Apple is testing a new store format in California, in an existing location, called “Apple Express”, specially designed to address the social distancing needs. Easy online order pickups and genius bar appointments are facilitated, but casual shopping is not really possible there. It is also a good way to use the online presence to create a true omnichannel customer journey and therefore shorted the actual physical presence time instore… which is a good way to address the issues Apple has always had with the queues at the entrance of its stores. In short: a pandemic solution might be the purchase process of the future, helping those looking for a specific item already bought online or a service to jump out of the queue and be immediately served.

Apple’s Express Concept May Solve Problems Post-Pandemic As Well

A short interview of Image & Communication Director Guillaume Houzé from Galeries Lafayette Group on sustainability and on the department store next challenges.

Video: Galeries Lafayette’s Guillaume Houzé on sustainability

The 118 years old American struggling retailer, operating 850 locations for a turnover of $10.7bn, avoided total liquidation by  selling its retail business to mall operators, valorising the company at $1.75bn and saving 70k jobs out of 85 in total.

Bankrupt J.C. Penney Is Bought by Mall Operators in Need of Tenants

Business of Fashion is compiling the lessons learnt post-covid, where the consumer behaviour has significantly changed. Initially for brands, such lessons are interesting to know also for retailers, as they apply to their customer too:

• No lies or negligence about actual delivery delay, this is important for trust building
• Customers are looking for value, and this does not mean uniquely a low price point
• Local shopping is key
• Make a choice between have and have-nots customers, in the wake of the mid-tier customers disappearance (this point is debatable)
• Create a community for your customers, online
• Use digital to make sure customers know what to expect when coming to you, especially in terms of stock availability

6 ways the pandemic has changed how people shopvvv

To limit the spread of Covid-19, and to reassure customers, retailers have had to implement safety measures instore.

For instance, all experts agree that to lower the risk of virus transmission, retailers must lower the density of people within the store, by  limiting the number of customers in the store at any one time. However to increase throughput (and sales), the number of people in the store has to increase too. In order to maintain social distancing while increasing throughput, customers need to spend less time in the store. Therefore, retailers should focus on the efficiency of the shopping experience by encouraging faster customer decision-making.

Another method to limit the interactions instore, and therefore limit the risk of contagion, used by some supermarkets is to scheduled shopping periods that are exclusively for customers who are 60 years or older. These customers may shop at a similar pace, reducing the number of interactions. Another option is to encourage customers to make appointments to limit customer density and reduce variability.

Globally, in regards to this pandemic, retailers must show that they care about the health of their customers and employees -consumers have shown loyalty to businesses that are putting safety first.

article: What Safe Shopping Looks Like During the Pandemic

Following its acceleration in digital and customer knowledge due to the Coronavirus outbreak, and after having launched its e-commerce website, Beco is launching a new Personal Shopping service, aiming at better serving its customers. It is also a way for them to get around the specific Venezuelian lockdown system, with a week under lockdown every two weeks, which strongly affects the business. The new service launches on 1 September.

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For the first quarter of the current financial year from March to May 2020, Japanese department store retailers have reported heavy losses, according to Japan Times:

• J Front (Daimaru and Masuzakaya) sales were down 58.6% to Y113.4 bn, with an operating loss of Y27.1 bn.
• Takashimaya sales were down 48% to Y116.2 bn, with an operating loss of Y7.3 bn.
• At Sogo & Seibu, sales were down 53.4% to Y68 bn, with operating loss of Y1.2 bn.
• Matsuya lost 69.5% of sales bringing it to Y6.9 bn, while operating losses reached Y959 m.

All four experienced extraordinary losses on top of that due to personnel costs related to store closures during the virus crisis.

Customer numbers remain low even though stores have reopened, and like everywhere, the severe absence of foreign visitors continues to deal a blow to sales.

Department store Selfridges is partnering up again with fashion rental platform Hurr to launch its first-ever high-end fashion rental collection. The 100-piece curated selection, named the Selfridges Rental Collection, will be selected by the Selfridges team and includes over 40 brands.

"Taking the rental revolution to a whole new level, this pioneering move by Selfridges proves renting as a long term, sustainable part of their retail business and we are so happy to bring this to life through our rental service with Selfridges for the first time ever," HURR wrote on an Instagram post. The new service also contributes to Project Earth, a major sustainability initiative launched by Selfridges (read more here). The collection is available from 17 August 2020.

