What: US department store reports better-than-expected quarter with digital sales headed to USD 10 billion

Why is it important: Macy's made money for the first time in the pandemic

Signs of a recovery are beginning to emerge. Last Macy’s report issued in November 2020 was already announcing better-than-expected quarter results thanks to a massive shift to online shopping.

On 23 February, Macy's said that it turned a profit for the first time in the pandemic, making USD 160 million during the 13 weeks ending on January 30, down from USD 340 million during the same stretch a year ago.

But Macy's is still struggling. Net sales dropped to USD 6.8 billion from USD 8.3 billion during the same quarter last year. Sales also fell to USD 17.3 billion in the year that ended on 30 January, posting a net loss of USD 3.9 billion.

Neil Saunders, managing director at GlobalData Retail, said in a note to clients that the results were a "marked improvement" and show that Macy's is "slowly climbing its way out of the depths."

Macy's believes this coming year will be better than the last one. It expects "continued pandemic-related challenges in the spring season," but with "momentum building" in the second half of the year. The company, in particular, is betting on strong growth online in the coming years. "We anticipate annual digital sales to reach USD 10 billion within the next three years, and that digital will become an even more profitable contributor to our business," CEO Jeff Gennette said.

Macy's made money for the first time in the pandemic 

Macy's Inc Reports Fourth Quarter and Full Year 2021-02-23

Macy’s Considers New Debt Sale to Aid Post-Pandemic Recovery 

What: operating results for the 13 and 52 weeks ended January 30, 2021

Why it is important: 2020 has been a severe year for retailers, who suffered loss in income due to the extended store closures around the world, and Dillard’s is no exception.

Dillard’s reported a net loss of USD 71.7 million for the 52 weeks ended 30 January 2021, compared to net income of USD 111.1 million for the prior year.

Dillard’s Chief Executive Officer William T. Dillard, II stated: "Our year-long efforts to control inventory and expenses and preserve liquidity have resulted in encouraging fourth quarter results. We ended the year with USD 360 million in cash and inventory down 26%. Retail gross margin improved 171 basis points, and operating expenses declined USD 123 million. […]"

Dillard’s, Inc. Reports Fourth Quarter and Fiscal Year Results

What: Ikea rolls out system to sell spare parts.

Why it is important: It fits into a trend towards repairing and reusing goods which is also finding its way into fashion.

Ikea will offer spare parts to customers worldwide, allowing them to repair their furniture and to prolong the life of its furniture as part of a big sustainability push. Ikea provided customers with 14 million spare parts in the year to August 2020 but will now develop a system to be rolled out on its website this year.

Ikea is aiming to become a climate-positive and circular company by the end of the decade, cutting more emissions than it produces, while facing down critics who complain that its cheap products encourage excessive consumption and a throwaway culture.

The initiative fits with many others and forms part of a general trend towards repairing and mending which is finding its way into the fashion world.

Ikea to sell spare parts in sustainability push

Mend and make new — how the pandemic reigniteed a repairs revival 

Related items:

• Ikea: How to keep growing and thriving at the same time
• Sustainability series #1: the cost of being good

What: Prada struck an unusual deal with Net-a-Porter, by selling its products via dropshipping

Why it is important: No more stock to buy for Net a Porter, reduced margin… is that the future of department stores?

Net a Porter was until very recently significantly different from Farfetch, as 100% of its sales were direct, under wholesale terms. This had to collide at one point with major luxury brands, eager to regain control of their distribution (and margins), such as Prada, who now sells directly up to 90% of its total turnover.

Prada went even further by forcing Net a Porter to accept a drop-ship model in order to keep the brand: Net a Porter will earn a commission on sales of Prada products, which will be shipped directly from Prada’s warehouses without having to be handled physically or financially by Net a Porter.

The perks are clear: less investment on inventory, reduction of financial and seasonal risk… but with a margin decreasing from 50-60% to 20-30%, which would not be enough to run a store for instance.

More importantly, this model can work with the cooperation of brands only if they see an interest to it, which is to be able to reach an “audience”, a “community”. As usual, the retailer’s positioning and specificity are crucial for its very own existence in this particular scheme.

