What: Despite being the most digitally savvy generation, Gen Z loves to shop in physical stores, but differently from older consumers.

Why is it important: 81% of Gen Z prefers to shop in stores and more than half do so because it allows them to disconnect from social media, a Kearney survey found. That desire means retailers are going to have to focus on creating the feeling of community while offering a selection of products that appeal to Gen Z tastes.

In fact, 98% of Gen Z shoppers globally said they typically make purchases in a store some or most of the time, according to a survey by IBM. Three times as many Gen Zs said they shop most of the time in a store compared to the number who said they shop most of the time online. That may be because, Gen Z is one of the loneliest and most isolated of all generations.

Brands need to start dedicating space for these kinds of decompression zones if they want to attract the Gen Z shopper. A good Gen Z store should also be hyper-focused. When asked what they are looking for once they arrive in-store, three out of four Gen Z shoppers told Kearney a “well-curated store experience focused on a limited number of products” was extremely or moderately important to them.

For Gen Z shoppers, physical retail spaces are all about escaping the algorithm, to see things outside your filter bubble. In that sense, brands are starting to move away from rollout strategies and designing each of their stores with more modular, flexible concepts. This is key given a poor in-store experience has led one-quarter of Gen Z shoppers to skip making a purchase.

Stores of tomorrow need to trigger memories that are beyond the transactional approach. Given the luxury industry is predominantly about recruiting first-time shoppers, not repeat purchases, the role of stores continues to be very important.

![Gen Z 

What Gen Z want from physical retail 

What: Retailers and brands are investing in store fulfilment and smaller and more nimble warehouses near shoppers to meet customer demand more sustainably and efficiently.

Why is it important: Micro-fulfilment strategies mean retailers can ship and deliver goods faster, but overhauling a distribution network is a daunting and expensive task for retailers.

To facilitate this transition, a number of tech companies are helping brands get up to speed.

PredictSpring has built a mobile point-of-sale interface for store associates to prepare a package for click-and-collect or e-commerce shipment. These types of tools will soon become as ubiquitous and necessary as payment systems and e-commerce platform.

A key component of micro-fulfilment is rethinking the role of the retail store, which now needs to function like a warehouse and bricks-and-mortar shop. Large beauty and fashion brands have a prolific real estate footprint, so they want to leverage that says Maggie Barnett, COO of ShipHero.

PredictSpring predicts that soon, any metro area with more than one million people will see that the majority of orders are fulfilled from stores, rather than warehouses. Flexibility at checkout in how customers can receive their orders, including buy online, pickup in store or ship from store, is increasingly important.

This puts a further burden on retail associates, who are already expanding expertise to include video shopping consultations, personal styling and online customer service inquiries. A key concern among ShipHero’s customers, is the ability to train associates to scale these services, including packing and shipping e-commerce orders.

Relying on stores more to fulfil online orders also changes the role of the warehouse. Flexe connects brands with a network of more than 1 500 warehouse locations in North America who have free space. Brands can be set up within three weeks, don’t have long-term commitments and can specify packaging. For example, if a brand like Nike wanted to do a drop with two-day or same-day delivery, it could set up temporary fulfilment locations outside of key cities.

Storing products closer to the customer is more important than ever, but allocating inventory can become a “bottleneck”, says Ben Eachus, co-founder and CEO of Flowspace, a logistics platform. Something that can help is inventory visibility, where individual products are tagged to show exactly where they are at any given time.

Forget mega warehouses

The department store will open ‘VR Pangyo Land’ in its Pangyo branch wher customers can experience a 360-degree virtual reality department store. At the VR department store, customers can virtually visit around 50 locations throughout Hyundai Department Store Pangyo’s 11 floors.

Among them, customers can visit 14 virtual stores, where they can access a ‘VR Showroom’ to peruse available items and purchase them at Hyundai Department Store’s online shopping mall.

Hyundai Department Store Pangyo to Offer VR Shopping 

What: Three charts to illustrate US uneven and unequal progress with shoppers returning to stores.

Why it is important: Despite remaining uncertainties, Moody’s is optimistic. In early May, the credit rating service revised its outlook for the US apparel and retail sector to positive versus stable.

