What: Department stores and other independent retailers leverage the growing interest for wellness and self-care to drive in-store traffic, designing new spaces and services that are certain to provide a meaningful and memorable customer experience.

Why is it important: Due to the substantial scale of the wellness market, which is estimated to be worth $1.5 trillion, and its rapid growth trend, brands and retailers stand to benefit greatly from integrating wellness experiences into their store strategies.

Retailers are continuously investing in their stores, aiming to offer a differentiated shopping experience thanks to distinctive and enjoyable services. For a few years now, several well-known department stores have undergone extensive transformation plans to elevate their shopping experience by modernizing their space and offering value-added services that extend beyond just shopping.

Selfridges in London offers beauty and wellness services, while Galeries Lafayette in Paris unveiled a 3,000 sq meter wellness gallery, becoming a true urban oasis. Both stores aim to attract more customers and fulfill different shoppers’ missions by incorporating these wellness experiences.

How Brands Are Infusing Wellness Services Into Shopper Experience

What: Selfridges' Corner Shop in London has premiered the Louis Vuitton menswear collection, marking Pharrell Williams' debut as the Creative Director for the brand.

Why it is important: The debut of the Louis Vuitton menswear curation represents a significant fusion of heritage and innovation within the realm of luxury fashion retail.

This exclusive pop-up space has been transformed into a Louis Vuitton-dominated environment for the next five weeks, showcasing a blend of Vuitton heritage and Williams' creative vision. The space has been reimagined as a combination of classic and modern Vuitton aesthetics, mirroring the brand's Paris home with landscape backdrops and pixel-themed cubes. The collection, named Louis Vuitton LVRS, includes a diverse range of fashion and accessories, featuring a pixelated 'Damoflage' chessboard print, as well as tailoring, leather jackets, and retro sportswear.

Despite the luxury pricing, the collection is only available for shopping in the space by appointment, emphasizing exclusivity. Williams' approach to the collection is described as a "love letter to the brand," reflecting different modes of dressing, from casual to smart, traditional to innovative. The overall vibe of the collection and the space exudes joy, light, and sun, in alignment with Williams' artistic heritage in the music industry.

Selfridges' Corner Shop debuts Louis Vuitton menswear curation

What: France's post office is testing the concept of offering changing rooms in some branches to aid online shoppers in promptly returning ill-fitting purchases.

Why it is important: La Poste anticipates that this approach will increase foot traffic and bolster its parcel business, compensating for declining letter traffic. However, this move has met with resistance from small independent retailers, with concerns raised about the potential negative impact on local economies if this practice is expanded nationally

The changing room resembles a French mailbox, equipped with a chair, mirror, and shelf for instant returns. The initiative aims to simplify the process for customers, allowing them to receive, inspect, and return items in one visit, reducing unnecessary trips and saving time. This experiment is a response to the surge in online shopping and the subsequent increase in product returns.

French post office opens changing rooms for online shoppers

What: DFS goes big in cosmetics by proposing new immersive concepts.

Why it is important: DFS is increasingly becoming a household retail brand in Asia.

DFS Group has introduced its 'Beauty Collective' concept in Hong Kong, aiming to enhance its beauty and fragrance retail offerings. This initiative was rolled out with the redesign of the T Galleria Beauty by DFS at Hysan Place, focusing on presenting unique and less accessible brands in the lifestyle, skincare, haircare, and technology sectors.

The Hysan Place store features 24 distinguished brands, including Aman Essentials, Argentum, Axxzia, Bachca, and Barneys New York. The 'Beauty Collective' concept is designed to provide an immersive shopping experience, creating a relaxed and inviting atmosphere for customers.

Additionally, DFS has introduced a specialized fragrance shopping experience at Galleria Beauty by DFS in Tsim Sha Tsui. This new offering focuses on artisanal perfumes and includes exclusive deals, further enhancing DFS's commitment to providing distinct and luxurious shopping experiences for its customers.

DFS launches “beauty collective” concept in Hong Kong

What: As 2025 climate commitments approach, the fashion industry faces pressure to improve its supply chains amidst various challenges.

Why it is important: In 2024, the industry should focus on how suppliers and workers can drive conversations forward, moving away from brand-centric narratives to a collective approach that empowers communities and suppliers. The power dynamics are shifting, and the industry needs to listen to these voices for meaningful change.

