulfillment business experienced a growth of 500% last year

What: Demand for new stores in central London is at record levels as the retail sector continues to recover from the pandemic.

Why is it important: While major closures on Oxford Street created big voids on the famous shopping street, they presented huge opportunities for new retailers to use up the available space.

There have been more than 1,000 requests from retailers or restaurants to find space in central London over the past year, and 177 of them were from businesses that have never had a presence in the capital before.

Although the number of empty sites increased in many areas during the pandemic the void rates they have created are expected to fall as recovery picks up.

Retail space in central London in high demand

What: Target announced a new starting hourly wage range of USD15 to USD24 for in-store employees, supply chain facilities, and corporate headquarters depending on the job title and location.

Why is it important: This news comes as retailers across the US struggle to fill open jobs in offices and stores. Almost 4.3 million people quit their jobs in December and some retailers have hiked pay and benefits to attract and retain workers.

Along with Target’s new starting hourly wage, they also announced a rollout of expanded health care and education benefits for employees. Target’s announcement represents a $300 million investment in its team.

Target increases starting wages for certain roles

What: Neiman Marcus sets its sight on pop-ups and takes the concept to new, immersive, and experiential heights designed to have customers back in-store again.

Why is it important: The group has hosted over ten pop-up retail experiences across all 37 stores, including exclusive collaborations attracting the public back. The mix of curation, exclusivity, and heightened experiences adds to "retailtainment."

The most recent collaboration was held at the Los Angeles store, where the Neiman Marcus Beverly Hills team met rapper, producer, and entrepreneur Tyler the Creator at their Golf le Fleur* event and began to discuss a partnership. The pop-up offered signature suitcase bags along with a fragrance and a three-bottle nail polish set that had a 100 percent sell-through. On day two, Tyler the Creator was on hand to greet fans which added to the immersive experience.

The most important focus is always going to be the unique relationships with customers – whether it be in-store, online, or through digital selling. Thus, building and deepening the customer relationship through experience, service, and product is a top goal.

The next few months will bring more pop-ups with "well-known European luxury houses." The activations may draw customers into the store, but the fresh mix will certainly catch their eyes they hope their wallets too.

Neiman Marcus focuses on pop-ups

What: Klarna's payment solutions and other services will be available at 150 Brookfield shopping centers to elevate the shopping experience.

Why is it important: Klarna and Brookfield Properties team up in a multi-year partnership to exclusively offer Klarna’s payment solutions and provide experiential marketing to 150 U.S. shopping centers, elevating the in-store shopping experience for millions.

This partnership with Klarna will also include out-of-home media, live stream shopping, augmented reality, as well as their payment solutions.

Klarna partners with Brookfield shopping centers

What: Macy’s is prioritising its private brand portfolio to grow the overall business and capture market share by offering assortments that build style credibility at compelling prices.

Why is it important: Leading the way in the development of well-designed and intensely marketed private brands is Target. After embarking on a private label reboot in 2016. Target now boasts 48 such brands, across apparel, home, consumer goods, and grocery. They brought in $30 billion in 2021, about $6 billion more than Macy's as a whole did. Macy's, who said they would revamp their own brands, has turned to Target veterans. Macy's nameplate (not counting its Bloomingdale's) runs 24 private labels across categories, representing 15% to 20% of its volume; the retailer doesn't disclose their revenue.

In 2020, Macy's unveiled its Polaris turnaround plan, and the goal was for its INC International Concepts, Alfani, Style & Co and Charter Club apparel lines to be well on their way to becoming a billion-dollar brand — to account for 25% of sales by 2025. Since then, with its turnaround resumed after getting interrupted by the pandemic, Macy's has introduced new labels, including ‘And Now This’ women's apparel, and Oake bedding.

Macy’s recently contracted with Brand Love Lab, run by Nadine Steklenski and Noria Morales, two executives instrumental in Target's past brand design efforts. Last week, Emily Erusha-Hilleque, was hired to join Macy's own ranks.

While Target customers can buy name brands across categories, including Apple, Levi's and Lego and all manner of groceries, beauty and household essentials, its apparel and home goods are dominated by its private labels. By contrast, Macy's is in the business of being an exceptional distributor of third-party brands.

With some brands pulling back from department stores, Macy's may have an opportunity to fill the market niche and literal store space left behind. Rather than mimicking Target, they will tuck under Nordstrom. Slick new brands won't matter in a sea of clutter, with no sign of intelligent life. Macy’s has up their game in basic retail blocking and tackling to have anything matter.

Macy’s prioritizes its private brands 

What: Kohl’s will open 400 new Sephora locations as well as add six new brands to the assortment.

Why is it important: While industry reports have been mixed about the partnership performance, Kohl’s chief executive officer Michelle Gass notes that 25 percent of the shoppers of Sephora at Kohl’s are new to Kohl’s, younger, and more diverse than their core consumer base.

