What: Impressive results for this company. Will it continue to grow?

Why it is important: Covid has served as an accelerator of growth for many online formats. Shopify represents a variant of a growing model offering “retail as a service” (including to brick and mortar stores).

The Canadian e-commerce platform has doubled its sales for the third quarter in a row. However, it warns that it is unlikely to keep up that growth rate through 2021. Shares have tripled in value to give the company a value of almost $ 180 bn. Hundreds of thousands of new sellers adopted Shopify’s services which allow brands to sell directly to customers.

Spending by consumers on the 1.7 m merchants selling through Shopify’s software and services grew to $41.1 bn in the fourth quarter. Net income in the quarter was $ 123.9 m compared to $ 771 000 in the same period the year before.

A representative of Shopify is due to address the IADS CEO meeting in April.

FT Shopify doubles sales for third consecutive quarter 

What: landlords may have to consider repurposing unfilled retail sites for leisure or residential use

Why is it important: the collapse of Debenhams and Arcadia has left the country with 15 million square feet of empty retail space

The collapse of Debenhams and Arcadia has magnified a problem for landlords: what to do with the glut of redundant retail space tainting Britain’s towns?

Neither Boohoo nor Asos, which have picked up Debenhams and Arcadia brands have opted to take on the leases for the shops. That means almost 15 million square feet of space will hit the market in the UK. Debenhams sites will be even harder to fill than the individual units left behind by Arcadia, because of their larger floor space.

Potential new tenants include discount stores B&M and Home Bargains, as well as fashion brands that have performed better during the pandemic, such as Zara, Mike Ashley’s Fraser Group and JD Sports, which last week announced plans to raise almost GBP 500 million as part of an expansion drive. Are also considered leisure and gym activities as well as turning spaces into flats and offices.

As an example, a Coventry shopping centre anchored by a Debenhams was recently sold for GBP 4.9 million. Eight years ago, the mall was valued at GBP 37 million.

What will happen to all of Britain’s empty shops?

What: Walmart is looking for new sources of income beyond retail.

Why it is important: They want to make the most of the “ecosystem” they are building, beyond stores and e-commerce. This is an echo of the notion of “audience” we promote at IADS: each department store should find its own voice, to address the right community. Ultimately, the community of customers is the most important asset and strength.

Walmart is planning to make the most of its audience (150 million unique visitors a day) to diversify beyond retail. This strategy follows what Apple and Amazon have been doing: selling services over products. The success of Walmart + emboldens the retailer to think outside the box: provide healthcare services to its app users, sell the screens in its 4,700 locations as advertising spaces, use its parking lots for events.

The topic will be addressed during our next Cross-Functional meeting scheduled for 26 April 2021, on “new business models, new sources of income”.

Why Walmart is looking to beyond retail for future growth

What: Offering lower rents is not enough to keep duty-free stores open.

Why is it important: The travel industry continues to struggle.

Two major South Korean duty-free operators, Lotte and Shilla, will close their stores at Incheon Airport’s Terminal 1 next month, leaving more empty space at the airport. Both Lotte Duty Free and Shilla Duty Free’s leases expired in August but were extended for an additional six months after new bidders backed out before signing contracts.

Their departure is the latest sign of dwindling fortunes for the aviation and travel industries, which are among those worst hit by the pandemic.

In January last year IIAC began the bidding process for new duty-free store operators, offering lower rents in an attempt to keep shopping at the airport alive. But the airport’s efforts proved insufficient to fend off growing scepticism and uncertainty surrounding duty-free shopping, prompting the search to continue for nearly a year.

Lotte and Shilla close duty-free stores at South Korea’s Incheon Airport 

What: The continuing and growing strength of the convenience format in the county.

Why it is important: Convenience is developing even further as a customer demand. Ubiquitous convenience stores are also shifting to cater to more of their customers’ needs.

According to The Korea Herald, convenience stores in the country outperformed department stores in 2020 for the first time in terms of offline sales. The combined sales of GS25, CU, and 7-Eleven took 31% of total offline sales, up from 29.2% the previous year.