Key trends for 2024 include greater industry collaboration, a deeper understanding of the need for primary data at the product level, and the adoption of digital product labeling. New legislation in the EU and the US, such as the Corporate Sustainability Reporting Directive and the Uyghur Forced Labour Protection Act, is expected to significantly impact the industry, with mandatory reporting requirements and increased enforcement budgets.

Despite these regulations, many major brands still resist disclosing basic information like production volumes, which is crucial for accurate projections about carbon reduction strategies. The pandemic has highlighted the unfair practices and power imbalances in global supply chains, prompting a need for more resilient and transparent supply chains with stronger partnerships.

The luxury sector is beginning to adjust to new realities, with some suppliers boycotting brands that don't respect their terms. Suppliers are also prioritizing brand partners that provide consistent orders and investment. Compliance requirements in 2024 will impact suppliers, with larger organizations likely dominating smaller ones unless they have a unique niche.

Technology adoption in supply chains is lagging, but the long-term benefits outweigh the costs. AI is enabling businesses to collect and analyze data more effectively. Investments in supplier compliance platforms are increasing visibility of risks and enabling proactive responses to regulatory concerns.

Legislation is coming for fashion’s supply chain

What: The article discusses the challenges luxury retailers face in retaining sales associates during the post-pandemic period.

Why it is important: The shortage of high-caliber sales associates has become a critical concern, particularly due to its impact on future growth and productivity.

Employee attrition in luxury stores has increased significantly, impacting the availability and desirability of sales associate jobs. This has prompted a shift in focus from HR departments to the C-suite of luxury brands. Luxury brands are implementing proactive steps such as training programs and retail academies to address this issue. Additionally, there's a recognition of the need to invest in soft skills training and enhance employee experience, including providing flexibility and leveraging AI for optimal staffing levels. Finally, there's a shift in focus from transactional performance to cultivating relationships and customer delight, particularly in response to the preferences of Gen Z employees.

Luxury brands tackle shortage of sales associates

What: Forbes reviews Galeria’s third insolvency in three years.

Why it is important: Central seems more interested to acquire the rest of Signa’s crumbling empire than Galeria. Is that only due to the non-luxury positioning of the company?

Galeria Karstadt Kaufhof, a prominent German department store chain with 15,000 employees, has filed for insolvency for the third time in four years. This follows the debt-fueled collapse of its parent company, Signa, which also owns Selfridges and several landmark properties. The latest insolvency filing at the Essen district court is seen as an effort by Galeria to break free from Signa's influence, which has been criticized for its high rents and restrictive ownership structure.

Previously, during its insolvency in February 2023, Signa Holding had pledged $219 million in new capital to Galeria in exchange for debt write-downs, which included $645 million from German taxpayers. However, the financial difficulties of Signa, particularly after its insolvency in late 2022, cast doubt on this support. Galeria's struggles were exacerbated by the pandemic, inflation, and energy cost hikes due to the Russia/Ukraine war.

Galeria’s CEO, Olivier van den Bossche, views the current development as a liberation from Signa’s high costs and restrictive management. The company has faced scrutiny and public criticism for its reliance on state subsidies and rent practices.

Signa acquired Galeria in 2019 and merged it with Karstadt in 2020, forming Europe’s second-largest department store chain. Since then, Galeria has closed underperforming stores and reduced staff, with plans to cut around 52 locations by the end of the month. The company has already begun discussions with potential investors, as stated by Galeria’s interim administrator Stefan Denkhaus.

Galeria Kardstadt Kaufhoh files for a third insolvency in 3 years

What: Marquette, a lifestyle concept store gathering DNVBs and designed for shopping centers, is planning to expand its presence with four new store openings in 2024, targeting a total of ten stores by the end of the year. The store features a vibrant and colorful layout and offers products from web-born brands (DNVBs) and other trendy brands across various categories like fashion, beauty, and leisure.

Why It Is Important: In the wake of Showfields collapse in the US, Marquette's expansion reflects a successful adaptation of the retail model, integrating online-born brands into physical shopping centers and diversifying its product range beyond DNVBs.

