What: consumers are moving away from fast fashion athleisure and looking to invest in longer-lasting performance wear

Why is it important: insights from Vogue Business ahead of IADS Sport & Lifestyle merchandising meeting

Online fitness communities have soared over the last year in response to the closure of gyms and restrictions on spectators at sports events.

As the power of digital communities and the growing interest in health are long-term trends, they have both converged and accelerated, creating networks of consumers ready to invest in fitness apps, equipment and clothes. Premium and mass-market athleticwear brands are tapping into these fitness communities to reach hyper-engaged audiences, while luxury brands are exploring the potential of technical athletic wear. Fitness networks nurture a sense of belonging and, as networks strengthen, participants are naturally ready to step up their spending on higher performance quality products.

More than 74 million athletes worldwide use Strava, an app that enables users to track metrics for outdoor activities. But it's the social aspect that’s attracting 2 million newcomers each month, involving the creation of clubs or challenges. Lululemon has one of the biggest clubs on Strava, with over 100 000 members and some of its challenges saw mass engagement with more than 300 000 people tracking their workouts together. And athleisure is one of few resilient categories during the pandemic.

As the pandemic continues, trust in institutions, media and government have declined. Instead, consumers are seeking out communities and networks online. The result: a long-term and hyper-engaged network of consumers in the fitness space.

Nike launched its run club, NRC, in 2010. It logged 100 million runs over the last 12 months, continuing to see strong year-over-year gains in weekly active users, new users and retained users in Q2, Nike says. The app links seamlessly to in-app purchases and offers exclusive drops and discounts.

As Nike is considered a luxury brand by younger consumers, the On CloudX shoe was ranked as #9 in the Lyst Q4 2020 index of the hottest items for men, the first time a technical running shoe has featured in the ranking. The top ten is typically dominated by luxury and streetwear brands, but Lyst is seeing a shift as consumers invest in technical sportswear.

Luxury brands have tended to steer clear of technical athletic wear, but there are signs that they are ready to push more into this product category. Designers already launched collaborations with sportswear brands in the past few years: Victoria Beckham, Maison Margiela or Vêtements with Reebok, Dior with Nike and Prada with Adidas.

It remains to be seen whether luxury brands will explore besides sneakers. Peloton, the exercise equipment and media brand that went public in 2019 is already serving those consumers. Peloton is a luxury brand, it’s vertically integrated and it has a high price premium.

As online fitness booms, is technical sportswear the new luxury

What: Liberty, London's iconic department store, is bringing its unique in-person experience to online shoppers.

Why is it important: The new virtual shopping service provided by Hero, connects online customers live with a department-specific expert in the Liberty store through chat and video consultations. Virtual shopping brings the Liberty store to life online. Customers who use the system are spending an average of 78% more when interacting with rich imagery and video content from in-store.

Liberty's store associates also use the system to follow what customers are shopping for in real-time, making it easy to share personalised product recommendations just like they would in-store. They are able to stay in touch with customers and share product updates by text, recommend complementary items, or send notifications when a product is back in stock.

See presentation by Adam Levene, founder of Hero, made at IADS General Assembly November 2019 in London with CEO of Liberty.

Liberty officially launches virtual shopping experience with Hero 

What: In order to provide more content to its customers, Kayak opens its own-brand resort in Miami

Why it is important: collaborations with websites allowing them to provide physical experiences to their customers could be a way for department stores to rethink the usage made of some of their square metres, and generate new revenues.

GDR UK, a retail intelligence agency based in London, spotted the online travel booking website Kayak which plans to open its first own-brand resort in Miami, in collaboration with boutique hotel brand Life House.

A full contactless experience is guaranteed from check-in to voice-controlled room amenities. This new venture will also allow Kayak to collect data on its customers and their usages.

travel booking website opens first bricks and mortar resort

What: from now on the company will rely on local partners

Why is it important: the department store has already cut 100 jobs in Zurich HQ

The company wants to avoid layoffs and try to place its 50 ex-employees with new partners. Globus has also developed social measures including early retirements, compensation, extended periods of notice and job search support.

By February 2020, Globus had been sold by Migros to the joint venture of Austria's Signa and Thailand's Central Group. The new owners announced last April that they would cut about 100 positions at the Zurich headquarters. The department stores currently employ 2 400 people.

