WWD has written an article on what home & decor categories are performing best, based on IADS' findings. The article quotes findings from the associations merchandising meeting on the home & decor sector held last February that covered brands, categories and products that are winning in retail thanks to strategies outlined in the takeaway report including Private Labels and sustainable offerings.

WWD covered IADS' findings on the Home & Decor sector

StoreBrands has written an article covering findings in IADS' latest report on the adapting Home & Decor sector in retail. The report reviews the associations recent merchandising meeting in February that shared insights on what home & decor categories are performing best. The report reviews the brands, categories and products that are winning in retail thanks to strategies outlined including Private Labels and sustainable offerings.

StoreBrands highlighted IADS' report on the adapting Home & Decor sector in retail

"There is no place like home," and customers are well aware of this. Despite challenging inflation levels and the difficulty of growing the share of sustainable products, the Home & Decor category proves remarkably resilient and successful for department stores.

In a difficult inflationary worldwide context, the Home and Decor business has deftly navigated a shift in consumer focus after three years of post-COVID enthusiasm for design and furniture in department stores. The astute introduction of new segments, such as kitchen appliances and tableware, and the perseverance on popular ones like home scents and private labels, have allowed department stores to adapt, instilling confidence in their strategic agility.

On average, the Home & Decor category's relative share of total turnover for IADS members decreased from 16% in 2022 to 14% in 2023. This correction comes after three years of growth as customers sought to equip their homes in difficult times of remote work and difficulty going outside. However, this trajectory is healthy as, while the numbers show the impact of inflation in many markets, they do not reflect the change in the nature of what is being sold: fewer expensive, bulky items, and many more affordable, smaller ones. In times when logistic costs are increasing, the positive impact on the overall company's margin is clear.

Home Accessories are, on average, the strongest segment with 48% of the category business, followed by Household Appliances at 22%, Electronics at 15%, Furniture at 10% and other products (gifting, art, stationery, and pet-related products) at 4%. E-commerce represents 27% of the total category business, a stable number that does not show the significant market shifts at work: while online has remained stable or decreased in Europe, it has significantly increased in other regions (Middle East, Asia, South America).

The 2023 winning combo: home scents, kitchen appliances, tableware and private labels

In terms of sales dynamics, three trends stood out last year.

Most IADS members achieved remarkable success with home scents. Aromatherapy, scented candles, and all forms of home scents have been remarkably growing at El Palacio de Hierro, Tanagra (from Chalhoub Group) and Breuninger. For many department stores, the scented candle business was driven by well-established and recognized best-selling brands, such as Baobab, a great performer in every market considered.

The second trend noted was the success of home appliances. That category ranges from coffee machines, a very successful category at Boyner and Magasin du Nord, to personal care appliances that performed extremely well at Sogo thanks to Chinese customers returning to Hong Kong, or water purifiers and carbonators (with Aarke standing out as a noteworthy brand in many northern European markets). In France, Galeries Lafayette saw great results with affordable tableware brands such as Tokyo Design Studio, Popolo and Serax: their constantly updated offer allows the display of new products to customers on a very regular basis. Tanagra and Sogo saw a great increase in high-end tableware.

The third trend noted was the renewed focus on private labels. In most IADS members' brand ranking, private labels score high. New products, new categories and even new brands were developed, and marketing investments were made to match the brands' positioning and quality with their perception by customers. Much is at stake: the private label business can represent up to 35% of the total sales in the category, and the few IADS members not already operating such private labels are planning to do so in the next 3 years.

What's cooking for 2024: new product categories and brands to watch

Through its many events ranging from mid-segment to luxury brands, the Milan Design Week showed that interesting developments are in the pipeline to grow the Home & Decor business. Tanagra continues developing fashion brand home collections such as Dolce & Gabbana, Versace and Missoni and works with Assouline to push coffee table books.

In Europe, the focus is on kitchen appliances and tableware, with brands such as Graef, a German high-end coffee grinder label, and the Portuguese ceramics Bordallo Pinheiro. In the rest of the world, Boyner plans on opening tech and electronics areas in each of their stores, which are all being currently upgraded as per the retailer's new concept. On its side, Sogo will develop bonsai trees, a category appealing to middle-aged customers.

To support IADS members in their brand scouting, NellyRodi, a partner of the IADS, presented its exclusive selection of up-and-coming brands made specifically for the Association's members:

• Furniture: Frama, Ruda Studio, Dooq, Situer Milano, Potiron.
• Tableware: R+D.Lab, Amabro, Pinoli, Kinindustrie, Aya & Ida.
• Decoration: Maison Deux, WL Ceramics, Schneid Studio, Warren & Laetitia, Design By Us, Oblure, Deya, Henry Dean, Y.S.M. Products, Courant Sauvage, Taith.