The big three department stores Lotte, Hyundai and Shinsegae, took 28.4%, down from 30.4% the previous year. The rise of convenience stores is largely attributed to the anti-crowd, shop-near-home trend amid the strict social distancing measures put in place to contain covid. Also, convenience stores are selling a wider range of products.

Korea Herald Convenience stores outperform pandemic-hit department stores in 2020

What: outside brands will soon feature on the Mango’s online shop

Why it is important: the pandemic has forced many retailers to reinvent themselves, especially online. In order to differentiate from competition, and in a move to attract more customers, Spanish brand Mango has decided to sell outside labels on its webstore, compatible with the brand’s positioning.

A first deal has been signed with Italian lingerie label Intimissimi, which will be sold on the ecommerce in six countries: Spain, the Netherlands, Germany, the UK, Portugal and France. The objective is to gradually extend the service, to add more product and reinforce the offer.

Following the store closures in 2020, Mango already reviewed its offer to adapt to the situation: it entered the activewear segment, and launched a home decoration line.

Marketplaces are emerging as a convenient solutions during the pandemic, for businesses and for customers. In Canada, Hudson’s Bay Cie is also opening a digital marketplace to extend offer.

Mango to retail third-party labels via its e-shop

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What: a support to the education system at a time when schools across UK are closed because of the virus

Why it is important: in a move to serve the community, as well as staying in customers’ review mirror, Marks & Spencer is disclosing resources and teaching topics M&S’s heritage in leading on quality, innovation and service

Created by the M&S Company Archive, the series of free engaging online learning resources are inspired by the group activities and include the history of food, the science behind textiles, the process of designing packaging and delivering for customers as a business. They feature films, printable worksheets and practical tasks such as pitching business ideas or creating food packaging. According to the press release: “As well as offering children the unique opportunity to get a behind-the-scenes insight into working at M&S, the resources aim to support skills in maths, science, art and design, and business studies and have been developed by education experts in collaboration with teachers and home-schooling coordinators”. It is a way for M&S to stay in touch with their customers during the lockdowns, and perhaps also to train future consumers or future employees.

M&S DIPS INTO ITS ARCHIVE TO LAUNCH NEW FREE DIGITAL LEARNING RESOURCES FOR FAMILIES ACROSS THE UK

What: Wittington Investments, the parent company controlled by the Weston family, has committed to supporting the business

Why it is important: lockdowns and removal of tax-free shopping may trigger a GBP 680m write-down

The company has been faced with a devastating drop in tourist flows as well as enforced store closures and is also dealing with the end of the previous tax-free shopping regime for tourists who visit Britain.

Those are the key points to come out of the accounts filing of SHEL Holdings Europe, parent company of the department stores operator (also including Brown Thomas, Arnotts, and De Bijenkorf).

The firm filed its accounts at Companies House covering the year to February 2020 and said that in the year concerned, its revenue rose to GBP 1.522 billion from GBP 1.452 billion. Pre-tax profit fell to GBP 37.8 million from GBP 103.3 million and net profit fell to GBP 31.1 million from GBP 82.2 million. But EBITDA rose to GBP 299 million from GBP 206 million.

But what was more interesting was that it warned of a “severe but plausible” situation in which its UK banking covenants might be breached due to the ongoing coronavirus restrictions.

And while it also said it's confident it would be able to renegotiate these, it also said that Wittington Investments – the ultimate parent company controlled by the Weston family – has committed to supporting the business in the “unlikely event” it can’t successfully renegotiate those covenants.

Fashion Network: Weston family may need to pump cash into Selfridges

Retail Gazette: family behind Selfridges poised to fortify department store

Related item:

• Brexit may kill London as a luxury shopping destination

What: A duty-free hub is taking the share of the lion on the Chinese market

Why it is important: With a tripled duty free allowance, this market is becoming especially attractive to Chinese customers, who might change their purchasing behaviour even when travelling is authorised again.

Hainan Island is China's smallest province but the region where most potential lies, since it is a much-liked touristic spot for Chinese customers unable to travel abroad. Michael Kors is building its 4th store there, Capri group and other luxury companies consider this market to be the only alternative to duty free sales, which are not expected to recover until 2023. This is fuelled even more by the Chinese government, which increased the allowance for duty free purchases to USD 15,500 per person, tripling the amount from last year.