The London-based department store first collaborated with the rental platform back in February, when it hosted a HURR rental pop-up

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US tourists are stuck at home due to the Covid-19 global crisis. For Europe, this represents 14% of tax-free shopping in Paris, and 11% in Italy, and their absence adds up to the loss of Chinese tourists. Vogue Business shares CITI and HSBC’s visions on potential solutions for luxury brands, which are also applicable to department stores: smartly use low-tech communication tools (targeted mailings, messenger systems..) to cater for your local customer but also connect with existing and stuck at home foreign customers, challenge your retail footprint and consider existing non profitable locations, and make sure the promoted assortment is adequate to the mindset of targeted clienteles.

Read full Vogue Business article below

Bracing for a summer without Americans

Nordstrom’s president of stores talks to WWD about how they are navigating Covi-19.

Nordstrom is expecting a 50-50 split in business between stores and digital by the end of the year. They are expecting similar constraints through to next spring, but there is too much uncertainty to make precise plans at this stage. A lot of effort is being directed at the stores:

• The Nordstrom anniversary sale will run from 19 August to 30 August
• Speed and convenience are key
• Nordstrom Rack and its website are doing well
• They will need even more experience in stores after Covid restrictions such as food, service, compelling assortments…
• Stores will become even more “third places” where people meet and connect
• Supply chains need to be ever more flexible to cope with changing patterns and trends
• There is a need to pay special attention to employees and the Nordstrom culture which runs the risk of deteriorating without physical contact

Jamie Nordstrom on Navigating Nordstrom Through COVID-19

Japanese convenience-store chain Lawson is opening a series of prefabricated stores in China. The first will be in Nanjing. The concept reduces construction costs by 40% and allows for flexible growth. Around 10 stores are expected to be operational by the end of the year.

The stores, created in partnership with Panasonic, come in 2 sizes: the larger one is a little smaller than the standard 80m² minimart, while the smaller one is suitable for transit stations. They can easily be opened in areas of high foot traffic and offer an alternative to online shopping during the coronavirus health crisis.

Lawson operates 2700 outlets in China and has indicated that it will roll out the prefabricated stores in Japan in the future.

In spite of bad omen birds, Wholesale is not dead, as it is part of the whole industry as it is built. However, it needs to reinvent itself and Fashionista provides a few examples of notable innovators on the market. Among them, Neighborhood Goods, a new Department Stores chain in the US (2 locations in Texas and one in NY) with a combination of experiential approach with a consignment business model. Traffic is generated thanks to their food popup and local communities bonds and initiatives.

Read full article below

Traditional wholesale isn’t working anymore, so what comes next?

In a move to reinforce its ‘direct-to-consumer’ offense strategy, Nike will no longer sell to nine major wholesale accounts, including US department stores Belk and Dillard’s. Nike plans to ramp up investments in e-commerce and technology, as well as open up to 200 new smaller-format, digitally enabled stores. The brand said in a statement: “[…] As part of our recently announced Consumer Direct Acceleration strategy, we are doubling down on our approach with Nike digital and our owned stores, as well as a smaller number of strategic partners who share our vision to create a consistent, connected and modern shopping experience.

IADS Exclusive - Nike House of Innovation 002: what to learn from the retailer

Nike Will No Longer Sell to Zappos, Dillard’s & These Big Retailers

Marks & Spencer of the UK has rolled out its checkout free shopping experience to 310 stores across the country. Contact-free shopping has been accelerated by the Covid-19 pandemic, and M&S has seen 10 000 new regular users of this technology in their stores since March. Mobile Pay Go is housed within the M&S app and allows payments up to £30. It is also linked to the loyalty programme. It offers a reward for referring a friend to the technology.

Press release: OVER 300 M&S STORES NOW OFFER CHECKOUT-FREE SHOPPING

Malls have undergone permanent transformation since the 90s. The pandemic is not driving new trends, but accelerating significantly the ones already happening: repurpose the spaces into a mix of work/live/play lifestyle offer (thanks to their accessible locations) and better connect with the digital world. As already highlighted in many of our analysis, in-store experience remains at the heart of all players’ strategies.