Kohl’s is seeing incremental mid-single-digit sales lift to overall store sales in the locations where it has launched and Sephora and Kohl’s are on track to hit their goal of opening 850 shops by 2023.

Kohl’s and Sephora plan on 400 stores in 2022

What: Central’s real estate arm is doubling down on the investment announced by the retail sister company earlier in February 2022.

Why it is important: Central Group goes all-in in terms of projected development over the next 5 years and the acceleration is quite significant.

Central Pattana, the largest Thai mall operator and a subsidiary of Central Group, plans to invest $3.7 bn over the next 5 years in order to both upgrade existing properties but also build new ones. This announcement, which does not precise if the announced amount includes already committed projects, follows Central Retail’s earlier announcement to be ready to invest $3.03 bn  during the next five years.

Central Pattana operates 36 shopping centres located in 30 Thai provinces. The plan is to expand to 50 centres by 2026.

Thailand’s largest mall operator plans a $3.7 bn investment programme in the next 5 years 

What: Several fashion brands are experimenting with next-generation materials or “livestock-free” replacements for conventional animal-based materials produced in nature-friendly ways.

Why is it important: From Gucci to Salvatore Ferragamo, fashion brands are exploring “livestock-free” replacements for conventional animal-based materials that are also made in nature-friendly ways, in a bid to transform their production models.

Next-gen materials make a distinction from “current-gen” leather replacements, such as PVC, that rely on petroleum and harmful chemicals or manufacturing processes. While the race for the best vegan leather is already on, a similar shift is expected to take hold among other animal-based materials, including silk, wool, and fur.

This change has the potential to reduce fashion’s waste stream and carbon footprint and make it a more ethical industry by reducing its reliance on animals to make materials. Next-gen materials will not solve all of fashion’s problems and will not solve the wider problem of overproduction, but they have the potential to reduce some of the most urgent issues.

Plant-based materials are gaining pace

What: Apple will let iPhones accept payments through a new Tap to Pay feature, turning anyone into a merchant.

Why is it important: A new update coming to the iPhone in the US, will turn the device into an always-on contactless payment terminal. Instead of asking people to bump a smartphone or credit card to a special terminal, sellers will be able to take payments using only their iPhones and an app.

The feature won’t be limited to just Apple Pay and other iPhones, contactless credit and debit cards, and other digital wallets are also accepted through a simple tap to the iPhone.

New iPhone update will turn anyone into a merchant

What: Chinese sales associates often go above and beyond and are key to brands hitting increasingly ambitious sales targets.

Why is it important: During the first lockdowns in China, sales assistants at luxury boutiques found ways to stay in close contact with their clients, mostly via WeChat, offering special services and promotions. Even as stores re-opened the initiative continued and their rapport with clients deepened. In some cases, luxury consumers in China now consider their sales associates to be someone with whom they have a meaningful relationship. Asking how beneficial it is for the luxury brand is complicated.

These communications aren’t limited to products and promotions but cover day-to-day topics. SAs are welcomed by consumers, who see it as a sign of how valued they are, by their SA and by the brand they are working for.

Luxury brands have recognised the growing importance of these staff members, and it’s difficult to overstate how important SAs have become as part of the Chinese luxury consumer journey over the past few years. Wages, in some cases bonuses, for frontline retail staff in China have risen significantly in recent years as a result.

It’s easy to see how the boom of China’s unique luxury service culture can be a win-win for both the sales assistants and customers.

These relationships are of course very beneficial to help boost sales, and for local management. However, this intimate customer service dynamic can present significant challenges as it places the relationship with the customer in the hands of the sales assistant, giving the brands less direct control.

Another headache for brands, an arguably more pressing and potentially contravenes some luxury companies’ ethics policies, is the gifting that goes on between customers and their SAs in order to seek favour.

The solution starts with added awareness of the problem and brands having the managers put a higher priority on the wellbeing of their SAs. They should provide more support for SAs and shift KPIs to consider the out-of-hours work sales assistants do, the conflict of interests that is sometimes inherent and the high expectations placed on them by consumers.

Sales Associates and China’s luxury retail boom

What: Following Louis Vuitton’s decision to progressively close all of its downtown duty-free stores in the country by March 2023, Chanel will also exit its downtown duty-free businesses outside Seoul, closing stores at the Busan Lotte Duty Free shop and the Shilla Duty Free Jeju Fashion Boutique by the end of next month.

Why it is important: The closures follow the decline in the Chinese daigou trade (a grey market in which surrogate shoppers buy lower-priced offshore products and resell them in China). Daigou shoppers accounted for more than 90% of sales at Korean duty-free stores in the years prior to the pandemic.

China overtook South Korea as the world’s largest duty-free market in 2020, with sales valued at close to USD 7 billion. GlobalData predicts the country’s duty-free sector will experience a constant annual growth rate (CAGR) of 17.4% from 2019 through 2025, largely driven by Chinese government policies promoting domestic duty-free consumption.