Is Net-a-Porter’s Unconventional Prada Deal the Future of Wholesale

What: a sustainable collab between the upscale department store and luxury shoe label

What it is important: one of the biggest challenges for department stores is to stay relevant and offer exclusive products to win over the hearts of customers. One way to do so is through exclusive collaborations with renowned brands and labels. This particular collaboration mixes exclusivity with sustainability

The new capsule collection features pieces for women and men, inspired by signature styles from the Louboutin archive and launched online -the physical store still being closed. The particularity here is that all items are made from upcycled denim. Louboutin said that “denim is like black, always present somewhere, it’s a classic. It’s rare to not see it in a crowd”.

The collaboration is part of Selfridges Project Earth: reinventing retail, by giving denim jeans another life and reducing waste.

Selfridges and Louboutin launch upcycled denim capsule

What: Instacart is considering opening up to 50 dark stores to scale up its picking method

Why it is important: the evolution of a service offered to retailers into a potential solution to real estate questions

Instacart as a very simple business model: it offers to retailers a click and collect solution without weighting them with extra staff, as it crowdsources workers to shop in the physical stores and deliver to customers. However, Instacart is aware that this method needs to be improved, as it could be faster, more efficient and less prone to errors.

This is the reason why they have taken contact with providers of warehouse technologies with a plan in mind to open up to 50 dark stores across the US. This intention, publicly described as a logical continuation of the service initially offered to retailers by Instacart, is perceived by some as a will to become a retailer itself.

IADS Note: This stance is very similar to the one used by Farfetch in its time when they decided to pivot from a service offered to wholesalers to a new channels for brands.

Instacart Frames ‘Dark Store’ Exploration as a Service to Partners

What: a special after-hours event at selected Lowe’s stores for Valentine’s Day

Why it is important: retailers are going over backwards to bring customers back instore, and are resuming to experiential retail -strictly safe. Experiential retail was booming before the pandemic, and is now (more than ever) needed to attract people in; when they would rather stay safe and shop from home

Fifty couples will win the after-hours in-store experience 'Night of Lowemance' date and enjoy activities such as splash paint a large canvas together. "We’ve seen all of this great DIY energy that people have channelled throughout these long months,” said Marisa Thalberg, Lowe's executive vice president, chief brand and marketing officer. “We thought why not turn it into some romantic DIY energy and create something that has long-lasting benefits, which is the spirit of DIY in general.”

Part of the event will be digital (for couples who couldn’t get the store experience) and will feature Chef Kelli Ferrell showing how to make a charcuterie board and themed mocktail on pre-Valentine’s Day.

Recently 7-Eleven partnered with Airbnb to create a “gaming palace” where customers can spend the night enjoying video games.

Valentine's Day at Lowe's? 50 couples will win a 'Night of Lowemance' date

Related items:

• 7-eleven launches experience with Airbnb
• IADS Exclusive - Instore experience: the case of Showfields

What: The Bike Shop by Smartech is now a permanent feature of the LG floor in Selfridges.

Why it is important: this demonstrates focus on environment, health and wellness is expanding.

In July 2020 Selfridges launched its first-ever bike shop in The Corner Shop of its Oxford Street store. The collaboration with Smartech saw the space transformed into a one-of-a-kind electric vehicle destination complete with e-bikes, apparel and exclusive gear. Born to revolutionise an ailing world, its existence demonstrates a new era of urban travel combined with innovation like no other. After the successful Corner Shop preview, The Bike Shop by Smartech is now a permanent feature of the LG floor in Selfridges.

Customers can discover and try the best bikes and accessories in the industry from the likes of Mate X, Angell and Superstrata. Smartech has curated a collection of the very best in e-vehicle innovations from up-and-coming entrepreneurs reinventing the cycling industry. There is also a selection of push bikes from Veloretti and Tokyo Bike. The products available rotate weekly and are available to test drive in a dedicated zone in the Selfridges car park. For customers unable to get to store, the range will be available to order at selfridges.com and smartech.buz

Rob Smith, head of partnerships at Smartech, says: “As we emerge from another lockdown into the ‘new normal’, we’ve seen an increased focus on health and wellness, looking after the environment and most importantly safety, with people avoiding public transport where possible.”