Ralph Lauren, Coach, Estee Lauder look to China’s Hainan Island as US luxury brands ...

What: the Chinese e-commerce group’s days of unchecked growth are likely over.

Why is it important: A return to previous growth rates cannot be achieved without government support.

Sales rose 37% as changing consumer buying habits boosted demand for online shopping. But the pace of sales growth has been slowing. For most quarters in the past five years, it was more than 50%.

More concerning is the potential damage from antitrust probes. The main focus of investigations has centred on e-commerce and fintech sectors — two of Alibaba’s core businesses. A massive regulator-led overhaul is underway at its digital payments affiliate Ant Group.

Unlike companies such as Tencent that can diversify sales and regulatory risks geographically by selling games globally, Alibaba’s focus is on China. For Alibaba, a return to previous growth rates — whether it is through new technology, marketing or pricing — cannot be achieved without government support.

Alibaba growing pains 

What: Sales doubled in 2020 to reach EUR 1,37 billion.

Why it is important: it reflects the consumer’s shift in terms of attractive categories, but also expectations: they want to be enabled with tools and advice, instead of provided a ready-made solution.

ManoMano increased sales by 100% in 2020 to EUR 1,37 billion and claims to have 7 million active customers, and 50 million unique visitors a month. Founded in France and well represented in Southern Europe, ManoMano is now eyeing at the UK.

ManoMano doubles sales in 2020 

What: a cross-industry collaboration for the Chinese Market

Why it is important: we explored during the Cross-functional meeting dedicated to space productivity the kind of out-of-the box partnerships helping to generate additional turnover. This is an example.

Ikea teams up with Asus, manufacturer of gaming PCs, to develop a specially adapted range of furniture at very competitive level. Smartly, Ikea uses this collaboration to penetrate the Chinese market, with a well-focused price range.

Ikea teams with Asus to launch furniture for gamers

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What: Luxury retailer launches its Black history month campaign focused on Black futures and Black excellence

Why it is important: how NMG responds to activists’ push for back-owned brands

Through numerous long-standing and new partnerships, Neiman Marcus Group has also announced the achievement of raising and donating $1 million over a three-year period to non-profit organizations that support Black communities across the US.

"Neiman Marcus Group is investing in a strong foundation of educational support, mentoring, and leadership skills, which are all crucial to the success of our communities," said Amber Seikaly, Vice President, ESG and Chief Communications Officer, Neiman Marcus Group.

As part of its three-year partnership with Boys & Girls Clubs of America, Neiman Marcus Group has pledged to continue fundraising in stores throughout February, with the goal to deliver more than $1 million towards the advancement of youth.

NMG has more than a century-long history of philanthropic partnerships within the community. In addition to philanthropic partnerships, NMG will continue to celebrate Black History Month by hosting Nikole Hannah-Jones, a Pulitzer Prize-winning reporter covering racial injustice for The New York Times Magazine. Black-led businesses and designers of brand partners are also highlighted through Neiman Marcus' "Spotlight on Diversity" story on NeimanMarcus.com.

PR: Neiman Marcus honors black history

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What: a shift in kidswear offering, moving from ‘special occasion’ toward ‘everyday style’

Why it is important: casualwear is the key trend of 2020, and customers are keen for a more relaxed & fun range from M&S Kids

As part of its ongoing shift to everyday clothing, M&S Kidswear is launching a new character range on M&S.com – Mr Men™ Little Miss™. The range is available up to aged seven across daywear, sleepwear, accessories and bedding.

Focusing on everyday kidswear is an important part of M&S’s Never the Same Again programme to offer relevant product for the new consuming habits, now and post-covid. Last month it extended its activewear label Goodmove to men and children.

EVERYDAY STYLE & VALUE FOR THE LITTLE ONES: M&S LAUNCHES NEW CHARACTER RANGE [...]

Related item:

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What: without speedy approval, the retailer would have faced liquidation

Why is it important: the reorganising plan eliminates USD 450 million in debt and keeps the 291 stores open

Belk entered Chapter 11 with USD 1.9 billion in funded debt, a heavy burden for a retailer struggling in a "challenging commercial environment" even before the pandemic, according to Belk CFO William Langley.

