What: Ikea opens 2 shop-in-shops in French supermarket Cora

Why is it important: while 32 out of its 34 stores are closed, Ikea adapts locally

The Swedish giant opened two 100 sqm corners in Cora supermarkets located near Ikea stores.

The brand is trying to adapt to covid-19 restrictions. Solutions are found at a very local level by opening "ephemeral points of service". Ikea employees will offer “consulting, sales and inspiration services” the Swedish giant said in a statement. The local initiative aims to "ensure the continuity of the business" while stores are closed.

Ikea opens inside French supermarkets

What: the department store uses them to stay relevant and attract younger customers

Why is it important: profit being a long haul for DTC only selling online, department stores constitute an interesting alternative

Department stores' place of relevancy has changed over the years. Before, for a brand to become known, it needed to be placed within a department store because that's where the consumer was shopping. Now that younger consumers are shopping online Nordstrom, in order to survive, cannot just cater to their parents. They have to cater to these young people.

Since 2012, when making a USD16.4 million minority investment into DTC menswear brand Bonobos, Nordstrom has inked partnerships with some of the hottest digitally native brands in the sector from Away and Thinx, to Kim Kardashian West's shapewear brand Skims, Everlane, Reformation or Goop. Some partnerships were even more interesting, by including exclusive products (Warby Parker Glossier and Boy Smells) or by complementing Nordstrom’s offer (Casper).

Nordstrom also has an extensive partnership with Rent the Runway. Select stores in Los Angeles in 2019 began serving as order pickup and drop-off locations Now, after the rental company announced in August that it's permanently closing its retail stores, the Nordstrom drop-off areas serve as one of the few physical touchpoints the brand has with customers.

It's become clearer that Nordstrom's relationship with digitally native brands is more and more important to its overall strategy aiming to attract younger shoppers into its physical stores. It will also allow Nordstrom to potentially win them over by doing what it knows best: customer service.

On the DTC side, as more digitally native retailers make their public debut on the stock market, and reveal their financial information, it's become clear how difficult it is to sell goods exclusively online and make a profit. The marketing costs associated with acquiring customers online has pushed DTC brands offline through temporary pop-ups, permanent locations or partnerships with traditional retailers.

'Relevance is key' Why Nordstrom has gone all-in on DTC brands 

What: the fashion group is tapping into changing consumer behaviour

Why is it important: the “Lauren Look” will be the first rental model to be introduced by a luxury brand

According to the New York-based company, the service aims to be a new channel through which customers can experience and engage with Ralph Lauren, before ultimately shopping the brand.

Starting at USD 125 a month, subscribers are able to access a constantly changing range of Ralph Lauren apparel. Members curate their own closet before receiving their first shipment. Once they have finished with the clothes, they can choose to either send them back and have them replaced by other pieces, or purchase them at exclusive members’ prices.

As well as adapting to the more fluid relationship between consumers and their wardrobes, The Lauren Look will also serve as an opportunity for the company to generate direct customer feedback and gain a better understanding of the market. Furthermore, the initiative responds to growing consumer concerns about overconsumption.

Ralph Lauren also specified that The Lauren Look clothes that reach their rental cap will be donated to Delivering Good, a non-profit that provides people impacted by poverty with new and nearly new merchandise.

Subscriptions to The Lauren Look are now available through a dedicated platform, exclusively in North America.

Ralph Lauren launches first rental subscription service

What: in 2020, the Lotte Shopping platform has only grown by 7% compared to 2019

Why is it important: The shinsegae platform grew by 37% during the same period

Cho Young-je, chief executive of Lotte Shopping’s e-commerce Business Division, has resigned in response to the company’s struggles to grow its online presence.

Lotte Shopping launched Lotte On, its e-commerce platform encompassing the company’s seven retail brands like Lotte Department Store, Lotte Mart and Lotte Home Shopping, last April. But the player is struggling to cement its position in Korea’s online shopping market, which grew 19% year-on-year in 2020. Lotte Shopping’s gross merchandise value hit KRW 7.6 trillion (USD 6.7 billion), marking a mere 7% boost from 2019, while rival Shinsegae Group’s digital arm SSG.com grew 37% during the same period.