• Household appliances: Create, Aarke, Beautiful.
• Tech: Gingko.

Department stores adapt to inflation, one of the many obstacles to growing sustainable products

Consumers spent a lot on their homes during COVID-19. With so much time spent at home, they indulged and renewed high-price products such as furniture, sofas and bedding, categories that are currently struggling overall. Then, due to inflation, consumers experienced a strong purchasing power decrease and reduced discretionary spending. To date, they remain more cautious and have cut back on impulse buying. This is why some IADS members have developed more entry-level products while also ensuring not to list high-price items that would only sell with a discount. What makes things difficult is that when consumers consider it a long-term investment, they continue buying expensive products such as coffee machines.

For that reason, while there is no universal recipe for maintaining full-price sales as the Home & Decor category's nature is diverse for every member, to focus on full-price sales, IADS members balance their offer construction between uplifts from promotion-driven products and categories or brands which are never discounted.

When it comes to sustainability, even though customers are becoming more accustomed to the topic, acceptance grows slowly as they are not ready to pay the real price of responsible products. As such, retailers find a compromise by reducing margins on sustainable products to maintain acceptable prices and having higher margins on other products. On the other hand, retailers face issues when it comes to increasing the share of responsible products. Some categories are more advanced than others: thanks to multiple labels and certifications, sustainable home textiles could soon reach 80% to 90% of the product offer. On the contrary, other categories have issues with offering more than 10% of sustainable products: lighting is a difficult category as there is no certificate for recycled metal. The situation is the same with wooden items: the only label, the FSC, is not considered relevant anymore. As a result, it's difficult to convey a unified message about sustainability to customers.

The past year has presented both challenges and opportunities for the Home & Decor categories, reflecting broader economic trends and shifting consumer behaviours. Despite a slight decrease in turnover share, department stores have demonstrated resilience in the face of inflationary pressures. Successful strategies have centred around private labels, specific product categories and onboarding new brands to meet evolving consumer preferences and drive growth. Challenges persist, particularly in navigating inflationary pressures and increasing the share of sustainable products.

Read the full press release below:

IADS PRESS RELEASE: Home & Decor

Beaux Arts has written an article on how department stores have transformed society, citing quotes from Selvane Mohandas du ménil, GM of IADS. The article article discusses the invention of the department store in Paris, France amid Baron Haussmann's architectual revamp of the city in the mid-19th century. The article quotes the IADS' take on the department store approach and the importnce of their role in the monumental architecture, theatrical decor, and the experience of Paris.

Beaux Arts echoed IADS' take on how Department Stores transformed society

Fashion United has written an article based on a talk hosted by IADS' General Director, Selvane Mohandas du Ménil, with Michael Ward, managing director of Harrods (London), and Nicolas Houzé, CEO of Galeries Lafayette (Paris) at this year's World Retail Congress. The article reports on subjects and points raised at the convention by IADS during the conference on challenges that they are facing in the current retail landscape and the inportance of adaptability and prioritizing the right consumers.

Fashion United article 

Fashion United has written an article based on IADS' insights on department store success shared at this years World Retail Congress. The article reports on subjects and points raised at the convention by IADS' General Director, Selvane Mohandas du Ménil, during a conference with two major players in department store distribution, Michael Ward, general director of Harrods (London), and Nicolas Houzé, CEO of Galeries Lafayette (Paris), where they shared their respective experiences and valuable insights.

Fashion United article 

The Fashion Network has written an article based on IADS insights on department store loyalty programmes. The article reports IADS' findings that department stores are now moving towards less financially tangible rewards due to the complicated nature of loyalty programmes and  difficulty of finding a sufficiently attractive discount level.

Fashion Network article 

IADS press release - Loyalty Programmes

The importance of being earnest: customers expect more than points for their loyalty. This is why Department Stores are revamping their loyalty programmes to bring clients the ultra-personalized connection they crave, by evolving their corporate culture and organisation to become even more customer-centric.

Technology evolution and recent changes in customer behaviour have encouraged the growth of large-scale loyalty programmes, allowing department stores to foster increasingly large communities of customers accustomed to point-based and tier-based systems. Going beyond this approach, many retailers now consider persona-based programmes as they recognise the diversity in needs and behaviours across customer segments. More than points, non-tangible perks, such as exclusive access and personalised experiences, create emotional bonds that drive deeper customer engagement. This evolution comes with a significant challenge: the needed changes in internal stakeholders' mindset to infuse customer-centricity and develop customer data usage across the entire company.