The recovery this spring has been uneven, with spending surging after the US government sent stimulus checks to many Americans. But foot traffic remains significantly below levels seen in the same period in 2019.

![Retail’s uneven recovery 1

But the recovery will not be evenly felt across the industry. Retailers that performed well during the pandemic, like Ulta Beauty, are seeing better traffic than in 2019. And value-driven retailers like T.J. Maxx, which still offer shoppers a bargain experience that is not yet easily replicated online, are also seeing traffic surges after a year of store closures.

![Retail’s uneven recovery 2

Department stores are struggling, with Nordstrom, Macy’s and Bloomingdales among the retailers still down from pre-pandemic traffic levels, though improved from February.

Mall stalemates L Brands, Macy’s and Gap are seeing their stock prices recover after sharp declines in the early months of 2020 — a sign investors are optimistic about the future of the category.

![Retail’s uneven recovery 3

Retail’s Uneven Recovery in Three Charts 

What:  All major department stores are entering into the food & beverage preparation and delivery market

Why it is important:  Rather than teaming up with specialized players, they build their solutions on their own, in order to create new streams of revenue.

Korean department stores are launching new activities and services to adapt to evolving customers’ demands and create new streams of revenue:

• Shinsegae sets up parking zones dedicated to pickup for delivery motorcycles, and offers food & beverage delivery,
• Lotte teams up with a logistical company to deliver purchases in neighbouring residential areas,
• Hyundai delivers prepared meals within 6 km.

With such initiatives, they also compete with food delivery platforms.

Department Stores in Korea Diversify 

What:  In spite of a record fine, Alibaba claims its fundamentals are still valid and efficient.

Why it is important:  Within all dangers that Alibaba might have to face, a state clampdown on data management would be a blow for the group which based its business model on a very efficient data management process.

Alibaba has announced a record loss of EUR 975 million for Q1 2021, due to a fine of EUR 2.3 billion (4% of its total turnover) for anti-commercial practices. Without this fine, Alibaba claims it would have posted a profit of EUR 3.3 billion, and aims at convincing markets that the worst is now over.

There are however some issues that will need a further resolution:

• The group’s financial arm, Ant, is still struggling with regulators,
• Beijing’s approach to data, and potentially constraining regulation,
• The future of the group’s media empire.

Alibaba aims at achieving a turnover of EUR 119.2 billion in 2021, +32% vs. 2020 and the double of 2019.

After $260 Billion Slide, Alibaba Aims to Show the Worst Is Over

This marks the company’s second straight year of losses, following a loss of JPY 11.19 billion (USD 102.4 million) the previous year. Meanwhile, net sales were down 27.1% and operating loss hit JPY 20.98 billion (USD 191.9 million).

The group expects that while net sales will drop a further 45.2% during the current financial year, it will generate a profit of JPY 1 billion (USD 9.1 million).

Sales of value-added, big-ticket items such as luxury brand goods, watches and jewelry have been favourable, particularly at its Isetan Shinjuku and Nihonbashi Mitsukoshi flagship stores in Tokyo. Thanks to both revamped e-commerce site and new shopping app, Isetan Mitsukoshi said it achieved a yearly online sales total of more than JPY 30 billion (USD 275 million).

Isetan Mitsukoshi Holdings’ Annual Loss Totals $382 Million 

Isetan Mitsukoshi Holdings Records FY Net Loss of Over 40 Billion Yen 

What: Saks.com will test the marketplace format in an effort to accelerate growth and expand its offerings to customers.

Why is it important: In creating a marketplace, Saks will be challenged to determine what brands and products, not previously carried, will resonate with the retailer’s audience and will buoy, not detract from, the Saks luxury image.

Last March, the parent HBC split the Saks Fifth Avenue stores and saks.com operations into stand-alone companies. Changes occurred since then, including launching everyday free shipping and free returns, advancing the digital stylist program, expanding Saks Limitless, an invitation-only program providing top saks.com shoppers with exclusive benefits and perks, and launching Saks Live, a livestream events platform. Marketing online expenses also ramped up to acquire new customers and to increase traffic.

Saks stores continue to work together with e-commerce to deliver an easy shopping experience, providing buy online, pick up in store service, and handle exchanges, returns and alterations.

