What: Falabella has announced a significant $508 million investment plan for 2024, focusing on enhancing its omnichannel capabilities, store network expansion, and sustainability efforts.

Why it is important: This investment is crucial as it highlights Falabella's commitment to adapting to the evolving retail landscape, emphasizing digital integration, customer experience, and environmental responsibility.

The strategy involves allocating USD 270 million for new store openings and renovations across Chile, Peru, Mexico, and Colombia, including two IKEA locations in Colombia. A further USD 157 million is dedicated to upgrading existing stores and shopping centers, aiming to merge physical and digital retail experiences. The plan also includes a USD 200 million investment in technology to boost e-commerce and digital banking in the Andean region, and USD 38 million for logistics improvements. Additionally, Falabella aims to achieve net zero in scope 1 and 2 emissions by 2035. The company's interim CEO, Alejandro González, emphasizes a focused approach to enhance profitability and customer experience.

Chilean retailer Falabella announces USD 508m investment for 2024

What: There is a changing landscape of luxury e-commerce and challenges faced by the first movers in this sector, such as Yoox Net-a-porter, Matches, and Farfetch.

Why it is important: The power and influence of multibrand e-tailers have diminished, with many luxury brands opting to build their own online retail presence.

These e-commerce platforms, which revolutionized the luxury retail experience, have seen a decline in their value and relevance due to shifts in market forces and the brands' direct-to-consumer initiatives.

Despite the challenges, there is recognition of the ongoing value of multibrand retailers in terms of curation, convenience, and trust. The article emphasizes the need for these e-commerce players to adapt to the changing dynamics and redefine their roles for sustained relevance. Mytheresa, a smaller player in the European luxury e-commerce market, has demonstrated consistent growth and profitability amidst the challenges, suggesting that adaptation and strategic positioning are crucial for success in this evolving landscape.

Luxury e-commerce players face a whole new reality

What: C-suite knows that AI is key for the business but its implementation is harder than expected.

Why it is important: The main question is to know where to start. The answer to when is “now."

A global survey by Deloitte's AI Institute reveals that top executives feel unprepared for the challenges and changes brought about by generative AI, more than a year after ChatGPT's emergence in the business world. This concern is significant as the World Economic Forum in Davos begins.

Key findings of the survey, which involved 2,800 executives from director to C-suite levels, include:

1. Lack of Preparedness: Only 20% of executives believe their organization is highly prepared to address AI skills needs.
2. Governance and Risk Management: Just 25% feel their organizations are well-equipped to handle AI governance and risks.
3. Employee Education: Less than half (47%) report that their employees are sufficiently educated about AI.
4. Focus on Tactical Benefits: Most executives indicated that their organizations primarily use AI for efficiency and cost reduction rather than for creating new growth opportunities.

Joe Ucuzoglu, Deloitte Global CEO, emphasizes that treating generative AI as a side initiative would lead to failure. He highlights the scarcity of talent in critical areas necessary to activate AI capabilities, suggesting that organizations cannot rely solely on internal expertise for AI implementation. This sentiment reflects the broader challenge businesses face in integrating AI effectively and responsibly into their operations.

Now decides next: Deloitte releases its report on AI

What: Made in China brands are exponentially growing and at-home competition is fierce.

Why it is important: Some of them are increasingly credible for overseas expansion. They might be a solution for department stores looking for an alternative to the big Western names going DTC.

In 1987, Ding Shizhong began transforming his family's small shoemaking business in Fujian, China into Anta, a major sportswear retailer. Anta grew rapidly, surpassing Adidas as China's second-largest sportswear brand with $7.8 billion in annual revenues. This growth was fueled by strategic acquisitions, including Fila's China rights and Finland’s Amer Sports.

However, Anta faces challenges with slowing growth in China and adapting to evolving sportswear trends. Financial pressures from a significant loan for the Amer Sports acquisition have led to plans for an IPO. Anta is responding to market shifts and increased competition by refining its product lines and adopting a direct-to-consumer retail model. Despite these hurdles, Anta remains a key player in the dynamic sportswear industry.

Nike challenger Anta faces fresh rivals in Chinese sportswear race

What: Tokyo department stores are enhancing their Valentine's Day offerings by including unique in-store dining options, featuring special chocolates and desserts.