Many retailers, including IADS members, have point-based programmes that often include loyalty-based discount systems: the more loyal customers are, the better deals they will have in the future. Striking the right balance between customer expectations and brand integrity is crucial. It is key to make these "earn points and burn them" programmes as appealing and engaging as possible while also considering customers' natural expectations to enjoy discounts when becoming members without compromising the retailer's brand name.

This type of point programme can frustrate clients as it can sometimes be difficult to understand, leading customers to feel they are not making the most of it. This issue is particularly pronounced in non-food retail, which, by definition, takes place less often than grocery shopping. The value of points can be hard to see when there is a significant delay between collecting points and using them. Also, there is no real consensus on the best way to grant points: encourage customers to buy more, or to come more often?

A solution to overcome this issue could be to offer straightforward discounts. Department stores are understandably reluctant to take this extremely costly course. It could initiate a very painful race to the bottom: finding the right and appealing enough discount level is difficult. Consequently, while generalised and widely adopted by customers, point-based programmes create friction, as retailers are justifiably wary about their margin level and brand image.

Loyalty with a vengeance: from points and tiers to AI-powered personas

Drawing the conclusions of such a situation, and to be in tune with their customers' expectations, the Manor loyalty programme, myManor, is based on personas, with customer communications which are tailor-made thanks to advanced data analysis tools (specific demographics, affinities, algorithms, regional clustering…). While El Corte Inglés does not have a branded loyalty programme for now, the retailer can refine its relationship with its customers thanks to a detailed understanding of their affinities, allowing it to define analytical drivers powering a value-based strategic segmentation.

However, with such an approach, complexity can be around the corner. As pointed out by Boyner with their Hopi payment app (acting as a loyalty programme), which is particularly advanced in that field, data is critical to identify customers, learn about their preferences, achieve customer engagement, and personalise the relationship to create greater value. Since they have access to more data, retailers must make choices and decide which one they really need to engage and retain customers efficiently. The available data gives access to an ocean of possible customer segmentations, all made according to an infinity of seemingly relevant criteria, and clear choices need to be made to make sure this does not increase organisational complexity at the expense of efficiency and, most importantly, profits.

This is why IADS members expect Artificial Intelligence (AI) to offer soon new and simple solutions to send hyper-personalised messages to each customer entering their store or accessing their website, once there is an alignment on available technology, regulation clarity, and the ability to establish safeguarding procedures: Air Canada's recent misfortune with a chatbot giving bad advice to travellers has been seen as a warning by all retailers in the world.

The rise of non-tangible benefits: a must-have to create an emotional bond with customers.

Department stores agree that customers highly appreciate non-tangible benefits and that they should develop further in the future. This does not systematically include out-of-this-world perks, as clients value anything that eases their lives. For instance, all benefits related to status (lounge access, pre-sales, special seats) are increasingly important for The Mall Group's M Card holders. Also, in Mexico, free parking and the distance to the store depend on the customer's tier at El Palacio de Hierro.

At the same time, department stores are exploring more personalised benefits. For instance, El Palacio de Hierro "Palacio" payment cardholders are treated to a bottle of wine, a meal at one of the retailer's restaurants, or a birthday gift, all of which create an emotional bond. The most difficult is to find the right way to communicate such perks, as it takes effort and resources to convey them: most customers remain paradoxically unaware of these benefits.

Others go beyond practices often found in retail by seeking inspiration from other industries, such as banking or air travel. While it is now common practice to have priority checkout according to the status, some IADS members are now considering offering top-tier customers airport fast-track access. Others are considering free digital subscriptions to third-party services, such as Spotify, as an interesting perk: marginal cost is low, and customer appreciation is high.

Finally, gamification is also a way to create a connection: the Mall Group offers Augmented Reality (AR) in-door navigation features in its customer app. Customers can play games or click on objects to access special deals or product offers and win discount coupons.

From product-centricity to customer-centricity: the necessary company culture shift

Department stores have always been product-centric businesses. Now that they must become customer-centric, they are going through a complete and complicated change of mindset and culture, which must come from the top of the organisation (CEOs are often involved in these moves). To encourage the change, some IADS members now generalise the Net Promoter Score (NPS) into everyone's bonus scheme: the KPI becomes a topic of discussion as it directly impacts compensation. Some go even further and consider linking compensation to indicators such as the Customer Lifetime Value (CLV) or retention rate, on top of the usual revenue and profitability KPIs.

To gain internal traction and support, all stakeholders (managers, teams…) must clearly see the benefits of the loyalty programmes. The Mall Group communicates on the incremental revenue generated through the M Card. Also, since their compensation depends on it, accessing the loyalty data easily and simply is crucial: El Palacio de Hierro's HR team is involved in sharing data and helping staff interact more efficiently with customers. Manor has regular in-store trainings on the programme benefits, as involving the staff and making sure they understand how the programme works is a game-changer.