Saks Fifth Avenue had a strong Q1 performance across all channels with total sales up significantly over 2019. Specific to the e-commerce business, Saks’ gross merchandising value exceeded expectations, up double digits versus 2019, with signs of an ongoing upward trajectory. Since March, site traffic is up 79% and new customers are up 84% to 2019. Saks stores total sales were reportedly higher than 2019.

To strengthen the dot-com’s capital structure, two financial steps — a syndicated USD 350 million asset-based, five-year revolving credit facility and a USD 115 million senior secured term loan — were completed to ensure liquidity and flexibility to drive growth.

Saks.com To Test a Marketplace, Investments Ahead 

Untapped Creatives, a platform for luxury, sustainable designs made between the U.K. and Africa, will debut in-store at the Oxford Street flagship and online, with fashion and beauty brands.

The products are often made to order, or done in small runs, and employ artisans in the countries from which the crafts or materials originate. Proceeds from some of the sales go to African charities.

Selfridges Makes Space for British, Black-Owned Fashion, Beauty Brands

What: Burberry, Louis Vuitton and JW Anderson are testing pop-up shops that pull in customers using tech like Augmented Reality and Virtual Reality.

Why is it important: In these uncertain times, going to a department store to do a pop-up is an easier and safer option.

Burberry’s new pop-up opens in Harrods with an AR experience that brings to life Greek Elpis statue in a Pokémon Go-style digital dimension. At Selfridges, JW Anderson has launched a pop-up created with Sharp End, a connected experience agency, that uses QR codes to trigger AR visuals like mushrooms growing, bees buzzing and flowers blooming. Louis Vuitton opened a pop-up in Paris, where customers can use the Vuitton app to tap into an AR experience interacting with animated mascots Zoooom with Friends, first introduced by Virgil Abloh for the Spring/Summer 2021 collection.

Despite easing restrictions in the UK and an initial reopening rush, footfall in the UK’s key shopping areas are still down, according to the latest weekly footfall monitor from Springboard, a retail data intelligence firm. The US, Italy and Sweden face similar challenges.

Pop-ups in department stores are proving to be especially popular, as many brands are hesitant to commit to longer term leases because of the uncertainty around when tourists will return, says Peter Mace, Cushman & Wakefield’s head of Central London retail, who specialises in luxury locations. However, large spaces have had “limited interest” compared to smaller premises because of the cost of fitting out a space.

New-era AR and VR pop-ups

What: Nordstrom announced the launch of a new collaborative collection with Wildfang, a brand that challenges stereotypes and gender norms.

Why is it important: Nordstrom ventures into inclusivity through a new private label.

Launching under the Nordstrom Made brand 'BP.',  the collection is designed for women-identified customers. Each piece was carefully sized for a variety of body shapes. The collection ranges from USD 12 to USD 89.

The collection is part of an ongoing collaboration with Wildfang, which includes gender knowledge trainings for employees, product research, social responsibility initiatives and marketing research. Nordstrom is giving five percent of total sales from the BP. + Wildfang collection to Year Up as part of the collaboration.

Nordstrom launches collection with Wildfang

What: Steen & Strøm has rebranded as Steen & Strøm 1797 following EUR 29.6 million refurbishment to reflect its heritage.

Steen & Strøm first opened in 1797 and is the oldest running luxury department store in the world. It is located in Oslo’s Promenaden Fashion District and comprises 135,625 sq ft over six floors of fashion, beauty, lifestyle and food.

The refurbishment includes a new store entrance, and a new beauty hall with a men’s grooming area and fragrance bar. The beauty hall will stock premium brands including Chanel and La Labo, as well as the first Dior Beauty Boutique in The Nordics.

Oslo department store Steen & Strøm relaunches

What:  JC Penney underwent a reduction of 20% of stores and 40% of associates following its purchase by SPG and Brookfield Asset Management

Why it is important:  The company is aiming at a new leaner model, focusing on flexibility, outsourcing, to make the most of a renewed and refreshed fashion and home offer.

JC Penney went into bankruptcy in May 2020 and by then, operated 846 stores across the country with 84,000 associates, before being acquired by Simon Property Group and Brookfield Asset Management.