Why it is important: Incorporating restaurant options in department stores has become crucial as these establishments strive to offer more than just shopping experiences. By providing unique dining options, especially during special occasions like Valentine's Day, department stores can attract a wider range of customers, increase foot traffic, and encourage longer visits. This strategy enhances the overall appeal of department stores, making them lifestyle destinations where customers can shop, dine, and enjoy leisure activities.

Tokyo's department stores are preparing for Valentine's Day by expanding beyond traditional gift offerings to include in-store dining experiences. Matsuya in Ginza will offer chocolates paired with alcoholic drinks and host pop-ups for various confectionery brands. It will also feature a special ice cream developed in collaboration with Seiste, a renowned chocolate brand. Takashimaya's Shinjuku store is set to provide desserts made on-demand by famous pastry chefs, available through reservation. Tobu Department Store in Ikebukuro will offer eat-in products from seven brands, including a unique Mont Blanc cake. Sogo & Seibu's Seibu store in Ikebukuro plans to serve dishes using cacao, such as beef curry and cola floats. Despite inflation, consumer spending on Valentine's Day chocolates remains high, with Matsuya Ginza's survey indicating an average spend of JPY 4,290 for romantic gifts and JPY 3,821 for personal indulgence.

Tokyo department stores to offer in-store dining options for Valentine's Day

What: Retail Dive published an article on 24th of December discussing the Scandinavian notion of “hygge” and how retail appropriates this notion especially during the holidays.

Why it is important: Department stores are increasingly actually selling “hygge” (lifestyle) without labelling it as such.

The concept of 'hygge,' a Danish term embodying coziness, contentment, and well-being, has become increasingly popular in the U.S., especially around the holiday season. Retailers and marketers are capitalizing on this trend, often linking the idea of hygge with the holiday spirit of togetherness, relaxation, and comfort. While hygge emphasizes simple pleasures and intimate, warm experiences, its commercialization has led to the sale of various products marketed as enhancing or embodying hygge, from cozy home decor to specialized games.

This trend aligns with the broader historical shift of Christmas and other holidays becoming highly commercialized, where the focus often lies on shopping and gift-giving. Experts note that while hygge can be supported by certain products, it fundamentally remains a feeling or experience rather than something that can be bought. The concept encourages appreciating the simple joys of life, often in contrast to materialism.

However, the act of giving thoughtful gifts, which align with the principles of hygge, can contribute to the feeling of contentment and joy. The emphasis is on the thought and care put into the gift rather than its material value. In this way, the principles of hygge can coexist with the practice of gift-giving during the holiday season, provided the focus remains on meaningful, personal connections and the simple pleasures of life.

Can retail sell hygge?

What: Ikea has significantly reduced prices on thousands of products, with plans for further cuts on an additional 1,000 items by spring.

Why it is important: Ikea aims to provide substantial savings to its customers, aligning with its vision of offering a more affordable and sustainable lifestyle to address ongoing cost-of-living challenges.

The price reductions encompass a wide range of popular products, including those in the living room, bedroom, kitchen, children's, and storage categories. Ikea aims to alleviate cost-of-living pressures for its customers by passing on approximately GBP 100m in savings. Michaela Quinlan, Ikea UK and Ireland's chief commercial officer, emphasized the company's commitment to creating a better everyday life at home by prioritizing low prices. This move follows a previous round of price cuts on kitchen and accessory items, which saw reductions on over 1,300 prices. Ingka Group, the owner of Ikea, expressed confidence that these price cuts would lead to increased sales volumes.

Ikea slashes thousands of prices following easing cost pressures

What: For the period from December 1 to 31, 2023, the clothing brands in the Retail Int. Panel. for the Commerce Alliance recorded a drop in turnover of 2.6% in store.

Why is it important: A shift in consumer buying habits towards eco-consciousness caused a significant decrease in consumer spending during the Christmas season. A decline in Christmas spending and a shift in the calendar contributed to physical store attendance witnessing a 3.5% drop, whereas online sales increased by 1% compared to the previous year. Shopping centers fared better than outlets and commercial zones, while city center street businesses saw a 2.2% decrease in activity. Yohann Petiot stressed the significance of winter sales for cash flow and stock clearance.