In its technology predictions for 2020 in December 2019, before the global pandemic and the resulting spike in bike sales, Deloitte foresaw a rise in popularity of cycling, especially e-bikes, predicting that by 2023, the total number of e-bikes in circulation around the world… should reach about 300 million, a 50% increase over 2019’s 200 million.

Selfridges creates permanent bike shop and EV destination at Oxford Street store with Smartech 

What: Previously announced restructuration plan bears fruit

Why it is important: The brand turns to a more DTC-focused model and skips athleisure category

Turnaround is still the word of the day at Under Armour, with CEO Patrik Frisk saying on a fourth quarter conference call that the brand will return to profitability in 2021. The company beat its own expectations, as it works to rebalance its cost structure and move toward stronger growth.

Under Armour is committed to exiting between 2,000 and 3,000 wholesale doors, in 2 to 3 years’ time. This will leave the retailer with closer to 10,000 wholesale doors. With that comes a focus on DTC, which grew 11% in the quarter thanks to a 25% rise in e-commerce.

The shift to profitability also includes the shift to a more DTC-focused model (pursued by rival Nike as well), as Under Armour looks to move toward a more full-price, premium positioning with its consumers.

Under Armour will also focus on performance products in spite of athleisure mega trend. The athleisure question is never one that Under Armour sees itself answering, doubling down instead on its performance-based positioning.

PR: Under Armour Reports Fourth Quarter And Full Year2020 Results

RD: Under Armour plans a returnto profitable growth in 2021

What: the live sale will offer customs-cleared luxury fashion goods

Why is important: Lotte enhances domestic duty-free sales through digital events

Lotte Duty Free aims to match the success of its first LuxeMall Live event hosted on 4 February. The event featured customs-cleared duty free luxury fashion products (that do not require customers to leave the country) for discounts of up to -70%. More than 60% of the customers were from outside of Seoul and finding it difficult to purchase offline.

Stakeholders and customers’ expectations are high following the success of the first event. The event can be watched through the LuxeMall homepage (ldfluxemall.com) or on the LuxeMall mobile app.

Lotte Duty Free plans on adding new brands and products through seasonal exhibition and other sales events to attract domestic customer purchases. The next LuxeMall product update will see the addition of 13 000 new items from 80 brands.

Lotte Duty Free will also introduce these products at its Lotte Duty Free COEX store. More than 40 brands, including Burberry, Givenchy and Ferragamo will be available at the COEX store from 2 March. Lotte Duty Free will also continue to sell customs-cleared domestic duty free goods through the integrated online platform Lotte ON.

Lotte Duty Free to host latest live sales show on dedicated LUXEMALL platform

What: Target expands its 15-year collaboration with Apple

Why is it important: new initiative is built on the success the retailer has established with other national brands, including Disney, Ulta Beauty and Levi’s

Target is pulling shoppers away from malls as it begins to open dedicated Apple shops in 17 of its locations starting this month.

New initiative builds on the success the retailer has established with other national brand partners, including Disney, Ulta Beauty and Levi Strauss & Co.

Beauty retailer Ulta and Target forged a similar deal last November. Ulta will open shops in over 100 Target stores in the second half of 2021, with plans to establish even more in the future. Similarly, 25 Disney stores were plotted for Target locations in 2019 and helped the retailer expand its toy profile.

Target to roll out dedicated Apple shops inside 17 locations 

Target - Apple press release

What: Nordstrom plans to surpass 2019 sales in spite of a 20% drop in 2020, thanks to online and off-price.

Why it is important: While they started investing two decades ago in digital, putting them ahead of local competition, they realised that they needed to double-down on e-commerce capabilities. This goes through a technological improvement (improve the product discovery) and a business model shift, as finding new ways to partner with brands would allow them to increase their offer (including categories where they were not present, and lower-priced segment).