Originating from a collaboration between Digital Native Group and Carmila (Carrefour group), Marquette opened its first store in 2020 and has since grown to six locations in France. Marquette growth strategy not only enhances the mall experience by introducing unique and sometimes lesser-known brands but also demonstrates the viability of a consignment sales model in the retail sector. With plans for e-commerce and potential home delivery services in the future, Marquette is said to already be profitable.

Marquette, a new French concept dedicated to DNVBs

What: The bankruptcy of the KaDeWe Group, which operates luxury department stores in Germany, is not expected to impact the rescue efforts for the mainstream retailer Galeria Karstadt Kaufhof.

Why it is important: The KaDeWe Group's bankruptcy highlights the distinct challenges within different retail segments, underscoring the complexity of navigating insolvency and restructuring in the retail industry, especially when contrasting luxury and mainstream markets.

The insolvency of the KaDeWe Group, which includes luxury department stores like KaDeWe in Berlin, Oberpollinger in Munich, and Alsterhaus in Hamburg, is not expected to negatively influence the rescue opportunities for Galeria Karstadt Kaufhof, according to retail expert Thomas Roeb. Despite the shared ownership under Signa Retail, the distinct market and operational requirements between luxury and mainstream retail segments suggest that interests in Galeria's rescue are separate from the premium sector challenges faced by KaDeWe. The bankruptcy aims to address unsustainable rent costs among other issues, with operations continuing at the stores. Observers speculate on the potential interest of the Central Group in acquiring more shares in KaDeWe Group during the bankruptcy, but the overall outlook for saving a significant number of Galeria stores remains unchanged and challenging.

Does the KaDeWe bankruptcy have consequences for the Galeria stores?

What: In a bid to revive their fortunes, department stores are undergoing significant transformations.

Why it is important: These stores are now striving to reduce their dependence on traditional business models, refresh their inventory, and attract a younger customer base. To entice shoppers and elevate traffic, department stores are focusing on innovation, personalized experiences, and improving private brands.

Factors like revenue declines, changing consumer behavior, and the shift to online shopping have prompted these changes. Companies like Macy's and Nordstrom are implementing strategies such as scaling down off-mall stores, simplifying pricing, and improving inventory productivity. JCPenney, under new ownership, plans to invest over USD 1 billion to enhance its stores, website, and customer experiences while targeting a younger demographic. The industry's key players are appointing new CEOs, making substantial investments, and prioritizing the revitalization of their businesses to adapt to the ever-evolving retail landscape.

Can department stores regain relevance?

What: Nordstrom is expanding its Nordstrom Rack off-price stores in the United States.

Why it is important: This expansion is part of Nordstrom's strategy to cater to budget-conscious consumers, with plans to create over 4,000 jobs through its existing and new Rack locations.

The new locations are planned in Houston, Texas; Omaha, Nebraska; Noblesville, Indiana; and Franklin, Tennessee, and set to open in the fall of 2024.

The stores range from 24,000 to 34,000 square feet and will offer convenient services such as online order pickup and easy returns. Nordstrom's commitment to growing its off-price business is evident, as it continues to invest in brick-and-mortar locations even amid sales challenges. The company's push into new markets like Omaha, where it lacks a presence, highlights its determination to capture a broader consumer base.

Nordstrom plans to open new Rack locations in 4 states next fall

What: Mango has launched its first virtual store on the Roblox platform, offering an immersive shopping experience for users with digital products and exclusive designs for avatars.

Why it is important: This move signifies Mango's adaptation to the evolving digital landscape, embracing the growing trend of virtual and metaverse experiences, and expanding its reach to a new, tech-savvy audience.

Mango has entered the virtual world by inaugurating its first store on Roblox, a popular video game platform known for its immersive experiences. This virtual store, located in the Outfit Shopping Mall on Roblox, aligns with Mango's "New Med" style, featuring a Mediterranean-inspired design with warm tones and natural materials. Users can explore and purchase Mango Teen clothing and digital products for their avatars, experiencing the brand's collections in a unique, interactive way. The store allows for virtual try-ons and taking selfies, enhancing user engagement. This initiative, part of Mango's collaboration with digital partner BrandNewVerse, reflects the brand's commitment to innovation and providing diverse experiences across physical, digital, and virtual worlds. Celebrating its 40th anniversary in 2024, Mango continues to grow, having achieved its highest turnover in 2022, and this venture into the virtual realm marks another step in its global expansion.