Lotte, which said Cho resigned due to health problems, is now looking to hire a CEO from outside the firm with e-commerce expertise.

Lotte Shopping’s E-Commerce Head Steps Down Amid Digitisation Struggle 

Lotte Shopping struggles to find its place online

What:  A “Prime” like program to attract more customers

Why it is important: paid memberships are usual for retailers who are able to propose additional perks (such as free delivery) but less for brands

Urban Outfitter has decided to launch a paid membership program (cost: USD 48 or USD 98) in order to boost customer loyalty. It aims to drive more traffic instore by granting to members specific perks: free shipping & returns, 15% discount, USD 10 coupon every month and a discounted promotion to clothing rental Nuuly.

According to McKinsey, customers who pay to access a membership program are 60% more likely to spend, to be compared with 30% in the case of a free loyalty program. Also, it has consequences on the average basket size and ticket.

Urban Outfitters tests paid membership program to boost loyalty 

What: Through the platform, users can create, manage and join book clubs through Amazon's online tools.

Why is it important: As cultural products are making a comeback, Amazon may be launching book clubs at the right moment.

All customers with an Amazon account are able to join clubs for free. Additional features are scheduled to roll out, and the ability to create a club will be available to all customers later this year. Users that create a club may customize its details, such as adding current and upcoming books, managing the club's members and setting privacy levels.

While Amazon does have a number of brick-and-mortar bookstores, the link between retail and book clubs is traditionally found among independent sellers. By building out the new feature, Amazon is tapping into the social aspect of reading and modernizing tools.

Amazon tests book clubs

Related item:

• Department stores selling books and culture

What: Amazon Go is opening its first store in London in Ealing, a western suburb of the city

Why is it important: Morrisons, which serves as the British arm of the Amazon Fresh delivery service, has reportedly teamed up with Amazon for the launch. There are apparenty plans for at least another 30 Amazon Go outlets in Britain.

There are around 27 stores in the US in New York, Seattle, Chicago and San Francisco. Last year (pre covid), the company forecast that revenue from Amazon Go would rise from $28 m in 2018 to over $ 600 m in 2020. Analysts have speculated that each Amazon Go store costs around $ 1 m I  technology.

See the video used to advertise the first Amazon Go store opened in 2018 in Seattle.

Amazon Go to make UK debut this week with London store opening

What: Isetan Mitsukoshi started the service through a dedicated smartphone app.

Why is it important: the company mainly targets younger customers.

Shoppers can move around the virtual reproduction of the operator's flagship Isetan store in Tokyo's Shinjuku district.

Computer-generated sales clerks will appear on the screen, and customers can chat with staff at the actual department store.

Shoppers can select from 400 products including cosmetics.

Isetan store to offer virtual reality shopping

What: Closing 8 stores might not be enough to sustain the profitability levels required to keep on investing

Why it is important: John Lewis plans to keep on massively investing in e-commerce and new retail categories, in an effort to be “where the customers are”, which implies keeping an eye on the retail network as well.

John Lewis, in a similar effort to IADS member SM, is looking at “rightsizing” not its stores as it is the case with SM, but its retail network, and could consider closing additional stores (on top of the 8 units already closed) with a decision to be taken end of March 21.

The perspective on the long range is to have large destination stores, with space dedicated to experience, complemented by smaller format local shops, and a backbone represented by e-commerce, where the retailer plans to keep on heavily investing. This implies that stores where “customers aren’t” will not be kept at all costs, all the more that John Lewis is, in parallel, entering new markets such as social housing and outdoor living.

Given the situation and the level of investments needed to sustain such a transition, bonuses will not be paid to the company’s staff in 2021, for the second year in a row.

John Lewis warns of further store closures 

What: Judith McKenna’s interview on Covid-19 vaccines, supply chain and remote working

Why it is important: An interesting sum up of what’s on the mind of the largest retailer in the world, plus a crucial reminder of retailers’ social roles as a whole.

Walmart International division CEO oversees 5,141 stores in 23 countries, staffed by 550,000 employees, in addition to managing the global sourcing operations. In other words, the context makes the position even more challenging than ever.