Norstrom’s strategic plan aims to increase sales in 2021 by 25%, surpassing 2019 and includes:

• A maintained focus on high-level omnichannel customer service, including expanding BOPI service to all Nordstrom locations, from Nordstrom local and Nordstrom Rack outlets for now,
• Widen the price range: keep its luxury positioning while also increasing its off-price offer (Nordstrom rack) by adding more lower-priced products, and make the most of its online capabilities (which still raises the question of making this profitable, as, BOF points out, even leaders TJ Maxx and Marshalls have not found a way to do so),
• Become less reliant on the wholesale model and boost e-commerce: Nordstrom will add new online business formats proposed to brands (drop-ship, e-concession, sharing revenue scheme) to reduce wholesale from 85% to 50% online, and encourage brands to increase the offer presented online from 300,000 SKUs to 1,5 million, especially on categories where they missed opportunities, such as home goods. The question raised by such a strategy is to know how a specific point of view will be maintained, which would be the reason why a customer would favour Nordstrom other more generic, and powerful, players such as Amazon,
• Leverage discovery tools to personalise customers recommendations by connecting profiles across platforms, after having centralised its analytical capabilities in 2018.

Analysts consider Nordstrom as the best-positioned American department store in terms of potential recovery once the virus crisis is overcome.

Don’t Call It a Department Store

Nordstrom brothers confident of overcoming trouble in store

What: A reflexion on what should be a permanent concern: a responsible approach to AI in retail.

Why it is important: There are already hundreds of Artificial Intelligence (AI) platforms and enterprise solutions on the market today, each aiming at solving different issues and improving Customer Experience (CX). However, they are not without risks – for customers, but also, in the event of a breach of trust, whether real or perceived, for brands and their reputation.

Referencing a recent BCG survey, Ricardo Saltz Gulko, Managing Director of Eglobalis, a global consulting firm specialised in customer experience strategies, identifies 3 focus points that should be considered where technological developments in commercial practices are concerned:

• Balancing the need to collect data for analysis and the implementation of technologies that can be perceived of as intrusive. People are already ambivalent: they often appreciate AI-enhanced experiences but fear exposure and a mismanagement of their personal data.
• Customers’ demand for responsibility and transparency. They will give – or withdraw – their trust to companies and brands according to the ethical principles these have set forth and show they truly uphold.
• Ensuring the protection of customers, as well as employees, against the inherent technological risks of AI. Businesses could establish up front procedures and guidelines to remedy AI-related contentions to mitigate these problems, but ultimately, this would better fall under the purview of global regulatory bodies.

Prevent Risks to Your Customer Experience & Brand – by Adopting AI Responsibly

What: After last year’s disastrous holiday, China is enjoying shopping again while travel is still restricted.

Why it is important: It is a reflection of the strong recovery of the Chinese market while foreign markets are suffering from the lack of Chinese tourists.

According to the Global Times of China, consumers are enjoying shopping fever for the Spring holiday, or Chinese New Year. Many shoppers who missed it last year, especially in Wuhan, are going on a flower buying spree, also because it will bring good luck linked to the Year of the Ox.

Since travel is still limited in the country, many people have been going to supermarkets and department stores in cities which would be practically deserted in the years before covid. Officials expect this to continue during the coming year and to reflect a strong economic rebound.

Global Times Lucky Year of the Ox fueling _revenge_ ..

What: Target’s All in Motion private label achieved the company’s goal over the first year.

Why it is important: Athelisure is still outperforming.

A year after Target launched All in Motion private label to compete with athletic powerhouses, the activewear label achieved the company's goal of generating USD 1 billion in its first year.

All in Motion is the 10th Target’s private label. It was developed in-house, with an eye toward sustainability, quality and inclusivity. And consistent with the “more for less” Target mantra, many of the core workout items are about 75% less than comparable Athleta and Lululemon offerings.

When All in Motion was launched, Target’s design team sweated alongside over 15 000 consumers of all age to learn what they liked and disliked about their gear. It’s this kind of dedication and customer insight that has been responsible for their success with private labels.

All In Motion Becomes Target’s Tenth Billion Dollar House-Brand

Target's activewear brand generates $1B in first year

What: an outdoor show is displayed across Selfridges’ flagship store windows.

Why is it important: a way for Selfridges to stay connected to customers during lockdown.