Read full article below

Malls transition to new models to thrive in the changing market

Usually brands uses influencers to showcase their products and advertise for a promotion or release. But now US department store Nordstrom has asked

Wendy Nguyen

, a 1.1 million followers Instagrammer, and other influencers, to participate in a campaign that would highlight Nordstrom’s new safety measures and “encourage people to experience what they built,” she said. The subsequent Instagram posts offer a glimpse into pandemic-era retailing and the ways stores are trying to bring shoppers back in person. The posts all praised Nordstrom’s safety measures, like mandatory masks, abundant hand sanitizer and adherence to social distancing. Multiple posts mentioned being able to shop “with peace of mind.”

Other companies are also planning influencer campaigns focused on store safety. Even before the coronavirus pandemic, retailers were struggling to get more people into stores. Now foot traffic to malls, including outdoor shopping centers, is down about 30 percent from last year.

The leading Swiss department store Manor is speeding-up the implementation of its strategic plans into digitalization and diversification of its products and services offers. This translates into:

• The launch of a marketplace on its e-commerce platform www.manor.ch to increase assortment variety (products and brands) in fashion, beauty and home
• The nomination of a Chief Digital Officer (CDO): Stefan Wetzler
• The simplification of the customer’s digital journey: instore ordering, click-and-collect and mobile-responsive website
• The launch of a new free Manor World Mastercard®
• The implementation of partnerships with brands such as Sephora in fragrances
• The reinforcement of its local F&B supply chain strategy, via its ‘Local’ label, promoting locally-sourced fresh organic products

This plan includes a strategic reorganization at the HQ level, and the simplification of management layers at the stores level.

See the press releases -available in German and French only.

Manor beschleunigt ihre strategische Transformation - german

Manor accélère la mise en place de son plan stratégique - french

In a move to offer customers experience, Japanese car manufacturer Nissan opened an interactive entertainment car showroom dubbed the Nissan Pavilion in Yokohama. The space features variety of experiential content showcasing Nissan’s technology. An experiential video allows visitors to feel what it is like to drive a Nissan Ariya, the brand’s newest electric vehicle, through the city.

There’s also an interactive cafe in the facility with tables displaying nutritional information of any dish placed on the table.

Read full article by The Drum below

Inside Nissan’s experiential car showroom of the future

video: Nissan Pavilion in Yokohama

Rents have been out of sync with retail for some time already on New York’s Fifth Avenue. Two years ago, there were reports of Versace, Ralph Lauren Polo and others preparing to leave the prestigious shopping street. Now that Lord & Taylor has gone too, Henri Bendel is no more and Calvin Klein will leave Madison Avenue, as well as the announcement that the newly opened Neiman Marcus at Hudson Yards will shutter, questions are being asked about the attractivity of midtown New York and the value of the “billboard effect” for retailers as varied as Gap, Nike or Tiffany. Gap, which shut in January, is rethinking its store numbers as part of a larger overhaul; Nike is locked in to its first House of Innovation (see review of latest one in Paris); and Tiffany is attempting to attract younger customers with an updated collection and its Blue Box Café.

The number of vanishing retailers has left a mark on the district: from 49th to 60th street on Fifth Avenue, the availability rate of leases at the end of 2018 hit 27.5%; up from around 5% a decade ago, according to data from real estate firm Cushman & Wakefield. The availability on Madison Avenue last year was 28.2% from 57th to 72nd street. With no traffic, this puts huge pressure on retailers and brands. The price-per-square-foot of retail space between 49th and 60th Street on Fifth Avenue at the end of 2019 was $2668, almost $500 more than a decade ago.

Meanwhile, Nordstrom is attempting to lure customers to the West Side, and some brands have been opening in Westfield and Brookfield Place down at the World Trade Center. Retailers and brands that were born online have been opening stores in SoHo: Everlane, Warby Parker, Allbirds are examples for whom the midtown high rents would make no sense.

Now with the Covid-19, the situation is getting worse with Valentino suing to get out of its lease on Fifth Avenue while Barneys still sits empty. The effect is also being felt on the “magnificent mile” of Michigan Avenue in Chicago, the Strip in Las Vegas, and Rodeo Drive in Los Angeles. Rents have followed but only slowly, and are at their lowest since 2011 across Manhattan. However, they have remained fairly stable at the top end of the rate mentioned above. The number of leases available, on the other hand is increasing steadily.