On the Covid-19 vaccine front, by reminding that 95% of the US population is within 10 miles of a Walmart store, the fact that Walmart wants to be involved in the national vaccination campaign comes as a consequence of its place in society, which is a constant for all department stores in the world. Interestingly, the complexity of such an operation at such a scale implies that it is not just about how many vaccines are delivered, but how a retailer organises itself to complete the action of health authorities in an efficient, traceable and transparent way.

McKenna also discusses the implications of remote working (see our most recent IADS exclusive articles here and here on this topic) as she recruited the new president for China operations 100% remotely, and the new person has not met anyone from Benton, USA, face to face. Even though she reckons remote working and management works, McKenna stresses the importance of travelling and visiting stores from time to time to keep connected with the reality of markets.

Walmart International CEO Talks Vaccination Ramp-Up 

What: they are all posting double-digit growth

Why is it important: a combination of pent-up demand and celebrating the holiday locally due to rising COVID-19 cases in China drives up the outlet sales

Value Retail Group’s villages in Shanghai and Suzhou, saw strong growth during the recent Chinese New Year holiday, despite the reduction in domestic travel due to rising local COVID-19 cases in February.

Overall, compared to the 2019 pre-pandemic level, CNY sales growth reached 184 and 11%, respectively, for Shanghai Village and Suzhou Village, while footfall increased 70 and 42%, respectively, setting new all-time records.

Some 27 boutiques at Shanghai Village and 30 boutiques at Suzhou Village each achieved their all-time highest single day of sales since opening. Spend-per visit grew by 67% for Shanghai Village and 52% for Suzhou Village.

Separate from the Bicester Village Shopping Collection, luxury outlet Florentia Village, which opened its seventh China outpost ahead of the CNY holiday in Chongqing, told WWD earlier that it anticipated three to five times more visitors during the Chinese New Year period this year.

Shanghai’s local retail conglomerate Bailian Group also revealed that its outlet business saw one of the biggest gains among its portfolios. Thanks to rounds of live streaming, its online outlet portal logged a 76% growth from last year during the CNY holiday.

You’a Outlets in China’s second-tier city Changsha told that it achieved double-digit growth.

Luxury Outlets in China Saw Outstanding Chinese New Year Results 

What: S5A new store will open in September 21 at the American Dream mall, a bit later than planned

Why it is important:  What retail crisis?

The Covid-19 pandemic has only delayed, not cancelled, the Saks Fifth Avenue project at The American Dream mall. Rescheduled many times, the latest date announced being March 21, the project is finally green-lighted for next September. It will be the only S5A location in New Jersey (in the past, the retailer used to operated at Short Hills and Riverside).

This is rather good news for The American Dream mall, whose owner Triple Five had to redeem 49% of stakes it owns in other malls, following a debt default on a construction loan. In addition, the mall was hampered by retailers planning to open a location there, but which went bankrupt beforehands (Barneys, Lord & Taylor, Century 21).

In addition to Saks Fifth Avenue, 100 retailers, including Primark, Hermés, Best Buy, are planned to open.

Saks Fifth Avenue Thumbs Up on American Dream

What: H&M has been removed from online shopping and service apps in China after it published a statement expressing “grave concern” over allegations of forced labour in the Xinjiang cotton industry. H&M has disappeared from ecommerce sites Alibaba’s Taobao, JD.com, Pinduoduo, as well as from apps Dianping, Tencent and Baidu. Many brands in China do not operate their own apps or websites but rely on a network of third-party e-commerce platforms and “super apps”.

Why it is important: H&M operates 445 stores across the country and China represents one of its four largest markets. A blog from the Communist Youth League called for a boycott of the brand just days after The UK, Canada, the EU and the US announced sanctions. Other brands which support the Better Cotton Initiative (BCI) such as Nike, Adidas, Ikea have also come under attack. The BCI said last October that it was suspending its approval of cotton sourced from Xinjiang.

Assessing China’s Xinjiang Cotton Fallout 

China erasing H&M from internet amid Xinjiang backlash

What: it’s Seoul’s first department store opening in a decade

Why is it important: Hyundai allocated 49% of the total space to rest areas and indoor garden

The company has opened its new location in Yeouido. With this new location, Hyundai aims to reach KRW 630 billion (USD 560 million) in annual sales and IBK Securities and Investment predicts the store will breakeven in 2023.