Amid the lockdown orders and the depressed shopping at stores that followed reopening, Belk's sales fell 32% year over year in the months between March and December last year. Liquidity in April 2020 was down 70%.

Langley said the plan, which leaves Sycamore as the majority owner of Belk, had support from lenders representing nearly all of its term loan claims and would pay unsecured claims. The CFO touted the plan as a way to keep its stores open and 17 000 jobs in place.

The department store said it has USD 225 million in new capital and extended maturities to 2025.

Belk files for bankruptcy, eyes lightning-fast exit 

Belk exits bankruptcy

What: Government help for large German department store group.

Why it is important: The rescue package argues that department stores are indispensable for the life of cities.

The German department store chain Galeria Karstadt Kaufhof has reportedly been offered a subordinated loan from the German government of up to EUR 460 million. The aim is to safeguard jobs and help the hard-hit company through the crisis.

According to the government, department stores also have an important anchoring function in city centres. They are considered indispensable “crowd-pullers” and their disappearance would also jeopardise the existence of many surrounding shops. Some oppose this measure arguing that it distorts competition as well as assuming that city centres cannot exist without department stores.

Several months ago, the company’s creditors agreed to a sweeping rescue plan for Galeria Karstadt Kaufhof by which it closed 40 stores and lost 4000 jobs.

German government supports Galeria Karstadt Kaufhof 

What: the first &Other Stories store opens in iAPM mall in Shanghai.

Why it is important: the first physical store in China, following the Tmall store opened in 2019.

&Other stories, which operates 72 stores worldwide, will open its first store in China after having opened in Korea in 2017 and TMall in China in 2019. Interestingly, the strategy in China is at the opposite of what has been conducted in the rest of the world, as the retail footprint of the brand has been constantly expanding without touching the fastest growing market. It will open in iAPM high end mall this coming Fall.

H&M’s Arket, & Other Stories to Open First Physical Stores in China

What: a major expansion with the department store adding 50 new brands across fashion and beauty to its portfolio in order to respond to the new trends

Why it is important: consumers lifestyle and habits have dramatically changed this past year, and retailers’ assortments needs to evolve with this shift. The trend for ‘casualisation’ accelerated, with a demand for more comfortable and casual styles

To respond to the new consuming habits of customers, John Lewis will be adding 50 brands across fashion and beauty; for women, men and children. Additions include established brands (such as Mango or New Balance) and emerging, independent and predominantly online brands. The new brands will offer contemporary styles for a casual day working or relaxing from home, as well as athleisure styles as the population has gotten more active since the pandemic. Conscious shopping will also continue to be a priority with new sustainable brands.

John Lewis is not the first retailer to adapt to the new consuming trends (see IADS exclusive on the new consuming habits): this month, Rinascente launched a pop-up store dedicated to sports and fitness in Turin. Kohl’s is also expanding its athleisure and lifestyle offer with a new private label, the launch of a wellness market and a partnership with outdoor brand Eddie Bauer. Target saw excellent results for its athleisure private label All in Motion generated USD 1 billion in its first year.

IADS next Merchandise meeting will focus on Sports & Lifestyle and will take place on 21 April 2021.

JOHN LEWIS BRINGS TOGETHER 50 NEW FASHION AND BEAUTY BRANDS [...]

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What: a partnership with resale platform Goodfair to sell vintage clothing online

Why it is important: Nordstrom has set for itself sustainability goals for 2025, and one way to achieve it is through resale. With this partnership with Goodfair, the retailer will drop new items every month; a way to attract younger shopper thanks to the limited-edition collections

Monthly drops initially consist of over 50 vintage items sourced from Goodfair’s supply stream. The majority of pieces are considered true vintage, meaning they were made before 2000 and follow certain guidelines dictated by Nordstrom with some pieces even bearing the “Made in the USA” moniker. The first instalment of the monthly Goodfair shop went live on 28 January, selling out within hours. The vintage picks are merchandised into Nordstrom’s existing website under its Sustainable Style vertical, the department store online shop dedicated to environmentally friendly products launched in 2019.

This is not the first time Nordstrom plays in the resale market: last year it launched See You Tomorrow, a resale pop-up store available online and at the New York flagship store.