The French focused on controlling spending rather than impulsive purchases for Christmas 2023

What: JCPenney is offering 3,000 customers free professional headshots in partnership with JCPenney Portraits by Lifetouch through the Snapshot for Success initiative.

Why it is important:  The initiative aims to support customers in their career pursuits through the Make It Count promise, where JCPenney matches their efforts by providing professional headshots.

The Snapshot for Success initiative and Suit Up events reflect JCPenney’s commitment to helping customers succeed in their careers. Customers can register for the headshots until February 7 and book their free sessions through March 11, 2024.

Over 200 Suit Up events are planned for this year from January through to April, continuing JCPenney's focus on supporting customers in their career endeavors.

JCPenney offers customers free professional headshots

What: Marks and Spencer Group reported a strong Christmas trading period with clothing and home sales increasing by 4.8 %.

Why it is important: The strong trading and sales growth signify positive market performance and strategic positioning, crucial for the overall financial health and future prospects of the company.

The company's total UK sales, including food and home & clothing, rose by 8.5% to  GBP 3,568 million. The CEO, Stuart Machin, emphasized the improvement in style perception and lead on quality and value in clothing and home segments.

M&S saw increased market share, particularly in womenswear, and strong performance in online sales, knitwear, denim, and Autograph lines. However, international sales were down 6.4% due to planned franchise shipments and challenging market conditions. Despite economic uncertainties, M&S expects to meet market expectations for the year, aiming to drive 1% growth in market share and accelerate their transformation in the new fiscal year.

M&S reports strong Christmas sales

What: Ulta Beauty saw impressive net sales and operating income increases last year. CEO Dave Kimbell discussed recent innovations the retailer has introduced and why the beauty category is expected to remain strong.

Why it is important: While some retailers have faced sales declines in recent months as consumers pull back on discretionary purchases, beauty has been a bright spot in the industry. The beauty and personal care market is expected to reach $646.2 billion globally in 2024, with anticipated growth at a compound annual rate of 3.3% over the next four years.

Ulta Beauty plans to relaunch its customer loyalty program, Ultamate Rewards, with expanded benefits, including an enhanced birthday offering and more personalized communication to customers. Ulta Beauty and the beauty sector are expected to remain in a stronger position than other retailers, despite economic pressures.

The importance of beauty in consumers' lives continues to drive the sector's resilience and navigate market pressures. Coresight Research unveiled the impact of enhanced product imagery on the industry. The retailer emphasizes innovation through new brands, tech advancements, and a balance between technology integration and human experience.

Ulta achieved $10 billion in sales last year, thanks to its strategies in the beauty retail industry

What: Amazon Fashion has introduced new AI-driven features to address the fit problem in fashion e-commerce.

Why it is important: The new tool aims to address the fit problem in fashion e-commerce, reduce returns, and improve the overall shopping experience for customers and brands.

These updates include personalized size recommendations, AI-generated Fit Review highlights, and standardized size charts for customers. One significant addition is the Fit Insights Tool, designed to provide brands with AI-driven insights on product fit and sizing issues based on customer feedback. The tool uses large language models to extract and aggregate customer feedback to identify defects in size charts, offering brands valuable data to improve their products and sizing information.

The personalized size recommendations algorithm evaluates sizing relationships between brands, reviews, and customer fit preferences to recommend the best-fitting size for each individual. The AI-generated fit review highlights summarize customer feedback, helping shoppers make informed decisions about sizing.

Lastly, Amazon has improved its size charts using AI to enhance accuracy and consistency, making them easier to follow and potentially addressing the variability in sizing systems across styles and brands.

Amazon points AI at fashion fit problem

What: Marks & Spencer is reevaluating its Sparks loyalty programme following a successful Christmas trading period.

Why it is important: The company’s review of its Sparks loyalty program reflects the evolving landscape of loyalty schemes in the retail industry and their significant impact on consumer engagement and sales.

The CEO, Stuart Machin, expressed the need to reconsider Sparks in the short, medium, and long term, emphasizing a focus on quality, style, and value. Machin dismissed the idea of introducing member pricing via Sparks, highlighting M&S' customers' preference for great products at everyday trusted prices.