Department store loyalty programmes are bound to evolve as a differentiator from competition and a magnet for loyalty. If rewards are not attractive enough, customers may lose interest, especially if the relationship with the retailer is only transaction-based. This is why customer-centricity is key, which involves deep changes in company cultures. This also implies focusing on leveraging customer data more effectively, ensuring that insights inform decisions across the entire organization. It comes at a cost in terms of investments for market research, customer data analysis, and adaptation to customer needs and feedback.

Read the full press release below:

IADS PRESS RELEASE: Loyalty Programmes

Read the full press release, in French, below:

IADS Communiqué de press: Programmes de fidélité

The International Association of Department Stores (IADS) has chosen Elisabetta Falco Beccalli to lead its Innovation and Communications efforts, succeeding Mary Jane Shea who is leaving the organization for personal reasons at the end of the month. Ms. Falco Beccalli brings over 15 years of international fashion business development experience to the role.

"We would like to thank Mary Jane for her dedicated and energetic contributions. We extend our heartfelt wishes for her success and fulfilment in her new endeavours," stated IADS President Kamshim Lau. "As Mary Jane departs, we are delighted to welcome Elisabetta, who will continue to build upon Mary Jane's many achievements. With her deep expertise in the fashion industry and international background, Elisabetta is ideally positioned to spearhead our innovation and communication initiatives going forward."

Ms. Falco Beccalli, 43, held senior sales positions with premier fashion houses including Yves Saint Laurent, Theyskens' Theory, Theory and Helmut Lang. She was instrumental in launching Theory in Southern Europe, running its inaugural showroom during the brand's rapid growth years.

Hailing originally from Italy, Ms. Falco Beccalli earned a bachelor's degree in communications from Villanova University in the United States. She has lived abroad extensively including in Europe, Asia and the USA. In charge of Innovation and Communications, Ms. Falco Beccalli will be responsible for identifying new technologies to help the IADS' member department stores address pressing industry challenges. This will include spearheading research initiatives, like the Association's annual White Paper, – with the latest edition about Retail Media released earlier in January-, the Global Department Store Monitor, - with the latest edition released earlier in February-, and creating new partnerships with relevant companies, coming on top of the existing cooperation with NellyRodi in trends identification, The Style Pulse in scouting new brands, Retail Hub in tech sourcing and RH-ISAC in cyber defence.

Following the 2020 pandemic episode, the IADS has gone through a significant reinvention in terms of responsibilities and services brought to its department store members. This transformation has been made possible thanks to the involvement of a new, younger team, with the average age of the team members decreasing by 13 years. This transformation was made visible to the world last December when Ms Kamshim Lau, 36, was elected the first female president in 96 years of IADS' existence. Such an appointment was a testament to the IADS members' agility and commitment to addressing the most pressing challenges in retail by collaborating and relying on the best talents available.

"I am thrilled to be taking on this dynamic new role with IADS," said Ms. Falco Beccalli. "I look forward to helping such an expert global organization drive innovation in the retail space during this time of immense change and possibility."

Read the full press release below:

IADS PRESS RELEASE: Italian Fashion Executive Appointed to Lead Innovation for the IADS

Read the full press release, in French, below:

IADS Communiqué de press: L'IADS nomme la tête de son département Innovation

The Financial Times has published an article written by Christopher Knee, an Honorary Advisor at the International Association of Department Stores (IADS). This letter discusses the challenges faced by department stores, particularly in the context of real estate ownership and investor strategies and suggests that many department store closures and difficulties stem from real estate owners leveraging their properties for profit rather than from inherent issues with the department store model.

Financial Times article 

The Financial Times has written an article quoting the IADS on expectations of Chinese spending oversees. The article reports the IADS' expectations for a strong return of overseas Chinese spending are still muted across many markets.

Business of Fashion article 

Making sense of numbers, away from the noise: 2022 department store performances reveal stark regional contrasts. While Europe experienced significant recovery (+7% from 2021 to 2022), the Americas and Asia presented a more diverse picture resulting in flat results collectively due to varied market responses (with the Americas at +1% and Asia at 0%).

The IADS Global Department Store Monitor was launched as the "IADS 100" in 2021 to make sense of quarterly reports and various fiscal exercise closure dates across the globe, and to provide a comprehensive benchmark for the department store industry, starting with 2019 numbers as a point of reference. This observatory analyses department stores' financial data year-over-year to gauge the state of the industry's recovery post-Covid.