The Hyundai Seoul spans 89 100 sqm — around 13 football fields — and was already crowded on its pre-opening date last Thursday, with locals eager to explore the capital’s first department store opening in a decade. Almost half of the space has been allocated to rest and relaxation, including 11 240 sqm of indoor gardens and wider passageways, un unprecedented experience in Korean department stores.

New brands are also onboarding. Nordic fashion and lifestyle brand Arket (which parent company is H&M) launched its very first store in Asia. Bungaejangter, which is Korean’s first second-hand transactions app, also introduced its first physical store, and people lined up to get a look into some of the selected luxury goods displayed in the store.

Designer brands have also entered, such as Gucci, Prada and Burberry. Hermès, Louis Vuitton and Chanel are currently negotiating with Hyundai.

According to Hyundai, the new location carries 90 food options, the largest food outlet of any department store in Korea.

Hyundai Unveils Seoul’s Biggest Department Store 

Seoul’s newest, biggest department store offers new shopping experience

Related item:

• Hyundai to open giant store in Seoul

What: The campaign is in line with Project Earth.

Why is it important: the retailer is moving away from seasonal campaigns and will instead focus on exploring the theme of nature throughout 2021.

Last year, Selfridges launched its ambitious five-year sustainability plan, Project Earth. In the same spirit, the company is now unveiling a yearlong campaign celebrating the great outdoors and exploring “the intersection of nature and culture.”

The campaign is a direct response to the “boom in outdoor appreciation” after prolonged global lockdowns have kept the population confined. It also marks a shift away from seasonal campaigns for the retailer, which will instead explore the theme of nature throughout 2021. “A move away from seasonal campaigns means we can be more sustainable in our creative production and delivery” said Hannah Emslie, the retailer’s creative director.

A series of digital art commissions that “bring nature to the digital space” are set to launch on the retailer’s site. In store, shoppers will be able to discover technical gear for all sorts of outdoor activities and an exhibition by Jonathan Schofield. A podcast is also set to launch this week and has been designed to be enjoyed outdoors.

Seasonal events will be rolled out during the course of 2021, explored through the lens of nature, not the fashion calendar.

Selfridges Debuts Yearlong ‘Good Nature’ Campaign

What: the US department store chain will revive its online store, a few months after liquidating and closing down its physical stores

Why it is important: the speed-up of e-commerce during the pandemic has made investors rethink their business and they are now bringing back Lord & Taylor webstore to take success up again

Lord & Taylor liquidated all its stores last September, and was bought by Saadia Group LLC in October (along with parent company Le Tote). Now the group has built up a team to revive the website. Lord & Taylor e-commerce should launch mid-April, initially selling men’s and women’s fashion, beauty, skin care, fragrances and home. Children’s wear, fashion accessories and footwear will be added to the offering later this year.

Saadia Group LLC is also considering reviving the physical store network, with small format stores but it shouldn’t happen before at least another year.

Retail Resurrects: Lord & Taylor Relaunching E-commerce

Related item:

• Lord & Taylor liquidates, closing all stores

What:  A selection of examples by GDR UK (IADS partner) on concierge delivery services

Why it is important: in addition to the last mile logistical hurdle, such initiatives are key to generate and retain high levels of customers loyalty

GDR UK, an intelligence company based in London, collected a series of examples on services aiming at improving, and increasing, the level of service at the time of delivery:

• Harper Concierge (London), Toshi (NY, London) are delivery services for luxury brands. They propose to customers a 1-hour slot to deliver the products in branded vehicles. They wait at the door to know what customers buy or return: payment of kept items is made by the customer via SMS, while these services take care of returning non bought items to each retailer
• La Moda, an online retailer in Russia, had to find a solution to compensate for the poor national delivery services in the country. This is the reason why they have developed their own fleet of vehicles, to deliver items to the doorstep, and, like Harper or Toshi, wait for the customer to try and buy.
• Amazon allows Prime customers to try for free for 7 days up to 6 items. Customers are free to return unwanted items at no cost.