While galleries remain closed, and the streets of London remain hushed, a photography exhibition is breathing new life into the city’s retail heart. ‘A Return to Nature’ is a joint outdoor show by photographers Marco Kesseler and Cameron Bensley and is displayed across Selfridges’ flagship store windows.

The exhibition celebrates the beauty and fragility of the natural world, our relationship with it, and sparks a dialogue around the impacts of climate change.

‘A Return to Nature’ is both a celebration of the natural world and a plea for its conservation. The exhibition – which is also available to view online – offers city dwellers a chance to embrace the great outdoors while the city’s busiest street remains fallow.

Selfridges brings nature to Oxford Street during lockdown

What: A new line launched by the retailer in the midst of the hardest year ever.

Why it is important: Private labels are a significant contributor to margin, when well executed. Dillard’s decided to go a step further by collaborating with a fashion brand for the design and style.

Dillard’s teamed up with US brand Toccin to create a 60s and 90s inspired collection of dresses and prints. With a USD 199 average price, the collection is thought to be radically new and fresh on the floor, in order to bring fresh air in Dillard’s offer (and possibly lure in fashion-oriented customers). Inclusive sizing, deliveries in drops, thought to be worn both at home and at the office, this new collection embeds in its core many of the characteristics of modern fashion brands.

Interestingly, in spite of the challenging context, Dillard’s seems to invest on its private label business to differentiate from competitors, as it already launched earlier this year an activewear line.

Also, the topic of Private Labels is of importance for IADS members too. Do not hesitate to look at thevideo and resources related to the meeting organised on 15 January 2021 on this topic.

Dillard’s Offers Exclusive LDT Dress Line From Toccin NY 

What: Unibail Rodamco Westfield plans to reduce US exposure from 2022, once market conditions improve.

Why it is important:  the end of big is beautiful: URW plans to focus on high quality locations, enhanced by data analysis collected at a global level.

URW is expecting a market rebound in 2022 in the US, and is prepared to wait until then, to offload US location once their value comes back to acceptable levels. The group plans to focus on choice locations, carefully animated by well selected and often renewed brands, supported by consumer data collected at a global level, and step away from the pure mall operation job.

Unibail-Rodamco-Westfield Expects to Start Selling U.S. Malls in 2022 

What: Shopify checkout and payment processing system are now integrated into Facebook platforms.

Why it is important: By providing its Shopify Pay option on social media, Shopify reinforces its central position for brands, encouraged to use their solution for their e-commerce developments.

Shopify operates the technology that powers many branded websites, and to ease customers’ experience from site to site, has developed Shopify Pay, a system that stores credit card and personal details (on Shopify’s servers) so that users do not have to enter them twice when shopping different brands.

Now, Shopify Pay (60 million global users, to be compared to 377 million for Paypal) is an option available on Facebook and Instagram, allowing customers to enjoy m-commerce (a market estimated to USD 36 billion this year) with the data they have stores on Shopify. It is expected to increase the return rate of customers, by erasing any friction point. Critics point out that, for now, Shopify Pay is not know enough to be a game-changing option.

However, one thing is sure: Shopify becomes a more and more central player for brands and retailers, by increasing its reach and customer services across the board.

Shopify Expands Its Checkout System to Facebook and Instagram

What: The retailer's Shop for Good initiative involves pop-ups, merchandise, windows and a focus on equity and inclusivity.

Why is it important: how Bloomingdale’s commits to support diversity and inclusivity.

Bloomingdale’s restarts its biannual Shop for Good campaign by celebrating and supporting the National Museum of African American History and Culture, the Black Artists + Designers Guild (or BADG) and American Ballet Theatre’s Representation and Inclusion Sustain Excellence program (or RISE).

Bloomingdale’s began its partnership with the museum in summer of 2020, when it mobilized its stores and customers to raise funds for the museum. Bloomingdale’s featured American Ballet Theatre dancers in its 2020 virtual holiday benefit, and the retailer works with BADG to explore new designers and collaborators.

The philanthropic campaign entails installations at all Bloomingdale’s stores, windows at the 59th Street flagship and a Shop for Good pop-up that doubles as a storytelling hub.