M&S CEO says company needs to rethink Sparks loyalty programme

What: During the Christmas period Fortnum & Mason experienced a significant sales increase, with revenue rising by 17% compared to the previous year.

Why it is important: The significant sales increase shows the company’s successful management of inflationary pressures and potential for sustained growth.

The refurbishment of its flagship London store and the reopening of the third floor contributed to a 30% rise in customer numbers, surpassing 6 million visitors. The restart of deliveries to the EU and the overall growth in 2022 boosted the company's performance. Despite facing inflation and increased costs for food and labor, Fortnum & Mason managed to achieve 12% revenue growth and a 23% pre-tax profit increase.

Although online sales fell by 11% compared to the previous year, they still accounted for 36% of retail sales, with plans to consolidate distribution centers to address growing demand. The company's CEO, Tom Athron, expressed confidence in managing inflationary pressures and foreseeing a shift in price increases.

Fortnum & Mason Christmas sales jump 17%

What: John Lewis Partnership is reportedly considering cutting up to 11,000 jobs as part of its ongoing turnaround program.

Why it is important: This significant reduction in workforce highlights the challenges faced by traditional retailers in adapting to the rapidly changing retail landscape, marked by increased online competition, economic pressures, and evolving consumer behaviours.

John Lewis Partnership, a prominent UK retailer, is reportedly planning to cut up to 11,000 jobs over the next few years across its various divisions, including its headquarters, supermarkets, and department stores. This move is part of a broader effort to reduce costs and improve efficiency, particularly through technological advancements. The company has already closed 16 department stores and reduced its workforce, reflecting the struggles it faces in a highly competitive market and the impact of the shift towards online retail. Additionally, John Lewis is modifying its redundancy terms, offering one week's pay per year of service instead of the previous two weeks, starting February 1. This decision aligns with the company's strategy to return to profitability by enhancing customer offerings, investing in technology, and optimizing store operations. The spokesperson emphasized that the company's focus is on improving performance, but acknowledged the unfortunate necessity of reducing the number of employees.

John Lewis considers up to 11,000 jobs cuts 

What: Harrods collaborates with Chinese fashion retailer Labelhood for a Lunar New Year-themed pop-up.

Why it is important: This partnership highlights the growing influence of Chinese fashion and cultural celebrations in global retail spaces, showcasing the integration of diverse cultural traditions and emerging fashion talents in a prestigious retail setting like Harrods.

Harrods, in partnership with Chinese fashion retailer Labelhood, has launched a special pop-up to celebrate the Lunar New Year, focusing on the Year of the Dragon. The pop-up, adorned in red and featuring dragon-shaped kites, offers over 40 styles from six popular Chinese fashion brands. It includes a family portrait photo studio, a photography series exploring family history, and a Lunar New Year-themed dim sum high-tea set. Additionally, Harrods has introduced limited-edition Chinese New Year pantry products. This collaboration, which began in 2019, underscores Harrods' commitment to celebrating Chinese culture and fashion, further enhanced by the upcoming launch of Harrods' private members' club, The Residence, in Shanghai.

Harrods celebrates Lunar New Year with Labelhood pop-up

What: Neighborhod Goods closes its two Texas-based stores.

Why it is important: These are the two original stores. The remaining ones are in NY and California.

Neighborhood Goods, a Dallas-based retailer designed to bring digital brands into physical stores, has closed its Plano and Austin locations. This company, which aimed to provide a physical presence for online brands without the need for significant investment in standalone stores, still operates two other stores in New York City's Chelsea Market and Newport, California's Fashion Island.

The Plano store, a 14,000-square-foot space in the $3 billion Legacy West mixed-use development, opened in 2018 and closed on December 31. The Austin store launched in March 2020, coinciding with the start of the pandemic, and closed on January 2. CEO Matt Alexander, who co-founded Neighborhood Goods with Mark Masinter, stated that these closures were pre-arranged due to different reasons and clarified that the company is not planning bankruptcy but is exploring various paths forward.

Neighborhood Goods, founded in 2018, gained attention by offering a rotating collection of online brands such as Rothy’s, Dollar Shave Club, and Draper James in a department store format. By 2019, the company had raised $25.5 million for expansion but paused its plans to open two to three stores annually due to the pandemic.