Commerce de détail Globus externalise la restauration

What: the Japanese retailer hopes for a USD 55 million turnover by 2026

Why is it important: it’s an attempt to shift from traditional inventory-heavy business model

Japanese department store operator J. Front Retailing will launch a new subscription-based rental fashion service as it tries to shift from its traditional inventory-heavy business model, Nikkei has learned.

The new service, the first by a major Japanese retailer, will allow customers to rent up to three high-end women’s clothing items from foreign and domestic labels for a monthly fee of JPY 11 000 (USD 103).

J. Front Retailing hopes to have 30 000 customers and sales of JPY 5.5 billion (USD 50 million) to JPY 6 billion (USD 55 million) within five years. The subscription service will be handled by J. Front Retailing’s subsidiary, Daimaru Matsuzakaya Department Stores.

It will initially offer about 50 domestic and foreign brands, including popular labels like Marni of Italy and France’s See By Chloe. The service will focus on upscale brands that are popular in department stores.

Japanese Retailer J. Front To Start Fashion Subscription Service

What: SSG.com will launch an open market place to enable individual sellers with a business license to freely market their products on the platform.

Why is it important: A big retail shakeup has started as retailers react to Coupang’s New York IPO and prepare themselves for the sale of eBay Korea, which could significantly shift market shares.

In addition to products from Shinsegae's retail affiliates, such as E-mart and Shinsegae Department Store, SSG.com will let individual dealers sell their products on its platform. Its main rival, Lotte Shopping, launched open market services in April 2020 on its combined online shopping platform, Lotte ON.

As part of the plan, SSG.com launched a seller's page called SSG Partners, where small and medium-sized dealers can register and manage their products. The e-commerce firm also lowered its standard for sellers, by simplifying the registration process: anyone who can provide their ID through a mobile phone can open a business on SSG.com's open market.

However, it decided not to allow open market sellers to sell grocery items, luxury goods and certain fashion brands, as they are in direct competition with Shinsegae Group's retail units.

SSG.com currently sells about 10 million products kept in stock, and this inventory is expected to grow fivefold when it starts its open market service. This growth will help Shinsegae's online business to increase its market share, which is now only 2.4%.

Shinsegae to launch SSG.com open market service

What: Selfridges group of the UK which includes the eponymous Selfridges store on Oxford Street, de Bijenkorf department store in Amsterdam, Brown Thomas and Arnotts in Dublin, as well as the Holt Renfrew upmarket fashion chain in Canada has officially announced results for the year to 2 February 2020, pre-covid. Although revenue increased by 7% to £1.97 bn, operating profits were down 10% to £88 m, and pre-tax profits plunged to £34 m from £98 m the previous year.

Why it is important: Managing Director Anne Pitcher stated that the group has suffered during this latest year. With Selfridges stores being located in city centres, she expects footfall to remain muted for some time, even when stores reopen. City centres — and especially London’s West End — have been devastated in the last year with the international and domestic tourists, plus office workers, that usually make up the majority of shoppers being thin on the ground.

Selfridges press release

What: The brand's U.K. director Gary Bott explains the decision to focus on a concession model, e-commerce and strategic wholesale in Europe, whilst Asia launches new multi-brand concept stores

Why is it important: The brand will rely on department stores for its development in Europe

South Korean label Gentle Monster is known for its cool eyewear designs as much as it’s known for its theatrical retail spaces.

A new multi-brand concept is set to open in Shanghai later this year and introduce new categories and brands beyond the Gentle Monster family. But it’s a different story when you look at the label’s European business, which includes a Selfridges concession and a flagship space on Argyle Street here. The latter won’t reopen.

“Ultimately, it was a decision based on the decline of footfall and sales. We had to look at it in terms of overheads which were disproportionate to the sales unless landlords were able to offer rent reductions. That’s why we are seeing so many stores close on the high street,” Bott added.

A dedicated e-commerce site for the U.K. and Europe is also in the works, in order to shift operation management to the U.K. and no longer have to ship product from the brand’s Seoul headquarters.

But as lockdowns begin to ease, Bott is expecting the focus to shift back to physical retail sales, which used to make up to 90% of the brand’s total revenues in the U.K. A small 7% came from e-commerce and the remaining 3 per cent from “strategic wholesale.”