During the tumultuous period from 2019 to 2022, department stores had to redefine their benchmarks for success. The past years, marked by unprecedented events such as the global pandemic and significant geopolitical upheavals, reshaped the retail environment. Traditional metrics of comparison with pre-2019 figures became obsolete as many new challenges created an unprecedented operating field for department store players: how can results be compared in a situation that has not existed before? Department stores indeed embraced a new paradigm, focusing on innovation and adaptability in response to these dynamic challenges, setting new standards for measuring progress and success.

The 2022 fiscal year exercise for department stores around the world was all about learning how to weather new storms while dealing with the impacts of the past 4 years of disruption. The IADS Global Department Store Monitor looks into how retailers across Asia, Europe, and the Americas faired and just how sound their recovery plan has been in a new age of volatility.

2022 was all about navigating turbulence on the road to recovery

The 2022 fiscal exercise proved difficult for retailers as they faced ripple effects from the COVID-19 pandemic as well as several new challenges such as social and political unrest, supply chain disruptions, geopolitical and energy crises, as well as inflation. Here is how main global markets fared in 2022:

• Asia: (2022 panel average: turnover remained flat at +0% vs 2021): Chinese department stores generally saw declines in sales, influenced by long-term COVID-19 restrictions, which resulted in their turnover falling below 2021 levels. In contrast, Indian retailers like Lifestyle (Landmark Group) and Shopper's Stop showed significant and steady growth in 2022 versus 2021. Japanese stores reported mixed results, with some showing slight improvements while others continued to struggle. Korean (Hyundai at +40% and Lotte at +12%), Filipino (SM at +25% and Robinson's Retail at +61%), Sri Lankan (Odel at +12%) and Thai (Central Retail Corp at +21%) department stores also exceeded 2021 results. These trends highlight the diverse impacts of the pandemic and the emergence of new regional market dynamics on the department store sector in Asia.
• Europe: (2022 panel average: turnover increase of +7% vs 2021): Europe illustrates a pattern of gradual recovery in 2022 following the significant downturns of 2020 due to the COVID-19 pandemic. This recovery, however, is not uniform across the region, with stores like Harrods in the UK showing extreme year-over-year growth (+192%), while others like John Lewis faced more flat results (+0.3%). Overall, sales results in Europe were positive between 2021 and 2022 for the department stores monitored in the UK, Switzerland, Sweden, Spain, Italy, Finland, and Estonia, even if only slightly for some. European stores have demonstrated resilience and adaptability, implementing strategies like enhancing digital presence and diversifying product offerings to navigate the evolving retail landscape and meet changing consumer demands.
• Americas: (2022 panel average: turnover increase of +1% vs 2021): In the Americas, the situation varied. American department store market experienced a complex recovery trajectory through 2022. Key points include the mixed performance of U.S. retailers, where some stores, like Dillard's and Nordstrom, managed to grow in 2022 compared to 2021, while others struggled (Macy's, Kohl's). Latin American retailers saw varying results with Chilean retailers Falabella, Ripley, and Cencosud Paris unable to see growth in 2022 against 2021, while Mexican retailer El Palacio de Hierro and Ecuadorian retailer De Prati saw strong growth in 2022 compared to 2021. This indicates a regional disparity in recovery, influenced by factors such as political shifts, inflationary pressures, and consumer spending trends.

Looking ahead: what can be expected for 2023

The global retail landscape is undergoing a seismic transformation, marked by a surge in department stores changing ownership, going private, or engaging in discussions about such transitions since fiscal year 2022 and continuing into 2023. Notable instances include Japan's Seven & I Holdings selling Sogo & Seibu to Fortress Investment Group, Hong Kong's Sogo (Lifestyle) opting for privatization, and France's Galeries Lafayette Group divesting BHV Marais. These shifts, also exemplified by the sale of Sweden's Ahlens, or South Africa's Woolworths divesting Australia's David Jones unit, underline a strategic response to the challenges of operating in public markets during tumultuous times. The trend towards privatization offers companies the flexibility and agility to swiftly implement changes and adapt to volatile market conditions.

Globally, complex geopolitical and economic factors are also at play. Ongoing conflicts, such as those involving Israel and Ukraine, are impacting supply chains and driving inflation. Consumers are cautious about non-essential spending, potentially affecting future performance. Consumer preferences are evolving towards in-store experiences and smaller store formats, while retailers are trying to find the right balance between online and physical sales to optimize profitability. In fact, efficiency and profitability are top priorities for the future of retail, driving players to explore AI technology integration which will help the business adapt quickly to changing consumer behaviours. Being dynamic is important for retailers to remain competitive and relevant in the current dynamic environment.

