What: Significant growth of e-commerce leads Walmart to heavily invest on a new class of sales associates

Why it is important: There are some lessons to learn for IADS members in these times of redefinition of stores and roles: how to ‘market’ a new position to potential recruits, but also handle the attached working conditions. Both Amazon and Walmart are starting to face criticism on this topic.

Walmart has increased its number of “personal shoppers'' to 170,000 this year, doubling the number from 2019. However, the title does not relate to the same position than in Europe or other department stores. At Walmart, this relates to the staff in charge of filling in digital and curbside pickup orders (see our former article on the topic here), hired en masse by the retailer who also pays them higher than the minimum wage.

However, given the fast pace of growth of e-commerce and the success of Walmart +, some workers start to complain about working conditions.

This is one of the fastest growing jobs at Walmart 

What: Online customer service during a pandemic-driven lockdown has proved a challenge.

Why is it important: Premium goods need premium service.

Selfridges is curated, luxurious and service-orientated but taking this experience online during a pandemic-driven lockdown has proved a challenge as has been seen from customer grumbles about delivery delays, mishaps, and slow returns

With department stores suffering so much with their traditional bricks and mortar outlets facing the on/off lockdowns - brands like Selfridges needed to pivot and focus on their online offer. But could it be that this highly decorated store is struggling to deliver to its exacting standards in the same way online?

Sales at the business have said to be resilient during the pandemic thanks to what is reported to be an investment in its online capabilities. The Times reported that sales in the year to February 2020 were up 7% to £1.97 billion, but since Covid-19 hit, operating profits had fallen 10% to £88 million. Selfridges has reportedly endured the “most difficult year” in its 113-year history after such a significant drop in profits.

The big draw to Selfridges department stores has been very much around the experience - from the installation of cinemas to more spectacular galleries such as the Wonder (which were opened by the soul and Motown legend - Mr Stevie Wonder – naturally).

Is it simply that the e-commerce is the issue, the operations, the call center, the culture - or all of it? Calling the helpline can be a frustrating experience, as customers are referred back online with their service issues and the wait time to speak to a service team member can be lengthy (up to 30 minutes).

Anne Pitcher is certainly seen as the driving force behind Selfridges success, and also launched the Project Earth initiative in which the group wants to raise the bar on industry standards in sustainability, extraordinary customer experiences and restless innovation. Hopefully an immediate focus for Selfridges is also inclusive of a review of the current experience for their distanced customers, some who clearly feel that very basic customer courtesy is not being met.

Customer Service Shambles At Selfridges And Harvey Nichols

What: the expansion of virtual store technologies

Why it is important: these technologies grew from nice to have to crucial in the customer journey

Machine-A, a concept store in London, has decided to transpose the full store into a virtual experience accessible to anyone, coinciding with the London Fashion Week. The virtual space will allow to discover the new designers, their collections, unfinished pieces and even personal messages. Virtual stores, as explained in our exclusive article and developed also by the likes of Gucci or L’Oréal, are, in addition to being obvious answers when stores are closed, an astute way to make the physical store (and the experience related to it) available 24/7.

Frictionless experience is key, and probably the most difficult to achieve (i.e. allowing the customer to fully stay in the experience even when buying a product, without having to land on another page).

An augmented reality shopping boutique is here 

What: Macy's has launched a series of initiatives to support Black-owned businesses and further inclusivity

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

Macy’s Inc. is putting the spotlight on Black-owned brands and Black creatives in its stores and on its website, and encouraging donations to support Black Girls Code and the United Negro College Fund.

“As we honour Black culture and Black brilliance, we are intensifying our commitment to the growth and advancement of Black-owned businesses, creators, changemakers and young talent — who are all woven into the fabric of the Black experience,” said Shawn Outler, Macy’s chief diversity officer.

Throughout February, which is Black History Month, customers can round up their in-store purchases to the nearest dollar amount and donate the change (up to 99 cents) to benefit Black Girls Code, which focuses on technology education for African American girls to join STEM fields, and UNCF (the United Negro College Fund), which focuses on getting African American students ready for college.

In other initiatives, Macy’s, with Cosmetic Executive Women’s Indie 26, is launching 11 Black-owned, award-winning beauty brands in February. Store windows this month will be displaying art by artists coming from pop, hip hop and graffiti culture.

In March, Macy’s will launch “Icons of Style” collaborations with Black creatives and brands found only at the store. The retailer is also continuing its Workshop at Macy’s program this spring, helping diverse and female-owned vendor businesses scale up at retail.

PR: Macy's honors black history

WWD: Macy’s highlighting black brands and creatives

Related items:

• Nordstrom reaffirms commitment to diversity and inclusion
• IADS exclusive: diversity, a strategy of silence

What: another push in digital from a department store operator

Why it is important: online retail is becoming a crowded scene and, like for physical spaces, retailers need to distinguish themselves from the competition to stay relevant

Hudson’s Bay will open a digital marketplace on its existing website thebay.com later this year. The department store is inviting small and large retailers to apply to join the platform. HBC will accept merchandise offers across categories already existing at the store, and new category introduction.

PR: Hudson’s Bay Puts the Call Out to Vendors to Join Its Marketplace

Retail Dive: Hudson's Bay to launch online marketplace

What: Fashion and beauty brands are leaving the mall.

Why it is important: The mall hit hard as it was mainly relying on Asian tourists.

More than a dozen stores closed in Tokyo's high-end Ginza Six mall this week, as the coronavirus pandemic kept big spending foreign tourists and other luxury shoppers away from Tokyo.

The luxury retail complex opened in 2017 with around 240 stores, as a symbol of the Ginza district's revival and as a popular destination for Asian tourists.

Ginza shopping district had struggled with shoppers' shift to other areas such as Omotesando. While Isetan Mitsukoshi sales are -30% in 2020 compared to 2019, Mitsukoshi Ginza store is -50%.

Stores close in Tokyo's high-end mall amid travel bans, Real Estate

What: More than 400 leading figures send a letter to the Prime Minister demanding urgent action.

Why it’s important: British brands might not be able to afford selling in the EU anymore.

The UK’s GBP 35 billion fashion and textile industry is facing “decimation” as a result of red tape and travel restrictions thrown up by the new post-Brexit trade agreement with the EU, Boris Johnson has been warned. In an open letter to the UK’s prime minister, leading fashion industry chief executives and icons said that Brexit was strangling the complex international supply chains and relationships that underpinned their industry.

“With 42% of all export sales coming from the EU, the costs and administrative burdens of trading in continental Europe mean many of our members — not least the SMEs — have concluded they simply can’t afford to continue selling to those countries,” said Helen Brocklebank, the CEO of Walpole.

The Cabinet Office said it was working closely with businesses in the fashion industry to adjust to the new trading environment and was aware that some businesses were facing challenges.

UK fashion industry facing ‘decimation’ over Brexit trade deal 

Brexit & Fashion_ An Open Letter to the UK Government

Related items:

• Brexit forces Debenhams to shut Irish webstore
• John Lewis stops overseas online order
• Insights of the Brexit impact on European travel

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