The company, supported by investors like Global Founders Capital and Forerunner Ventures, positioned itself as a modern alternative to traditional department stores. It aimed to cater to customers who prefer to experience products physically before purchasing online. The store design by Droese Raney Architecture featured modular components to flexibly showcase various brands.

As the retail landscape evolved, larger retailers like Target and Macy’s began incorporating digital brands into their offerings. Meanwhile, many digital-first brands, including Rothy’s and Buck Mason, have opened their own physical stores, while others experimented with temporary pop-ups. Shopping centers responded to the shift in retail trends by offering shorter-term leases and temporary spaces, particularly during the pandemic-induced wave of store closures.

Neighborhood Goods closes 2 of its 4 locations

What: Marks & Spencer shares soared to a five-year high following speculation that the retailer will be among the top performers during the holiday season.

Why it is important: Despite post-pandemic industry challenges, M&S has demonstrated resilience and strategic progress under its current leadership, fostering a positive market outlook for the company's potential holiday sales and recovery efforts.

BNP Paribas analysts identified M&S as one of their top stock picks for 2024, touting it as a potential "Christmas winner." Analyst Warwick Okines highlighted M&S' improved preparedness in its food business and expanded clothing range as factors driving potential sales growth. M&S' turnaround program, led by chair Archie Norman, CEO Stuart Machin, and co-CEO Katie Bickerstaffe, has garnered momentum, resulting in the company's re-entry into the FTSE 100 after four years. The retailer is slated to announce its Christmas sales figures on January 11, reflecting the impact of strategic initiatives and the holiday period on its performance.

M&S named ‘Christmas winner’ by investors

What: Macy's Inc. has rejected a USD 5.8 billion buyout offer from Arkhouse Management and Brigade Capital Management, citing concerns over the offer's financing and value.

Why it is important: The rejection of the buyout offer highlights the ongoing challenges and pressures facing Macy's, including investor expectations, the company's real estate value, and the need for a compelling strategy to improve performance. This situation underscores the complexities of navigating corporate strategies and investor relations in the dynamic retail sector.

This decision comes at a critical time for Macy's, with Tony Spring about to take over as CEO, and the company's stock trading close to the offered buyout price.

Analysts and insiders view the rejection as a strategic move, believing Macy's board sees potential for higher stock value under new management.

The company's real estate assets, valued between USD 7.5 billion and USD 11.6 billion, are a key factor in the buyout dynamics, with challenges in realizing this value.

The situation may lead to further actions, including a potential proxy battle at Macy's annual meeting, as the investor group seeks a more significant role in the company's future direction.

Macy’s dismisses USD 5.8B buyout offer from Arkhouse and Brigade

What: AI inspires many retailers to automate call centers and chatbots. Alix Partners argues that other use cases are possible.

Why it is important: Creativity will be key for retailers willing to maximize their use of AI to get ahead of competition.

GenAI (Generative AI) is increasingly becoming integral in the retail sector, offering more substantial business impacts compared to other recent tech advancements like crypto and NFTs. Retailers are using GenAI for content creation and automating routine processes, particularly in call centers. However, its most significant potential lies in combining GenAI with machine learning (ML).

ML analyzes complex data to identify patterns for informed predictions, while GenAI generates new content like text, audio, and video. Their hybrid use can enhance hyper-personalization in marketing, creating a continuous improvement cycle. This combination can significantly improve customer count, basket size, and total trips, leading to notable revenue increases.

For instance, a nationwide specialty retailer implemented a custom marketing solution using ML and GenAI, resulting in a 30-45% increase in email open and click rates, directly correlating to revenue improvements. The process involves using AI and ML to identify high-potential customers based on customer lifetime value (CLV) and develop response propensity models. These models determine which customers are likely to make additional purchases and their likely purchases.

GenAI then crafts personalized offers and messages, with ML models creating micro-segments for tailored messaging. This approach leads to optimized messaging and a virtuous loop of increasing effectiveness.

The potential applications of GenAI and ML extend further, including matching customers with knowledgeable sales associates, implementing advanced marketing strategies, and deploying discount elasticity models to maximize margins. The integration of these technologies into existing processes can significantly enhance outcomes, making it a promising investment for retail businesses.