Mango exudes Mediterranean charm with its first virtual store on Roblox

What: Neiman Marcus Group reported a pleasing outcome for the holiday season, despite facing challenges in the luxury market and a promotionally charged retail sector impacting margins.

Why it is important: Neiman Marcus’ successful holiday sales performance in the current luxury retail environment gives insight into the company's strategies to drive sales and maintain profitability

CEO Geoffroy van Raemdonck highlighted a sequential improvement in sales trends from the previous quarter and growth in spending among top customers and luxury categories such as jewellery, designer handbags, and beauty. While NMG did not provide specific holiday sales figures, adjusted EBITDA eased to USD 95 million from USD 112 million in the prior year, with sales totalling USD 948 million versus USD 1.034 billion previously.

The company attributed its success to over 1,000 experiences held during the holiday season, leveraging customer insights and real-time data to drive personalised, relationship-based sales. Although NMG underperformed the overall retail industry, it remains optimistic about revolutionising luxury experiences through financial flexibility, investments in experiences, and building relationships with brands and customers.

NMG plans to focus on high-value customers, emphasising in-store and remote selling, as well as long-standing relationships with luxury brands to drive growth and provide valuable retail partnerships. The company aims to drive high customer lifetime value by focusing investments on customers seeking the most desirable luxury brands.

Neiman’s holiday sales down but less so from the fall season

What: Showfields is going bust and all stores are to close.

Why it is important: The DTC approach to department stores was interesting, but not able to be profitable enough.

Showfields, known for showcasing direct-to-consumer brands in a department store-like setting, is closing its remaining stores in Brooklyn, New York; Washington, D.C.; and Los Angeles, following the closure of its Miami and Manhattan locations last year. This decision comes amidst ongoing bankruptcy proceedings that the company filed for in October.

The retailer informed its vendors through a memo, advising them of the possibility to file claims as creditors for time paid but not utilized. Showfields also noted its inability to cover return-to-vendor shipping costs. The closures reflect the company's financial struggles, including issues with debtor-in-possession financing and landlord concerns.

Showfields, launched in New York City in 2019, initially gained attention for providing physical retail space for mostly online DTC brands, a concept that was novel at the time. However, the retail landscape has since evolved, with many DTC brands expanding into physical retail through partnerships or their own stores, and some being acquired by larger retail chains.

The company's situation parallels that of Neighborhood Goods, another retailer partnering with DTC brands, which has also recently closed some of its locations. Showfields' closure signifies the challenges faced by innovative retail concepts trying to bridge the gap between online and physical retail in a changing market.

All Showfields stores to close

What: The Massachusetts Institute of Technology's study reveals that artificial intelligence is currently not cost-effective for replacing the majority of jobs, particularly those involving computer vision.

Why it is Important: This study is crucial as it addresses widespread concerns about AI replacing human jobs, providing a realistic perspective on the current capabilities and economic viability of AI in the workforce.

The study focused on the cost-effectiveness of AI in replacing human labour, particularly in tasks involving computer vision. The research found that only 23% of jobs could be feasibly automated with AI due to high installation and operational costs. The study, which examined about 1,000 visually-assisted tasks across 800 occupations, suggests that while AI adoption has accelerated, its practical application in replacing human labour is limited and not economically viable in most cases. The findings highlight that AI's impact on jobs might be less immediate and widespread than feared, with significant automation potential in sectors like retail and healthcare, but less so in industries like construction and real estate.

Humans still cheaper than AI in vast majority of jobs, MIT finds

What: The retail sector experienced a reduction in jobs during November, with department stores and apparel/ accessories stores shedding positions.

Why it is important: The decline in temporary jobs pointed to fundamental changes in the market, such as the subdued outlook for the holiday season and the continual growth of online shopping.

Overall employment growth exceeded expectations, with non-farm payrolls expanding by 199,000 jobs and the unemployment rate dropping to 3.7%. Factors contributing to this growth included the return of striking workers and stronger-than-expected employment expansion. It was observed that while seasonal layoffs in November and December led to job losses, these would likely be recovered in January and February. The data suggested that the labor market was gradually returning to normal, with the November gains reflecting a rate typically seen as necessary to keep up with U.S. population growth.