Russian Fashion retailer turns couriers into brand ambassadors and concierges

toshi offers wait while you try concierge service for at home luxury shoppers

harper concierge offers a contact free luxury you try we wait service

prime wardrobe lets customers try on six fashion items before sending back what they don't want

What: SKP has announced it will open a flagship in Hohhot, the capital of Inner Mongolia

Why is it important: the influential department store is beating a path into lower-tier cities

Local media reported that SKP Beijing garnered USD 2.7 billion in sales over 2020, surpassing famed luxury destination Harrods. And according to Beijing Business Daily, the high-end mall has been China’s top department store by revenue for the last ten consecutive years.

According to Bain & Company, China’s 2020 domestic luxury goods consumption went against the trend, predicted to achieve 48% growth (USD 53 billion). So the next piece of the puzzle for luxury brands and companies is where to find these new consumers in lower-tier cities.

Chengdu in particularly has emerged as a viable alternative to Shanghai and Beijing. Hohhot, on the other hand, is less of a safe bet yet, still tantalizing. Ten years ago, Louis Vuitton opened a boutique there in 2010 and shuttered four years later.

However, the demand for luxury goods in lower-tier markets is undeniable and its residents have seen their incomes rise. In 2019, Deloitte found that third- and lower-tier cities had shown strong spending growth and purchasing power. That same year, Seeco reported that these cities were highly-ranked in annual purchase frequency as well.

Is Hohhot Luxury's Next Hotspot

What: What counts as a sale differs if you are a brand or a landlord

Why it is important:  Department Stores are facing the same issue with their concessions: should the rent include the click & collect business?

Retail spaces rent calculation has been for long composed of a monthly fixed fee, completed by a variable indexed on the turnover. However, now that omnichannel is becoming the norm, accompanied by its manifestations such as click & collect or kerb side pickup, landlords are more and more willing to include turnover generated through this new channel in the calculation, an option that retailers do not want to discuss. Sephora and Everlane are cited in the article as extremely reluctant to do so, if not hermetic.

Landlord’s position is dual: on the one hand, they want to make sure that the stores are not used as warehouses, to guarantee the long-term value of the location, but on the other hand, they also want to maximise the immediate profit by increasing the rent level with any possible manner.

As a consequence, contractual discussions and negotiations on leases are becoming increasingly complex and long.

Retailers and Landlords Clash Over What Counts as a Sale

Related items:

• Is turnover rent the new norm for retail?
• A new rent model under consideration in UK malls

What: the retailer launches a series of “exciting foodie collaborations”

Why is it important: award-winning restaurant collaborations to enhance traffic in department stores

Selfridges have opened a new pop-up space in its London Foodhall that will showcase different food industry talent. First up is Pabellón, a Venezuelan street food brand, who began its residency on 12 March. In 2019 and 2020 they won multiple British Street Food Awards.

Calling it a series of ‘exciting foodie collaborations’, Selfridges’ head of food, Andrew Bird, adds: ‘The space has been designed to be a launchpad for new brands as well as a destination for the capital’s best street food and exciting chef collaborations.

The Pop Up Kitchen at Selfridges will operate a takeaway service during standard opening hours to begin with, given lockdown rules.

Selfridges unveils first pop-up kitchen collaboration 

What: 6 charts to show how shopping and supply chains were adapting to the pandemic.

Why is it important: Consumers moved online and retailers pivoted to move inventory locked in brick-and-mortar locations.

E-commerce sales boom in pandemic

E-commerce retail sales, % of total sales

E-commerce sales boom in pandemic

Retailers ship from store to move inventory

Count of annual or quarterly reports mentioning "ship from store"

When stores closed and customers moved online, retailers looked for a way to get in-store inventory moving. Target, for example, has been perfecting its ship-from-store model for years.

Retailers ship from store to move inventory

Retailers move to the curb

Count of annual or quarterly reports mentioning "kerbside pickup"

The other option for retailers was to get customers to pick up at the kerb. This simplifies the supply chain it’s cheaper for the retailer. But there are questions about how companies will improve these offerings going forward. "Retailers are going to focus on the kerbside, trying to make that experience actually enjoyable," said Dave Gill, vice president of insights and analytics at Rakuten Intelligence.