According to BCG, global luxury sales are forecast to drop around 29% in 2020, amid the decline of tourism. A number of retailers have stopped paying rent to their landlords during the pandemic which in some instances is resulting in litigation (Gap and Simon Property, for example). Most commentators appear optimistic for the long term but in the meantime, the feel of these shopping corridors will be different both through the smaller number of stores and because of the market position of stores moving in, such as Vans, Five Below, or Timberland, for example.

According to Macy’s CEO, tourism to the stores had essentially “disappeared,” with its smaller stores in rural communities recovering faster than its stores in urban shopping meccas. It might be that some of these markets take longer to recover than retail in the suburbs, as many consumers are looking to shop closer to home during the pandemic versus downtown. Researchers at Harvard that have been tracking consumer spending have found also that consumption by high-income households remains far below pre-Covid levels, therefore impacting luxury retailers’ sales.

The pandemic has accelerated digital transformations across the retail industry. However, it does not replace interactive in-store experience, provided it conveys a feeling and a message of safety. How? By proposing pick-up options, reviewing the way samples are given to customers (on request, or with a specific ceremonial), proposing individual appointments and guest services, and, above all, make sure that the store looks “fast and easy”, i.e. well lit, with high impact signage and wayfinding, to create a sense of comfort and safety.

Read full NRF article below

Looking at the post pandemic in-store experience

As buying patterns have changed since the pandemic, BoF looks at three categories that are booming at the moment, besides from loungewear: home, exercise, and fine jewellery.

Read full article below

Now that everyone has sweatpants, what else do they want to buy?

British department store Selfridges is launching a new sustainable initiative called Project Earth, with plans to change the way we shop by 2025. It is based on three issues (quotes):

• Materials: Ensure the most environmentally impactful materials used throughout the business come from certified, sustainable sources by 2025
• Models: Pioneer new retail models and experiences, making Selfridges synonymous with circularity, including repair, resell, refill and rental
• Mindsets: Put longevity, creativity and sustainability at the heart of the business, and engage with teams, partners and customers to effect change

The retailer collaborated with more than 300 brands on exclusive collections, and Project Earth will supported by a programme of events and activities.

Press release: SELFRIDGES AMBITION TO CHANGE THE WAY WE SHOP

Website: SUSTAINABILITY COMMITMENTS FOR THE FUTURE

Website: SELFRIDGES PROJECT EARTH

Amazon recently reported its second-quarter results including a double-digit revenue growth year-on-year, helped of course by the Covid-19 pandemic. Revenue for the quarter reached $88.91 bn, over $7 bn higher than expected. Grocery sales online tripled compared to the previous year.

This meant that the two-day delivery services were unusually delayed. But as the pandemic wore on, orders shifted from the less profitable consumables and groceries towards a more “normal” mix of goods. The delivery delays are on their way to recovery now: the company secured additional capacity in its fulfilment centres which it was not expecting to use until 2021. Prime subscribers have been shopping more often and buying more with each order.

Amazon is now preparing for the peak season in November and has announced that its Prime Day shopping event, normally taking place in July, is now scheduled for the fourth quarter. Inventory has to be built up again.

The company also has to take additional measures to protect staff who were complaining during the pandemic that not enough was being done. For the third quarter, Amazon expects revenue of between $87 bn and $93 bn, with operating income between $2 bn and $5 bn, factoring in corona-virus related investments.

The cloud computing unit, Amazon Web Services, reported revenues of $10.8 bn, up 29% on last year. Third-party sales grew 52% year-over-year during the quarter, outpacing growth in Amazon’s first-party sales, which increased 48% year-over-year.

US Malls are hit hard with the pandemic and they are looking for solutions as their department stores anchors are closing down. Amazon may be a solution: they have engaged discussions with mall owners to open Amazon distribution hubs, on former JC Penney and Sears locations. The trick? At a $4 rent per square foot for Amazon, compared to a regular $19 for department stores, mall owners show that they are ready to significantly lower their margins to remain relevant, thanks to their central and accessible locations.

Read two articles below

Amazon may take over old JC Penney and Sears

Abandoned mall department stores may become Amazon fulfillment centers 

Related items:

• Malls transition to new models to thrive in the changing market
• Amazon thrives on virus