The IADS Global Department Store Monitor, while being a subjective selection of department store companies which fiscal year results can be compared year over year, serves as a tool for retailers and department store players to better understand how their performance compares across the global landscape in more turbulent times. Such results have become a key indicator of retail performance as external forces, which used to not be considered to impact fiscal results, have multiplied and become part of the conversation. The IADS Global Department Store Monitor is the only report that has been keeping track of such a selection of global department store retailers since 2019, providing a deeper and more accurate conclusion about the retail landscape.

List of companies updated in the IADS Global Department Store Monitor:

Cencosud Paris, Central Retail Corp, Coin, Coop group, De Prati, Dillard's, El Corte Ingles, El Palacio de Hierro, Falabella, Fenwick, Golden Eagle, H2O (Hankyu Hanshin), Hanwha Galleria (Hanwha Group), Harrods, Hyundai, Isetan Mitsukoshi, J Front (Daimaru Matsuzakaya), Jelmoli (Swiss Prime Site), John Lewis, Kaubamaja, Kohl's, Liberty, Lifestyle (Landmark Group), Liverpool, Lotte, Macy's, Maoye, Marks & Spencer, Marui (0101), Matahari, Myer, New World, NK, Nordstrom, Odel (Softlogic Group), Parkson Retail Group Ltd, Rainbow, Ripley, Rustan's (Robinsons Retail), Selfridges Group, Shopper's Stop, SM, Sogo Seibu(Seven & I Holdings), Stockmann, Takashimaya, Tobu, Tokyu, Wangfujing, Wing On, and Wushang (former Wuhan).

Read the full press release below:

IADS PRESS RELEASE: IADS Global Department Store Monitor

Read the full press release, in French, below:

IADS Communiqué de press: IADS Global Department Store Monitor

Access the IADS Global Department Store Monitor datasheet here:

IADS Global Department Store Monitor

More than just an opportunity, retail media could become a driving force for department stores' physical flagships and their perenniality.

The surge in interest in retail media, highlighted by extensive media coverage over the past three years and concrete results in companies such as Amazon or Walmart, indicates its growing significance in the retail sector. Many see the $100bn worldwide retail media market as a lifebuoy for an industry where margins are tight. Going beyond, retail media could also represent a transformative force for department stores: the convergence of digitalization and advanced in-store technologies can transform them into effective media companies, leveraging customer traffic both online and in flagship stores.

Since its inception in 1928, IADS' purpose has been to coordinate information between department stores worldwide and research their activities to address their many challenges. Every year, the IADS produces a White Paper on a specific topic relevant to the industry. The 2020 edition reviewed how department stores managed the COVID-19 pandemic. In 2021, digital transformation and how it impacts organizations was explored, and in 2022 the focus was centred around CSR and ESG. The latest 2023 edition is dedicated to the hot topic of retail media which evolved significantly between 2022 and 2024.

The 2023 White Paper aims to identify where the retail media market stands, spell out the opportunities (and potential traps) for department stores, as well as suggest a few routes of reflection for their CEOs to prepare their organizations

for such a shift. Finally, since retail media is seen as a way to generate incremental, high-margin revenue, the White Paper helps to understand the cost of such new revenue, not only in financial terms but also in terms of people, organizations and needed adaptations.

Retail media is less of a revolution than a reinvention

Retail has never been a stranger to advertising. It started as early as the 19th century with the likes of Sears, Printemps, Jelmoli and Harrods issuing catalogues encouraging brands to advertise. While this helped sales and contributed to brand recognition, both at the retailer and product level, it also generated a new stream of revenue, coinciding with the development of the modern advertising industry, which evolved from selling ad spaces to offering complete brand solutions. This shift enabled department stores to forge new relationships with brands, selling them opportunities to stand out through trade marketing cooperation (B2B2C). The 21st century simply changed the advertising landscape, from a physical form (newspapers, catalogues, stores) to a numerical one (banners, emails, social media).

However, the eternal challenge in advertising, from the advertiser's point of view (the brand), has always been to make advertising effective, profitable, and measurable. Top-of-the-funnel strategies (national advertising) are difficult to evaluate in terms of ROI, while bottom-of-the-funnel ones (trade marketing) are difficult to scale at a national level. To cope with the lack of visibility of ROI in the upper funnel, brands were sold access to readers or watchers profiled according to an ideal target, a profiling made possible thanks to the navigation history knowledge acquired via tracking (cookies). However, the market is now much harder to navigate, as costs of advertising online have been on the rise for the past few years, and third-party cookies are disappearing in the wake of a stronger concern about personal data.

This is why retail media networks (RMNs) are a solution rather than a revolution: they are a collection of advertising and promotional tools owned by a retailer, using first-party data to target shoppers and prospects. As such, they offer a significant opportunity for revenue generation without cannibalizing traditional trade marketing activities.