Retailers ship from store to move inventory

More shoppers choose to pick up orders

Order for pickup as % of all buyers

"More than 50% of our BOPIC orders for the fourth quarter were delivered kerbside," BJ's Wholesale Club CEO Lee Delaney said on the company's earnings call this month, referring to the retailer's buy-online-pickup-in-club option.

More shoppers choose to pick up orders

Amazon's network struggles to keep up

Click to ship and click to door, measured in days

It is worth noting that these figures are an average that includes marketplace sellers for which Amazon doesn't control the supply chain.

Amazon's network struggles to keep up

Amazon's orders start showing up late

Percentage of Amazon orders arriving late

The slowdown in Amazon's network resulted in an uptick in late shipments, but the retailer has seen these figures largely recover.

Amazon's orders start showing up late

6 charts show how a pandemic upended retail supply chains 

What: Canadian bookstore chain is adding departments to its core book offer.

Why it is important: Many ideas for real department stores an reasons to reconsider entering the book market.

Indigo is experimenting with a new model of a “cultural department store” where customers who enter to browse through books often end up lingering as they impulsively shop for slippers, bowls, a knife set or a cookbook. It extends to food, health and wellness, and home décor. It is also offering its own brand merchandise.

How a Canadian Chain Is Reinventing Book Selling 

What: BoF and McKinsey & Company published an update to The State of Fashion 2021

Why is it important: recovery could be slower than expected in Europe, with bright spots in the US and China

Recent developments around more virulent mutations of Covid-19 and delayed vaccination programmes could further delay our path to herd immunity. But there are evolving ideas such as the “roaring twenties” recovery scenario for 2022.

2020 results in a nutshell

-European fashion sales were down roughly 20% on 2019 levels with Germany and France performing the best (down only 16-18% compared with 2019), while fashion sales in Spain and Italy contracted by 30%,

-In the United States, sales plummeted 23% year on year,

-Strong market performance in the summer in both Europe and the United States,

-China returned to a growth trajectory in August compared with 2019, with full year results only down 7% year on year,

-Markets with a high e-commerce penetration, including the United States and the United Kingdom, reported growth of between 45 and 50% in e‑commerce,

-China, where fashion e-commerce already has more than 50% market share, continues to grow.

2021 in Europe, down and out

Our outlook for 2021 is particularly downbeat in Europe, where it is conceivable that lost sales might range between 12 and 24% compared with 2019.

Two key uncertainties remain. First, how bad will the first quarter really be? The extension of European lockdowns until Easter alone would be sufficient to set 2021 sales back to 2020 levels, or worse if there are further setbacks in the second half of the year. Second, while it is still possible to avoid lockdowns in the fourth quarter, consumer sentiment remains highly uncertain.

2021 in the United States, improvements expected

The United States is expected to perform significantly better in 2021 than in 2020. Fashion sales will be down between 6 and 16% compared with 2019, but this is still a welcome improvement on 2020. This partial recovery will largely be driven by the continued surge of e-commerce, with online fashion sales set to outgrow pre-crises levels by as much as 40%.

2021 in China, a full recovery

Life in mainland China has largely returned to normal, so the most pressing question is really around the future of Chinese tourists. One important consideration is the Chinese vaccination strategy: given the relatively low case numbers in China, some observers have argued that China will not distribute the vaccine at a high speed, which means Chinese travellers are unlikely to return in significant numbers before 2022. In the meantime, Chinese luxury consumers are expected to increase their spending at home by as much as 50% this year.

The State of fashion 2021 reality check

What:  the retailer expands its online reach to over 100 countries

Why it is important: M&S reported a 75% increase in international online sales last November

The group said the expansion into countries from Argentina and Brazil to South Korea and Pakistan was part of its strategy to accelerate its online business.

When M&S published first-half results in November it reported a 75% increase in international e-commerce sales, underlining the shift in online spend throughout the COVID-19 pandemic.

“We’re focused on turbocharging our online business both in the UK and internationally, and as part of this we see a real opportunity in extending the number of countries where we run an online channel further,” said Paul Friston, M&S’s international director.

The websites will offer M&S’s clothing and home products.

In January, rival John Lewis said it was no longer pursuing international expansion and had ceased its online delivery service.

M&S EXPANDS INTERNATIONAL ONLINE BUSINESS

M&S expands online business to over 100 countries