Combine machine learning with GenAI to multiply the business impact

What: In 2024, the National Association of Large Distribution Companies (Anged), which includes major department store operators like El Corte Inglés, Carrefour, Ikea, and Leroy Merlin, will increase salaries for nearly 260,000 workers in the sector by 4.5%.

Why it is important: The salary increase signifies a significant step towards improving employee compensation in the retail sector, reflecting the sector's growth and stability.

Leroy Merlin, will increase salaries for nearly 260,000 workers in the sector by 4.5%. This raise is part of a larger agreement made in March of the previous year, where unions and Anged settled on a 17% salary increase over four years. The increase includes a 14% fixed rise and a 3% one-time payment. The distribution sector is expected to see a 9% increase in nine months, with potential additional payments based on sales performance.

Antonio Pérez, General Secretary of the Fetico Independent Trade Union Confederation, highlighted this as the most significant salary increase in the sector's history, reflecting a successful combination of staff efforts and effective dialogue, contributing to the sector's stability and historic growth in Spanish retail.

Department stores raise salaries by 4.5% in 2024

What: The Gangnam branch of Shinsegae Department Store in Korea has achieved a record-breaking sales milestone of over 3 trillion won ($2.3 billion) this year, making it the first Korean department store to reach this level of sales.

Why is it important: The store's success is attributed to factors such as a high percentage of VIP member purchases, a diverse range of over 1,000 brands, its strategic location in a high-income neighborhood, and effective marketing strategies targeting younger consumers and foreign tourists.This achievement places Shinsegae Gangnam among the ranks of globally renowned department stores like Harrods in London and Isetan in Tokyo. It highlights the store's ability to attract a diverse customer base, including high-income residents, younger shoppers, and international tourists, through a combination of luxury brand offerings, strategic location, and targeted marketing.

This milestone reflects the growing influence and global standing of Korean retail, as well as the evolving consumer trends and preferences in the region. Shinsegae's success demonstrates the potential for department stores to thrive by adapting to market demands and consumer behaviors.

Shinsegae's Gangnam branch becomes first Korean store to crack 3 trillion won

What: The John Lewis Partnership has made senior appointments, welcoming Peter Ruis as the new Executive Director to lead John Lewis, and assigning Naomi Simcock as the Operations Director for John Lewis Retail and Supply Chain.

Why it is important: The senior appointments at the John Lewis Partnership signify a strategic move to enhance leadership and operational capabilities, ultimately aiming to drive the next phase of brand transformation and strengthen its unique employee-owned business model.

Peter Ruis, who previously worked with John Lewis from 2005 to 2013, brings over 30 years of retail and leadership experience to his new role. The Partnership aims to continue its transformation under Ruis's leadership and capitalize on the unique employee-owned business model. This move follows the successful transition of Indigo plc in Canada under Ruis's leadership.

Naomi Simcock, as the previous interim Executive Director, will now focus on operations, with both leaders working closely to support the business. Nish Kankiwala, the CEO of the John Lewis Partnership, acknowledges Ruis's expertise and passion for the brand while expressing gratitude for Simcock's leadership.

John Lewis makes senior appointments

What: Etsy has launched "Gift Mode," an AI-based service designed to curate personalized gift ideas for shoppers.

Why it is important: This innovation represents Etsy's strategic move to become a major destination for gift shopping, leveraging technology to enhance the customer experience and differentiate itself in the competitive e-commerce market.

Etsy has unveiled a new service called "Gift Mode," which uses a combination of human curation and machine learning to suggest gift ideas based on the recipient's interests. Users provide details about the recipient, such as their relationship, occasion, and interests, and the service generates gift options tailored to over 200 different recipient personas. Additionally, "Gift Mode" allows gift givers to create a "gift teaser" for recipients, complete with a note, tracking information, and a preview of the gift. This service is part of Etsy's broader strategy to establish itself as a key player in the gifting market, aiming to increase its visibility among U.S. shoppers, only 12% of whom currently consider Etsy for gift shopping. The launch of "Gift Mode" comes at a time when Etsy is undergoing significant restructuring, including workforce reductions and changes in its executive team.

Etsy launches AI-based gift recommendation service