Retail jobs fall ahead of the holiday season

What: The fate of Sogo & Seibu remains blurry even for insiders following its sales to the US fund.

Why it is important: Japanese department stores are a staple of the national retail industry and can generate heavy emotional customer responses.

The future of Sogo & Seibu, a major Japanese department store chain, is uncertain following its sale to Fortress Investment Group. This sale, initiated by its former parent company Seven & I Holdings, faced opposition and led to the first department store strike in Japan in 61 years due to labour union concerns over job security and cultural preservation. Despite efforts to address these concerns, the sale proceeded amid controversy and delays.

The company faces challenges in its business reconstruction, especially in managing underperforming regional stores and adapting flagship locations. Concerns remain about potential job losses and the impact of reduced store sizes on brand partnerships and customer base. The department store industry as a whole is struggling, and Sogo & Seibu's ability to reinvent itself under new management is being closely watched.

After troubled sale, prospects for Sogo & Seibu uncertain

What: In Asia, payments by QR codes become ubiquitous.

Why it is important: Soon, Western retailers will need to catch the train in order to remain up to date with tourists from this region.

Juniper Research forecasts a significant increase in QR code payment volume in Southeast Asia, from 13 billion transactions in 2023 to 90 billion by 2028. This growth is attributed to the financial inclusivity QR payments offer, especially for unbanked consumers. Southeast Asian countries, including Vietnam, Thailand, Singapore, Malaysia, and the Philippines, are focusing on enabling cross-border QR payments to revitalize their economies post-Covid-19.

QR code payments are favored for their convenience and adaptability to contactless trends accelerated by the pandemic. However, larger-scale deployment raises issues of transparency, accuracy, and network stability.

Originally developed in Japan for the automotive industry, QR codes have evolved into a popular payment method, especially in China and India. In Southeast Asia, direct arrangements between central bank systems are replacing third-party services for foreign payments, promoting fee-free transactions and favorable conversion rates.

Each country in the initiative has its own national QR code system, such as NETS in Singapore and PromptPay in Thailand. The agreement, which aims to bypass the US dollar in transactions, reflects the region's fintech ambitions and adapts to global economic shifts.

Beyond Southeast Asia, cross-border QR payment systems are emerging in other parts of Asia-Pacific, like between Nepal and India. Global payment giants like Visa, Mastercard, and Google Pay are also showing interest in cross-border QR payments, although uptake in Western markets remains limited compared to digital/mobile wallets and card-based payments. However, with increasing travel from Southeast Asia, Western markets may soon embrace QR payment methods more widely.

What retailers need to know about the rise of QR code payments in SEA

What: US department stores are reducing their size to face competition and remain relevant.

Why it is important: Basics of retail remain the same: location primes over store size.

In the U.S., the average store size is at its smallest in 17 years, a trend driven by the rise of e-commerce and a shift away from large department stores and big-box retailers. In the first three quarters of 2023, retailers signed leases averaging 3,200 square feet, the smallest since 2006. This change reflects a greater focus on experience and food and beverage outlets, with these types of companies signing nearly one-fifth of all retail leases, typically targeting spaces under 5,000 square feet.

Despite the shift to smaller stores, demand for retail space remains strong, with a low national vacancy rate of 4.8%. Retailers are adapting by using data analytics to tailor their inventory and infrastructure for local markets, enabling them to occupy smaller spaces, particularly in open-air shopping centres. Some fashion and luxury retailers, however, are expanding their store footprints.

As online shopping grows, representing about 15% of all retail sales, less store space is needed for basic commodities. Instead, service and experience-based businesses like nail salons, coffee shops, and yoga studios are filling retail spaces. The cookie company Crumbl, for instance, has opened over 900 small stores since 2017. Traditional apparel and big-box retailers are also downsizing their physical presence, with companies like Macy's focusing on smaller-format stores and closing larger department stores.

The closure of many big-box retailers and minimal new retail construction have contributed to low vacancy rates and rising rents. To cope with higher rent costs, retailers, including Crumbl, are opting for smaller, more profitable store formats. This trend signifies a significant shift in the retail landscape over the past decade.