Gentle Monster’s Post-Pandemic Retail Rethink 

What: stores will serve as community hubs for an increasingly omnichannel retail experience

Why is it important: Shopify to play a critical role in a physical retail

DTC brands like Allbirds are now focusing on the critical role stores will play to serve shoppers’ multichannel needs. Post-pandemic, more direct-to-consumer brands will turn to physical retail as a way to build community.

Allbirds, a Shopify customer, is continuing to open new retail stores and expects store traffic to rebound strongly post-pandemic. In that way, Shopify is helping stores to schedule kerbside pickups, enhance ship-from-store capabilities, create shop-by-appointment reservations, boost its customer personalization and service to make the in-store shopping experience more efficient.

“Having the ability to meet the customer wherever they want to be met, at any time, is critical as we go into the future,” said Travis Boyce, head of global retail operations at Allbirds.

Allbirds began 2020 with ambitious plans to open 20 stores during the year and increase its store count from 15 to 35. The pandemic slowed those plans, and it ended last year with 23 stores, including store openings in Philadelphia and Los Angeles.

Going forward, Boyce said, stores will serve as hubs for a broad omnichannel experience, and as places where Allbirds can build a sense of community for its customers.

“Appointment scheduling could become how shoppers let stores know they want personalized service”, Arpan Podduturi, director of product at Shopify, said.

Shopify surveys have found “that 50% of consumers would like to be able to schedule a time for in-store shopping,” Podduturi said. Appointments let shoppers share information about their preferences and sizes before they get to a store, allow store staff to choose specific products for them, have information about their purchase history and give more shoppers the VIP store treatment.

Why Digital Pioneers Allbirds and Shopify are Investing in Physical Retail

What: the UK department store supports the Sustainable Fibre Alliance (SFA)

Why is it important: all key raw materials in own-brand products will come from sustainable sources by 2025

The UK department store retailer is to fund a three-year programme run by the Sustainable Fibre Alliance (SFA) to support the expansion of the body’s new Cashmere Standard from Mongolia to the Inner Mongolia region of China.

The retailer said its involvement will be part of a commitment “to ensuring all key raw materials in our own-brand products will be from sustainable or recycled sources by 2025”.

For its part of the support, John Lewis is funding the training of 420 herders in Inner Mongolia, on the global standard. Training will be provided by a leading animal welfare NGO, the International Cooperation Committee of Animal Welfare (ICCAW), together with experts from a local agricultural university.

Protecting cashmere’s future John Lewis to fund Inner Mongolia wool programme

What: the opening of more brick-and-mortar location for the online resale platform

Why it is important: while online shopping is soaring, physical shopping is not dead yet as demonstrated with the RealReal’s expansion into the physical business. After opening smaller neighborhood stores in California and in NYC, the label plans on opening ten more before the summer

The RealReal realised that consignors are more responsive when dealing with a physical space and tend to consign more items, which ultimately offers more choices for customers. And buyers who purchase offline and online spent more a year than online-only buyers. CEO Julie Wainwright said: There are favorable terms for driving those smaller neighborhood stores to faster profitability than they were before Covid.”

The success for the physical expansion lies in the fact that, even though online shopping can be convenient, it will not overcome the in-person desire to touch and feel. The RealReal also bets on its core value ‘resale’ to continue attracting customers who are more and more committing to a sustainable consumption, through ‘re-commerce’ for example.

The RealReal’s Results Are Another Sign That Brick-And-Mortar Stores Won’t Go Out Of Fashion

What: the retailer is doubling down on its online business

Why is it important: Kohl's bets on activewear for growth

Americans have loaded their online shopping carts with not just essentials but also leisure goods. As consumers bought everything from leggings and sweatshirts to kitchen electrics, the company’s digital sales surged to account for 42% of net sales in the fourth quarter.

Overall net sales declined 10% to USD 5.88 billion in the quarter, but was above expectations of USD 5.86 billion.

Kohl’s is betting on the rise in demand for activewears such as running shoes and workout clothes. The company is planning to increase the space for such products in its outlets by adding brands such as Eddie Bauer and expanding those offered from HanesBrands Inc’s Champion.