Behind Nordstrom’s Online Vintage Shop With Goodfair

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What: a new mall in Chongqing, the Oval, mixing art and retail

Why it is important: following the steps of SKP and K11, operators realise that enhance retail is key to generate and maintain traffic in store

IADS partner GDR UK reports the opening of The Oval, a new mall in Chongqing, China. Its specificity is that art is mixed in the retail experience: when visiting the premises, customers can see artwork displayed on their smartphone, and the centre of the mall, the OR, is a “multi-dimensional fashion complex”, half store, half gallery.

Interestingly, a significant part of the retail space is also dedicated to sport and fitness: running track, skate par, shooting club, indoor sports playground, bowling alley. We explore this trend in the upcoming Merchandising Meeting #2 on sport & lifestyle in April 2021.

Multi-purpose mall brings art and retail together in Chongqing

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What: Walmart's membership program could already account for 7.4 to 8.2 million members

Why is it important: 30% of online grocery transactions come from Walmart while Amazon accounts for about 27%, down from 33% in 2019

Five months after Walmart's membership program was released, Consumer Intelligence Research Partners analysis indicates that it has garnered between 7.4 million and 8.2 million members. On the other hand, Cowen analysts estimate 12 million U.S. households have Walmart+ memberships and 69.6% use them at least once per week. Despite economic uncertainty, it seems Walmart shoppers are willing to spend the USD 98 annual subscription service (or USD 12.95 per month).

Members currently account for about 13% to 14% of total Walmart.com. Consumers that shop for groceries at Walmart.com spend almost double the average online Walmart shopper per year, the CIRP survey shows, at USD 1 900.

Walmart+ program gains traction 5 months after launch

What: After acquiring Debenhams, Boohoo takes over the remains of Arcadia Group.

Why it is important: Boohoo has become an opportunistic acquirer of faded brands.

Boohoo has agreed to buy Burton, Dorothy Perkins and Wallis out of administration, marking the final stage in the break-up of Sir Philip Green’s Arcadia Group. The online retailer said it was set to acquire the digital assets and intellectual property of the brands for GBP 25.2 million.

The transaction will lead to the closure of 216 shops across the UK occupied by the three brands which made about GBP 428 million in revenues last year.

John Lyttle, Boohoo’s chief executive, said the deal ensured that the brands’ “heritage is sustained, while our investment aims to transform them into brands that are fit for the current market environment”.

The acquisition of the final parts of Arcadia — after Asos last week announced it would buy Topshop — closes a chapter for UK high streets. When Green in 2002 acquired Arcadia for GBP 850 million, Asos’s revenues were just GBP 4.1 million and Boohoo did not exist.

Boohoo to buy Burton, Dorothy Perkins and Wallis brands for £25m 

What: new wave of lay-off as a result of the impact of the crisis on retail

Why it is important: The pandemic has a significant impact on non-essential retailers which have been facing forced store closures for months, and they are exploring ways to save costs, sometimes at the expense of workers

The permanent lay off of more than 600 workers across Canada represents less than five per cent of the HBC’s total workforce; and the decision was made while nearly half the company's department stores remain temporarily closed. Workers concerned, both part-time and full-time, have worked for the retailer for between 10 and 30 years, predominantly in sales and middle management. "The pandemic continues to have a significant impact on non-essential retailers," said Tiffany Bourre, a spokeswoman. "Due to these circumstances beyond our control, the company has had to make adjustments which have resulted in a reduction in workforce."

Hudson's Bay permanently laying off more than 600 workers across Canada

What: SFW postponed from March to April, due to resurgence of Covid in China.

Why it is important: it is one of the few offline events scheduled this year. Due to its rescheduling, international brands with an offline planned activity decided to move it online.

Due to new outbreaks in Liaoning and Hebei, massive test and vaccine campaigns are carried out, in addition to partial lockdowns and safety measures, including rescheduling public events. This is the reason why SFW was rescheduled. International brands planning to have events during this week decided to move it online, such as Canada Goose, Cartier, while local retailers such as Lane Crawford and K11 are increasing safety measures.

Shanghai Fashion Week postponed amid new Covid-19 outbreaks