The American store is shrinking

What: Lidl reviews HR perks in order to attract and retain the workforce on a tough market.

 Why it is important: Can department stores compete in their human-intensive activities such as instore logistic and fulfillment positions for instance?

Lidl is set to significantly enhance its employee benefits from January 1, 2024. The company will offer 28 weeks of full pay for maternity or adoption leave, a substantial increase from the previous 14 weeks. Additionally, Lidl will provide paid leave for staff undergoing fertility treatments, allowing two full days off per treatment cycle with no limit on the number of cycles. The supermarket chain is also introducing five days of paid leave for those affected by pregnancy loss before 24 weeks and has expanded its compassionate leave policy to include five days of paid leave. These changes are part of Lidl’s commitment to supporting its employees' work-life balance and personal milestones. The company is also working towards becoming an accredited menopause-friendly employer.

Lidl doubles paid maternity and adoption leave

What: International logistics costs are driven up by the success of fast fashion in the Western world.

Why it is important: For department stores, the news is important for two reasons: there is a disconnection between customers’ demands for sustainability and appetite for fast fashion, and logistic costs being up again is not exactly good news.

The booming demand for fast fashion and e-commerce goods from Chinese brands like Temu and Shein is driving up air freight rates, creating intense competition among logistics companies for Asia-West shipping routes. This trend emerged during the pandemic and has continued, with e-commerce platforms often paying nearly double the rates of general cargo to meet rapid delivery schedules.

While air freight rates are rising, especially on transpacific routes, sea freight rates have fallen significantly post-pandemic. E-commerce goods now account for a substantial portion of air freight volume, leading to a shift in the logistics industry's focus.

The surge in demand is limiting traditional customers' negotiation power for lower rates in China. Cargo carriers are responding by reallocating resources and expanding e-commerce capabilities. However, there are concerns about the impact of fluctuating China-US trade relations on this sector. Despite potential challenges, the outlook for the air freight market remains strong due to sustained e-commerce and fast fashion demand.

West’s love for Shein and Temu drives ecommerce boom for air freighters

What: Frasers Group has decided to back out of its planned acquisition of SportScheck after the retailer filed for administration.

Why it is important: The decision by Frasers Group to back out of the acquisition of SportScheck highlights the ongoing financial crisis surrounding Signa and the challenges faced in the European sports market.

Frasers cited the ongoing financial crisis surrounding SportScheck's owner, Signa Holdings, as the reason for its withdrawal. However, Frasers still believes that SportScheck is an attractive asset in one of Europe's key sports markets and intends to work with the appointed insolvency administrator to potentially acquire the retailer's business/assets. This comes as Signa Holdings itself filed for insolvency due to a lack of necessary liquidity and severe economic pressure.

Frasers pulls out of SportScheck acquisition as it seeks pre-pack deal instead

What: Ikea has injected GBP 35m into a pay rise and bonus scheme to support staff through the ongoing cost-of-living crisis.

Why it is important: Ikea believes that when its co-workers grow, so does the company, so further investment aims to enhance the financial stability and security of the employees.

Ikea has pledged to meet the new Real Living Wage, with hourly-paid staff within London stores receiving the new rate of GBP 13.15 per hour and employees outside of London will receive GBP 12 per hour. Hourly-paid workers will receive a 10% increase and salaried co-workers will see their pay jump by 5% from January.

The GBP 35m investment into pay follows a GBP 12m cost-of-living support package shared in January.

Ikea staff receive pay rise in GBP 35m investment

What: Fenwick has partnered with the football club Newcastle United, aiming to support local talent and creativity while putting the city and northeast region on the global map.

Why it is important: The collaboration signifies a significant development for Fenwick, reflecting its commitment to supporting the local community and expanding its global reach.

This collaboration includes benefits such as access to the hospitality box for football games and advertising opportunities. Fenwick's first advertising campaign, "Quiet No More," targeted at a younger audience, features moody images displayed across the U.K. Newcastle United's chief commercial officer expressed enthusiasm for the partnership, which extends to creating meaningful experiences to grow both brands internationally.

Fenwick named as luxury retail store partner to Newcastle United