Kohl's bets on activewear for growth

Kohl's Q4 financial report

Related item:

• Kohl's turns to Eddie Bauer as outdoor sales surge

What: He will have to force the department store into digital age

Why is it important: Today, online sales account for less than 10% of the total business

Isetan Mitsukoshi Holdings has named one of its star executives who rebuilt operations in Malaysia and Japan to lead the company into the digital age. Toshiyuki Hosoya, who is now president of Fukuoka-based unit Iwataya Mitsukoshi, acknowledged the challenges traditional department stores face amid the pandemic and the rise of online rivals.

He began his career at Isetan in 1987, working in women's clothing and accessories and quickly emerged as a star player. But it was during a stint in Malaysia where he truly proved his leadership. Hosoya completely revamped this struggling branch, including an overhaul of its sales structure and customer service.

Since becoming president of Iwataya Mitsukoshi in 2018, he has made it a point to speak directly with its over 1 000 employees at roundtable discussions and other events. Under his leadership, Iwataya launched a unified, cross-department database for customer information, and entrusted employees with a range of responsibilities from customer service to inventory management. Both measures were later adopted by parent Isetan Mitsukoshi.

Isetan Mitsukoshi relies on its department stores for about 90% of its income, unlike many of its competitors that have diversified into new fields like property rentals. This means it was hit especially hard by the pandemic. The company is expected to log a JPY 45 billion (USD 422 million) net loss for the fiscal year ending March.

Embracing e-commerce is considered crucial to Isetan Mitsukoshi's recovery. Online sales currently contribute less than 10% of its total sales, but the chain began offering every product at Isetan's flagship Shinjuku store and other outlets for purchase online in Noveber.

Isetan Mitsukoshi appoints new CEO

What: Tonal partners with Nordstrom to bring its intelligent strength training system to new customers in 40 stores across the US

Why it is important: Tonal’s fitness equipment uses a proprietary digital weight system that generates up to 200 pounds of resistance and replicates every machine in the weight room with a fraction of the equipment, as well as an advanced A.I. software available to offer customised and evolutive training programmes to its users.

Its partnership with Nordstrom will take the form of a 50 square foot concept in Nordstrom Women’s Active department where visitors can experience a full Tonal demo and try a workout first-hand. Tonal hoping to reach new customers, including in 12 states where it had no physical locations yet.

As for Nordstrom: "We know customers are looking for inspired workouts that elevate their wellness ambitions, and we're excited to offer them a dynamic new digital fitness experience through our partnership with Tonal," said Lori Marten, Nordstrom Vice President and Divisional Merchandise Manager. "Our goal is to help customers discover the latest active gear for style, performance and everything in-between, and we look forward to making it easier than ever to discover everything in one place so they can look and feel their best."

Tonal Partners with Nordstrom to Expand its Retail Footprint [...]

What: the retailer and the tech giant team up to compete with e-commerce players, such as Coupang

Why is it important: retail and tech are joining forces in South Korea

South Korean retail giant Shinsegae Group and information technology behemoth Naver are combining forces to gain an upper hand in the fast-changing e-commerce field.

Chiefs of the two sides signed a stock swap deal worth KRW 250 billion won (USD 221 million) and a strategic partnership agreement.

Shinsegae said it would be combining its expertise in retail, both online and of physical stores, with Naver’s expertise in online platform operation and artificial intelligence technology to provide the best benefits to customers. The retail giant also said it aims to create a new retail ecosystem where they can work and grow together with individual and small business sellers.

Shinsegae and Naver ink stock swap deal 

What: a part of the store will be converted into office space

Why is it important: the retail rethinks its store as consumption shifts online

First, John Lewis unveiled plans to convert part of its Oxford Street, London flagship into office space. And now Marks & Spencer is doing the same. The retail giant wants to convert the upper floors of its Oxford Street site while retaining retail space on the lower levels.

The moves on the part of both prominent retail names come as physical retail faces its biggest challenge in decades, not only because of the pandemic-linked lockdown, but because of the wider shift to online shopping.

M&S aims to consult with local stakeholders on its proposals, with its plan being to develop a smaller but much more modern store that will still offer its full range of products.