Since then, 174 stores have been closed (20%) and 34,000 associates were made redundant (40%). The remaining teams are either working from home or in leased spaces, as the HQ has been given up, and some functions such as IT support are being moved abroad.

The strategy is to be leaner and more flexible, in order to attract again the customer base via a new fashion and home brand offer.

JC Penney cuts jobs

What: Called “Hudson’s Bay Charter for Change” it's a 10-year, CAD 30 million commitment through the retailer’s foundation to support five organisations focused on education, employment and empowerment.

Why is it important: Programmes are set to impact more than 300 000 lives.

Hudson’s Bay is partnering with five charitable organisations: Indspire, Black Youth Helpline, CEE Centre for Young Black Professionals, CPAC Foundation and MLSE Foundation.

Altogether, they will impact more than 300 000 lives through programmes beginning with scholarships and bursaries, initiatives with school districts and families to keep kids in school and initiatives to help immigrant upgrading their professional skills.

Hudson’s Bay Makes a Multimillion Dollar Commitment to Equality

What: Malls are replacing anchors (large department stores and retailers) by experiential spaces to drive traffic.

Retailwire reports that malls are betting on big, immersive entertainment experiences as a footfall-drawing scheme, such as a mall in Houston which replaced a 4,000 sqm Bed, Bath & Beyond by an interactive art museum, or another setting up an augmented reality experience on the former premises of a home décor chain.

Experts are dubious on the fact of being sure that this will be enough to cure the malls’ woes and issues. Analysts point out the fact that events and experiencial spaces, even though they generate traffic, might not help to convert said traffic into footfall in adjacent stores.

More than a theme-park, malls must get back to their initial function of drawing customers, families and communities with entertainment, experience and meaning. A farmer market might be more effective in that sense than an art museum.

Malls, Needing A Comeback, Replace Anchors With Immersive Experiences

What: Although still below 2019 sales levels, Nordstrom is well engaged in its digital transformation with an impressive 46% of sales achieved online, mainly thanks to its apps.

Why it is important:  Online is not anymore merely compensated lost offline sales, or coming as a complement to stores, but gaining market shares on its own.

While reporting Q1 2021 performances, Nordstrom announced that its total revenue YTD was still 13% below 2019 levels. However, e-commerce rose +23% last year, amounting to 46% of its total revenue, total revenue grew +44% vs. 2020 to USD 2.9 bn achieved through 100 Nordstrom stores, 248 Nordstrom Rack locations and the Trunk Club subscription service, and net loss was reduced to USD 116 million, from USD 520 million at the height of the pandemic.

Growth has been driven by the new apps (downloaded more than a million time), contributing to 75% of digital traffic and 2/3 of total digital sales.

Erik Nordstrom reiterated the fact that he was confident to achieve a full year performance of +25% with half of sales performed online, by anticipating a strong second half year.

Nordstrom Reduces Losses in Q1 

Nordstrom Reports First Quarter 2021 Earnings

What: Hyundai Department Store’s consolidated net profit more than doubled on year to KRW 55.85 billion (USD 49.9 million) in the first quarter as new stores were opened and consumption recovered.

Why is it important: Operating profit surged 336.3% during the same period to KRW 65 billion.

The company’s net profit in the January-March period jumped 133.8% on year to KRW 55.85 billion won from KRW 23.89 billion. Its sales increased 52% during the same period to KRW 683.23 billion from KRW 450 billion during the same period a year ago.

Opening of new duty free stores in Dongdaemun in central Seoul and Incheon International Airport and increased sales of imported cosmetics have also helped, according to the spokesperson.

Hyundai Department Store's net profit more than doubles

What: Kohl’s is making rapid headway towards recovery from 2020, but still reports numbers 5% lower than 2019 results.

Why it is important : Kohl’s continues to partner with new brands like Sephora and Calvin Klein in a broad-based merchandising revamp.

The retailer saw surprising Q1 sales results as it fights to recover from debt incurred during the global pandemic.

Kohl’s is strategically revamping its merchandising assortment through partnerships with major brands including Sephora, Calvin Klein, Eddie Bauer, And Tommy Hilfiger in hopes to transform its image and offering to customers.