Chanel pulls back from Korean duty-free 

What: Seven & I Holdings plan to sell SOGO and Seibu as part of a strategy to shift its focus on, 7-Eleven Japan Co.

Why is it important: Sogo & Seibu was reported to have been struggling since the pandemic as consumers went online and operating hours of physical stores were impacted by regulations.

While Seven & I has not confirmed a sale process, it stated it was looking into all possibilities regarding changes to the business portfolio, including the sale of shares in Sogo & Seibu.

The sale of Sogo & Seibu follows campaigning by institutional investors who want to see the company focus on its core convenience-store business, but it comes in the midst of a moderate recovery in Japan’s department store market.

Seven & I Holdings to sell Sogo & Seibu 

What: Macy’s, beating expectations across several fronts, saw big fourth-quarter gains on the top and bottom lines, and increased its dividend.

Why it is important: The good Q4 results allow the retailer to stick to its Polaris strategy rather than separating its dot-com and brick-and-mortar stores into separate businesses. It involves growing digital, private label offerings and small-format stores Market by Macy’s and Bloomie’s.

For the quarter ended Jan. 29, net income rose to $742 million from $160 million in the year-ago period. Operating income rose to $1.02 billion, or 11.7% of sales, from $401 million, or 5.9% of sales, in the same period a year ago.

Net sales rose to $8.67 billion from $6.78 billion. Comparable sales rose 27.8% in the last quarter from the year-ago quarter, and 6.1% from the 2019 quarter.

For all of last year, Macy’s Inc. generated $1.43 billion in net income, versus a loss of $3.94 billion the year before. Net sales rose to $24.46 billion, from $17.35 billion in the prior year.

Digital sales increased 12% versus the fourth quarter of 2020 and increased 36% versus the fourth quarter of 2019. Digital penetration was 39% of net sales, a 5% point decline from the fourth quarter of 2020, but a 9-percentage point improvement over the fourth quarter of 2019.

About 7.2 million new customers shopped the Macy’s brand during the quarter, an 11% increase versus the fourth quarter of 2019. During the fourth quarter of 2021, 58% of new customers came through the digital channel.

Bloomingdale’s comparable sales rose 37.6% versus the fourth quarter of 2020, and 13% versus the fourth quarter of 2019. About 391,000 new customers shopped the Bloomingdale’s brand during the quarter, a 26% increase versus the fourth quarter of 2019 and spent 41% more.

Results were driven by strong sales of luxury handbags, fine jewelry, men’s shoes and contemporary fashions, fragrances and home.

Macy’s Press Release 

Macy’s soars in Q4, no dot-com spinoff

What: Walmart’s annual report shows that diversification pays. (well!)

Why it is important: Even though the new activities remain small in comparison with the overall retail-related numbers, their increase and marginal size are becoming so significant that they helped Walmart weathering the increased supply chain costs that were the consequence of a very exceptional year 2021.

Walmart announced that its overall sales increased +6,3% in 2021 to $393.2 billion for the US, and +2.4% to $572,8 billion globally. Interestingly, this growth (supported by the US market as Walmart international net sales decreased 16.8% due to divestments) came at the same time from stores, non-retail activities and from online (which experienced a growth slowdown to a +1% in Q4 2021).

Sam’s Club sales ended the year up +9.8% and membership revenue and other income were up +27% to about $5 billion. Advertising becomes a core business revenue stream as it reached $2.1 billion and helped to offset the unexpected increases in supply chain which were evaluated at $400 million over expectations.

This illustrates according to the retailer that a diversified business model is the new normal for retail as it allows to weather any kind of situation while also generating streams of revenue which are not dependent on traffic and footprint.

Walmart increasingly earns revenue from non-retail activities 

What: The group will continue to expand investments into its e-commerce businesses, including urban air mobility (UAM) services and the metaverse, despite its growing losses from online shopping.

Why it is important: While Lotte Shopping sales and operations profit dropped, the department store business put up a good defense.

Last year, Lotte Shopping marked sales worth KRW 15.58 trillion and an operating profit of KRW 215.6 billion, down respectively by 3.7% and 37.7% year-on-year. Its e-commerce revenue declined by 21.5% to show KRW 108 billion, while its operating loss increased by 64% to reach KRW 156 billion in the same period.

UAM is a transportation service using small aircraft, such as flying cars that can take off and land vertically. Lotte plans on utilizing its drones to deliver online orders to isolated areas that cannot be reached easily by road.

Lotte Group's convenience store brand, 7-Eleven, will also play a key role in strengthening its e-commerce. The retailer plans to utilize some 6,000 stores in the country as distribution centres for delivering online orders within an hour of purchase. It also recently acquired Mini Stop, which has 3,000 stores ― a move expected to boost Lotte Shopping's quick commerce initiative.

For its metaverse service, Lotte is almost finished developing its online platform. Lotte's goal is to connect all of its retail subsidiaries with its metaverse service. This connection will enable customers to try out various items in the virtual world prior to making purchases online.

Lotte continues investing in digital transformation 1