From an opportunity…

While initially FMCG (fast-moving consumer goods) retailers played a central role in the development of RMNs for structural reasons - the leading company being Amazon, where retail media generated a revenue of $31.2bn in 2021 (and should reach $45bn in 2023) -, retail media is no longer exclusive to them. Specialty retailers and other retail verticals are also developing their own RMNs to capture a portion of this appetizing market.

US-based Kroger utilizes its loyalty and POS transaction data to create targeted advertising and measurement tools. This allows for precise campaign planning, personalization, and post-campaign tracking, offering advertisers detailed insights into customer segments and sales uplift. RMNs have shifted the narrative from trade marketing being a "bottom-of-the-funnel" medium to a strategic "top-of-the-funnel" medium, attracting larger marketing budgets and making physical stores valuable again. They provide incremental revenue, which is particularly appealing in the context of shrinking margins in brick-and-mortar and e-commerce channels.

The landscape of RMNs is dynamic and geographically diverse, with a significant number of players in the US and competitive markets like France, where alliances, such as Unlimitail, allow national retailers to pool resources and therefore achieve a mutualized scale effect comparable to what is available in the US.

…to a solution for brick & mortar flagships

The context matters: despite the growth of e-commerce, 85% of retail sales in the U.S. still occur in physical stores. RMNs enable brands to target customers throughout their entire shopping journey, including in-store interactions. This has led to a renewed interest in physical stores as strategic assets for advertising. Retailers are finding innovative ways to incorporate advertising into the in-store experience, such as digital screens and in-store radio stations. These technologies transform stores from mere points of sale to influential advertising platforms.

For that reason, department stores have the potential to offer unique advertising possibilities by leveraging their significant online and offline footfall. The digitization of stores and the capability to sell first-party information allows for innovative onsite media propositions. As such, their flagship stores are therefore seen today as major untapped channels for advertising. They offer detailed geo-localized data that can inform brands about shopper behaviour in specific areas. This granularity of data is key for advertisers to optimize their marketing and product strategies. Retail media networks enable brands to reach customers close to the point of purchase, making physical stores an integral part of advertising strategies. In that perspective, retailers can use foot traffic data to create hyper-local segmentations and improve advertising efficiency in local markets.

But to successfully transition into a new mass media, department stores need to differentiate their RMN products, address organizational challenges, form strategic partnerships, define new standards, and make informed technology choices.

Are we about to see the emergence of new media companies?

RMNs mark a paradigm shift in retail advertising, offering precise, data-driven advertising opportunities both inside and outside retailers' own media channels. With projections indicating that RMNs could become a $100+ billion market by 2028, major retailers across various categories are launching their own networks to tap into the burgeoning demand for targeted and measurable advertising.

For them, RMNs present an opportunity to generate new, high-margin revenue streams that can compete with established advertising channels. The integration of brick-and-mortar stores into omnichannel RMN strategies, utilizing location intelligence and digital targeting, further expands the scope and efficacy of these networks.

Read the full press release below:

IADS PRESS RELEASE: IADS White Paper 2023

Access the White Paper below:

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IADS White Paper - Retail media and department stores: an opportunity, or a lifeline?

The Financial Times has written an article based on IADS findings on private labels. The article reports IADS' findings that the private label business has accounted for 16% of total member turnover of the IADS in 2022, compared to 9% in 2019.

Financial Times article 

IADS press release - Private Labels 

Fashion Network has written an article based on IADS' press release reporting changes seen in men's fashion styles in department stores. The article details key findings, trends and interesting brands in the Menswear fashion category, spotted by IADS partner, NellyRodi.

Fashion network article - english version

fashion network Article - French Version

IADS press release - menswear

Fashion United has written an article referencing IADS' press release reporting the changes of the Menswear category in Department stores. The article details key findings, trends and interesting brands in the menswear category, spotted by IADS partners, The Style Pulse and NellyRodi.

Fashion United Article 

IADS press release - Menswear

TextilWirtschaft highlights IADS' announcement of Seidensticker as a must-have fashion brand in the menswear category. The article details the up-and-coming Menswear brand Seidensticker and its importance in the fashion retail industry, spotted by IADS partner, NellyRodi.

TextilWirtschaft Article

IADS press release - Menswear

Fashion United has written an article based on IADS' press release reporting the results of its Menswear in Department stores meeting. The article details key findings, trends and interesting brands in the menswear category, spotted by IADS partners, The Style Pulse and NellyRodi.

Read the article below:

fashion United Article 

IADS press release - menswear

**Booming and blurry: if menswear remains a steady category, it is adapting to changing customers' tastes and lifestyles, but also to their price concerns.