Marks & Spencer plans to downsize Oxford Street flagship

What: Edgy LA store Fred Segal ventures outside home ground in US.

Why it is important: Opening stores when others are closing. Adapts the format but retains its spirit to attract customers.

Fred Segalplans to open two freestanding stores in Las Vegas this summer at the $ 4.3 billion Resorts World Las Vegas luxury resort and casino. The Fred Segal men’s and women’s stores will each cover 5 000 sqft of space.

With locations on Sunset Boulevard in Los Angeles, Malibu and Los Angeles International Airport, as well as international units in Taipei, Taiwan and Bern, Switzerland, Fred Segal is opening stores at a time when many retailers are struggling to keep the lights on in existing units.

The Las Vegas stores will feature Fred Segal’s signature vine-covered façade and red, white and blue awnings. Brands will include Libertine, MadeWorn, John Elliott, On Running, and Danielle Guizio. A Sundry Shop will offer beverages and snacks inspired by the culture and lifestyle of Los Angeles.

Management claim they have benefited from the closure of Barneys. Resorts World is the first new casino to be opened in Las Vegas for 14 years.

Fred Segal passed away at 87 on 25 February 2021. He will be remembered as arbiter of West Coast cool.

Fred Segal Bets On Las Vegas With Two New Stores

What: the company announces the opening of 60 freestanding stores and 200 locations inside Kohl’s stores

Why is it important: it’s Sephora’s largest expansion in the U.S.

Following a year in which e-commerce dominated the retail landscape, this move signals Sephora’s confidence in the future of the brick-and-mortar shopping experience. With a focus on growing its presence in off-mall locations, the retailer also aims to make Sephora more accessible to beauty shoppers across the country.

With a light at the end of the tunnel for retailers impacted by the pandemic, Sephora is once again announcing ambitious expansion plans. The retailer last year had planned 100 store openings, though it's unclear how many of those occurred, given COVID-19 became a serious concern in North America about a month later.

The company will also begin rolling out a buy online, pick up in-store service to all of its stores this week, following a successful reserve online, pick up in-store program. Sephora also highlighted other features aimed at online shoppers, including its sales through Instagram Checkout, its partnership with Instacart and its offering of instalment payments through Klarna.

Sephora plans 260-store expansion through Kohl's, owned stores

Sephora To Expand Brick & Mortar Footprint With 260+ New Stores In 2021 Across The U.S. 

What: This is the latest effort by M&S to attract new shoppers

Why is it important: M&S tries to keep up with Asos and Boohoo

Marks & Spencer Group Plc will start selling third-party fashion brands online as part of a wider initiative to revive its long-struggling clothing division.

The company will launch the first wave of guest brands, including Hobbs, Jack & Jones, Joules, Sosandar and Triumph, on its website over the next three months. They will be sold alongside M&S’s existing in-house brands.

This is the latest effort by M&S to attract younger shoppers and keep up with online competitors like Asos and Boohoo. It marks a significant change for the retailer, which since its founding in the 19th century has mainly sold its own brands.

The brands will initially launch on M&S.com, with future opportunities in UK stores. Partnerships will vary from wholesale agreements to exclusive collaborations. M&S may also look to buy more labels, following its January purchase of upmarket fashion brand Jaeger.

Marks & Spencer to Sell Rival Fashion Brands Online in Revamp 

What: Macy’s has decided to eliminate the role of COO in the company

Why is it important: the executive changes will make the company more efficient.

The current holder, John Harper, will depart this summer and will not be replaced. The Chief Stores Officer and the Chief Supply Chain Officer will now report directly to chairman and CEO Jeff Genette.

Another senior appointment will be made effective mid-March: Laura Miller will succeed the present incumbent as CIO. She comes from the hospitality world and will also report directly to the chairman and CEO. The other function reporting to Genette is the CFO who oversees the real estate function.

According to the company, these changes in reporting structure will enable Macy’s to be nimbler and more efficient as they move forward and drive top- and bottom-line growth.

The co-founder of Blue Mercury, founded 20 years ago and acquired by Macy’s in 2015 for $ 210 m, is also leaving Macy’s. Macy’s has started the search for a new CEO to oversee the 166 beauty stores, who will report directly to Tony Spring, CEO of Bloomingdale’s.