Vaccines and the stimulus rollout likely gave Kohl’s a big push in Q1.

Kohl's posts 70% sales growth as it rides consumer momentum in Q1 

Kohl’s Halo Effect By Sephora And Others Will Pay Off

The French department store has recruited senior luxury executives Laurence Nicolas and Mathieu Staat who join the management board.

Laurence Nicolas will head the Boulevard Haussmann flagship and Mathieu Staat will manage the department store’s omnichannel strategy. Both executives will join the management committee.

Nicolas, a luxury retail executive with a business degree from Neoma Business school, started her career as a consultant. She was formerly executive vice president of Sotheby’s jewelry and watches activity and previously worked at Cartier and developed the watches and jewelry activity at Dior.

Staat, who studied at French business school ESCP, developed digital marketing and client relations activities at French hotels group Accor and was most recently digital director for Sephora in Europe and the Middle East. The executive also worked in marketing for French chain Fnac and cosmetic label L’Occitane.

Printemps Recruits Laurence Nicolas And Mathieu Staat 

What: From 1 September, Stefano Della Valle will succeed Vittorio Radice at the helm of the European arm of Central Retail Corp.

Why is it important: Radice will take on the role of non-executive board member and he will continue to be involved in the company’s decision-making process, dealing with stakeholders and overseeing Central Group Europe’s new openings in Wien, Dusseldorf and Basel, as well as the transformations of the units in Zurich and Geneva.

Della Valle will take on the role of CEO of the retail company, which operates Rinascente in Italy, the KaDeWe Group in Germany, Magazine Zum Globus in Switzerland and Illum in Denmark.

After turning Selfridges around between 1996 and 2003, Radice joined Rinascente in 2005 as CEO. Della Valle first joined Rinascente in 2006 as CFO, and in 2017, he was promoted to the role of Central Group Europe COO. Before landing at Rinascente, he worked at Deloitte and covered several executive roles in the Prada Group across Italy and France.

Central Group Europe Promotes Stefano Della Valle as CEO 

What: Marketing is oriented to better resonate with customers.

Why is it important: The department store favours local by paying tribute to the city.

As life in New York finally starts to normalize, Bergdorf Goodman’s pre-fall campaign embodies several of the city’s landmarks, communities and unique energy.

The campaign, called “It’s a New York Life,” offers content across Bergdorf’s digital platforms including bg.com, social media and paid social. There also will be activations and programs expanding the theme through the summer.

For Pre-fall, Bergdorf Goodman Tributes N.Y. Life 

What: Walmart is acquiring Zeekit, a female-founded startup based in Israel, to offer virtual try-on experiences.

Why it is important: It offers a solution to what has historically been a problem for many online brands, and for retailers last year when fitting rooms closed.

Having a virtual try-on feature gives customers a better idea of how a clothing item fits them and whether it matches their features.

The technology is not new as both e-commerce and name brands have debuted capabilities that allow consumers to virtually test items before purchase and provide a more convenient shopping experience.

As AR (augmented reality) capabilities grow, more players will begin to offer it as a way to reduce returns in the future.

Walmart to acquire virtual fitting room startup 

This week the department store will add yet another string to its foodie bow with the opening of the Chocolate Hall. Timed to celebrate the 150 year anniversary of the opening of Harrods’ first confectionary counter, and marking the end of an extensive four-year refurbishment of the store’s food halls, the Chocolate Hall promises to be as much an experience as it is a retail destination.

Harrods has a new food hall

What: The department store has renewed its commitment to its Herald Square flagship with USD 235 million of private investment in the surrounding neighbourhood.

Why is it important: To achieve these upgrades, Macy’s will leverage its underlying Herald Square real estate to build a commercial office tower above its iconic flagship store.

The retailer’s plan would upgrade Herald Square’s transit infrastructure and public realm into a pedestrian-friendly urban space with upgraded subway access, improved transit connections and ADA-accessible elevators.

Macy’s said the plan is expected to generate USD 269 million annually in new tax revenues for New York City, support 16,290 annual jobs and spark USD 4.29 billion in annual economic output.

Macy’s Announces Herald Square Upgrade