Bloomingdale’s Shop for Good campaign “elevates the voices of diverse and inclusive creatives across fashion, art and culture,” said Frank Berman, Bloomingdale’s executive vice president and chief marketing officer.

The shop also goes virtual at Bloomingdales.com/shopforgood, starting 1 February.

Bloomingdale’s Campaigns for Causes

Related items:

• Nordstrom reaffirms commitment to diversity and inclusion
• Macy’s highlights black brands and creatives
• Neiman Marcus celebrates Black history month

What: Sears quietly disappears

Why it is important: it dangerously hurts the overall health of shopping centers

Transformco, the owner of the Sears and Kmart banners, is moving to close more stores after years of steady retrenchment. Sears stopped issuing official store closure announcements two years ago. After the October 2018 bankruptcy filing by its parent company, Sears has continued on its path to retail oblivion.

End of January, Sears quietly posted “temporary store closing” positions at 10 of its remaining locations on the company’s website.

Sears Holdings began 2019 with 489 full-line Sears department stores in operation. Today, that figure drops to just 36 locations after this latest round of closings.

It’s unknown how much longer Sears can continue in its present state. Online reviews for the 36 remaining Sears stores include comments such as, “kind of empty,” “this place looks bare,” and “looks like they could fill up the store with some inventory.”

Forbes: Sears closes 10 more stores

Retail Dive: Sears closes 13 more stores

Related items:

• Old Sears locations become vaccination centres
• Sears: a victim of old age, mismanagement or evolution?

What: UK will no longer offer tax-free shopping to tourists.

Why it is important: UK will be the only country in Europe not to offer a tax rebate.

Before Brexit, tourists would claim back 20% of the purchase price of all goods over GBP 135 (USD 185). Worried that visitors from the EU, who are now third-party nationals, would start claiming back VAT, the British government scrapped the VAT rebate.

In 2019, foreign visitors bought GBP 3 billion worth of goods from fashion and other luxury stores in the UK – and spent another GBP 3 billion staying in hotels and eating in restaurants. “These people – who mostly come from China – have contributed a huge amount to the British economy but will simply make the choice not to shop in the UK because it is less advantageous to them,” says Paul Barnes, the CEO of Association of International Retail.

“We are now the only country in Europe offering no VAT rebate, so why would tourists not go to Paris instead, if they can save thousands of euros on luxury goods there and nothing here?” French officials are already rubbing their hands at the prospect of tempting Chinese customers across the channel. France has recently dropped its minimum spend required to recoup VAT from EUR 175 (USD 210) to EUR 110 and is said to be investing in new luxury space in central Paris and at the city’s Charles de Gaulle airport. It is also looking into making visas for Chinese nationals easier to obtain.

Brexit may kill London as a luxury shopping destination (...)

What: Best Buy in the US to reduce space allocated to customers, in favour of digital orders fulfilment.

Why it is important: They plan to reduce by up to 50% the store space, altering also one of their initial key features, the width of assortment.

US Electronics retailer Best Buy decided to take the bull by the horns after seeing its online sales tripling last quarter and decided to roll over a plan to reshape its stores. Their retail surface will be reduced by up to 50%, and the free space will be allocated to digital orders fulfilment capabilities. This also will lead to a new definition of roles among salespersons, including some layoffs that will be announced in the future.

This last point set aside is also the strategy that is followed by IADS member SM Store, who is “rightsizing” its retail surface in order to find the right match between physical retail and digital capabilities.

Best Buy tests smaller shopping areas to focus on e-commerce 

What: sales continue to decline

Why it is important: recession in HK started before the pandemic, and retail sales have been declining every month since January 2019. The social unrest and protests in the streets were tough for retailers, and were followed by the pandemic that was another blow

The holiday season did not bring much benefits to HK retailers, and retail sales by volume fell a record 25.5% in 2020. Significant declines were seen across department stores, jewellery and clothing, and also in industries including food, alcoholic drinks and tobacco. However there is hope that Hong Kong’s economy will rebound in 2021, depending

on the rollout of vaccines. The retail sector, the F&B, and all the entertainment should revive, but with travels still on hold touristic activities will stay low for a while longer.

New Virus Variant Sees Hong Kong Retail Sales Plummet