Macy’s Sets Senior-level Changes; Eliminates COO 

What: Since 2011, the sportswear giant has grown DTC sales from 16% to 35%, all while continuing to take share.

Why is it important: DTC business share will continue thriving in the coming years.

In 2011, DTC sales made up 16% of Nike brand revenues, or USD 2.9 billion of the total USD 18.1 billion brought in that year. By the end of Nike's fiscal 2020, which came 31 May, that number had grown to 35%, or USD 12.4 billion. Of course, Nike's revenues have also grown over that 10-year period, to USD 35.6 billion. By comparison, Adidas made USD 23.8 billion last year, and Under Armour made USD 4.5 billion.

It's been about having the right product, definitely. But it's also been about knowing how to make tough decisions. In the '90s, that meant opening outlet stores when trends shifted to khakis and away from sneakers, according to Matt Powell, senior industry adviser for sports with the NPD Group, and in the past few years, it's meant doubling and tripling down on shifting spend to its DTC channels.

Nike has a strong brand, so it's able to command a sizable business through its own channels. Another advantage to the method is that Nike has more control over how its brand is presented through DTC channels, something which analysts speculated was the reason it stepped away from Amazon.

A report from McKinsey and the World Federation Sporting Goods Industry estimated that the shift to DTC has been accelerated by two years because of the pandemic, and researchers recommend that in the medium- to long-term, brands that want to thrive will need to aim for a 20% DTC business, or higher. It's at that point that brands begin to see a virtuous cycle from DTC sales and higher margins, rather than the "vicious cycle" that comes with less scale of the channel.

How Nike is using DTC and data to expand its empire

Related item:

• Adidas aims to cut out retailers in a renewed push for growth

What: bookshops fight back

Why it is important: one of the reasons for department stores abandoning book selling was the competition. The competitive landscape is now changing.

After the consolidation of major bookshop chains, the growth of e-books seems also to have reached a plateau. Independent bookshops which favour a local approach are thriving. Perhaps this is a moment for department stores to reconsider entering this market, albeit in a different way.

How bookshops survived the Amazon onslaught 

What: The retailer ends with the repaying debt it took on at the height of the pandemic last year.

Why is it important: Nordstrom’s debt sale is an important step on its long road back to full blue-chip status in the debt markets.

The retailer sold USD 675 million of unsecured bonds this week to finish repaying the debt it took on at the panicked height of the pandemic last year. The buyback frees up prized real estate including its Seattle flagship that served as collateral. It buys the company more time to repay its debt and helps improve its challenged liquidity position.

Refinancing debt or loosening credit terms had become a particular focus of members of the Nordstrom family after deteriorating ratings last year. A cut to junk by just one of the three main rating firms can trigger a dramatic change of fate for companies. Nordstrom lost its investment-grade rating from S&P Global Ratings in September and earlier negative outlooks from Moody’s Investors Service. This week’s deal alone wasn’t enough to land Nordstrom an S&P investment-grade rank or a Moody’s outlook adjustment, but S&P revised its outlook on the company to stable from negative.

In all, the deal will save Nordstrom around USD 29 million annually in interest costs, which over the life of the bonds more than covers the USD 80 million penalty Nordstrom faces to repay the old notes early.

Nordstrom Starts Repairing Its Tarnished Status With Debt Deal

What: John Lewis has announced results for the year ending 30 January 2021. Total sales were up by 5% to £ 12 317 m due mainly to the supermarket chain Waitrose accounting for 62% of the total. However, the department stores checked in at £ 4 722 m only 2% down, thanks to the extremely strong performance of the online business. Operating profit at the department stores was naturally down by 25% to £ 554 m, but still profitable.

Why is it important: Overall, the group showed a loss before tax of - £ 517 m. No partnership bonus will be paid this year, the first time in 50 years.

The turnaround plan will require a substantial investment which means the group’s financial results will not improve in the current year. Investments will reach £ 800 m, 40% higher than in recent years.

More stores will be closing in the current year. However, investments will concern the remaining destination stores. There will also be smaller local stores showcasing the best of John Lewis. Already underway is the introduction of John Lewis shopping areas in Waitrose stores, and improved click and collect services.

John Lewis Partnership Full year results 11 March 2021