In a difficult worldwide context, wary male customers have become price-sensitive and spend less. However, their appetite for fashion remains stable and shows a twist from casualwear (the driving force of the business) to semi-formal wear, as many companies ask employees to return to the office. Now that they also come back to stores, department stores' focus is also on generating growth in e-commerce, which in turn raises the question of operational profitability.**

Overall, the men's fashion category turnover share was stable in the past exercise at 16% of the total business on average for IADS members. In terms of price points, year-to-year, while entry-level and luxury sales shares remained stable at respectively 18% and 10% of sales, the premium segment grew at the expense of the high-street category.

Two parallel trends explain this shift:

▪ The return to the office, implying adequate attire, but with a rejuvenated and modernized touch,

▪ The need to spend more as such products are more complex, therefore more expensive, than casualwear, but without entering the luxury territory, due to economic concerns and spending capabilities.

It is interesting to note in this context that department stores remained primarily purveyors of accessible and inspiring fashion: the high street/mid-range price bracket was the most important with 45% of sales, followed by the premium segment, with 25% of sales and growing.

Casualwear meets office wear and elegance: an increasingly fluid category

The Style Pulse, an IADS partner, explained to department stores' buying teams their conclusions based on their digital B2B platform usages, and how menswear categories continue blurring: customers are no longer looking for separate offers in suits, casualwear, and sportswear, but are wearing all three at the same time. Mix this need with the return of office wear and social functions, and the cocktail becomes complex:

▪ Elegance is back, sustained by the "quiet luxury" trend and the appearance of new generation tailoring ideas.

▪ Customers demand relaxed styles that can be worn on every occasion, from the office to evenings out,

▪ Fluidity has really taken ground, with a feminine touch added to utilitarian and technical wardrobes.

Consequently, as men's fashion is no longer a collage of separate and very distinct segments, brands are not categorized and confined to specific stylistic boxes either. The days of "one brand is equal to one style" are gone.

Nevertheless, casualwear is still the force driving the business with a 56% share on average, followed by office wear (24%), showing people are increasingly back to the office. After significant growth in 2021 due to events resuming after Covid, occasion wear decreased to 5% in 2022. Finally, and this also shows how fluid the category has become, athleisure grew to 15% of the total business, a dynamic segment which would have remained solely classified in sports departments a few years ago.

As fashion authorities, the department stores' top-of-mind priority remains the product and brand mix

Nelly Rodi, a partner of the IADS, presented its exclusive scouting of up-and-coming brands made specifically for the Association's members:

• Must-have brands: Ami, A.P.C., Carhartt WIP, Arte, Nudie Jeans, Les Deux, Isabel Marant, Seidensticker.

• Brands making a comeback: Gant, Fursac, HS05, Lacoste, Aigle.

• Rising brands: ERL, Aries, S.S.Daley, Bode, Eleventy, Revolution, Thisisneverthat, De Bonne Facture, Drôle de Monsieur.

• Hidden gems: Cherry, Ouest Paris, Manastash, Norwegian Rain, Baziszt.

Pop-up stores and capsules remain an extremely powerful way to animate the product and brand offer, as illustrated with the Lacoste x Netflix capsule and Calvin Klein swimwear pop-up at Manor, Disney x Givenchy capsule andMC2 St Barth pop-up at El Corte Inglés, Jacquemus' store takeover and Café du Cycliste pop-up at Galeries Lafayette, Boss x Looney Tunes and Agnès b x New Era collaborations at Sogo or Les Deux pop-up at Magasin du Nord, to name a few.

Going beyond the retail floor animations, department stores also adopt tailor-made strategies to lure in specific customers according to their local trends: for instance, while Boyner is focusing on including more sustainable and

eco-friendly products, El Palacio de Hierro is simultaneously working on the development of streetwear, the repositioning of formalwear and the relaunch of its made-to-measure program, and The Mall Group mixes local brands and Instagram labels.

Challenges ahead: e-commerce, inflation and inventory hurdles

With life fully back to normal, customers are back in stores and the share of e-commerce in the category is no longer increasing, remaining stable at 17%. To keep this business dynamic, department stores launched new services such as Boyner with Boyner Now, a 90-minute delivery service which allows customers to order alternative sizes and try the items while the delivery person waits at the door for their decision. Thanks to a new distribution centre, Magasin du Nord offers faster deliveries and more BOPIS services. On their side, El Palacio de Hierro and El Corte Inglés significantly grow their online product offer.

All these initiatives raise the question of making such operations profitable in the current cost context: inflation is a reality for all. In all markets, customers are looking for bargains and cheaper alternatives. For some retailers, the purchasing decision is getting more complex, with fewer units per transaction (UPT) and a smaller average basket. As a consequence of inflation and slower sales in some cases, department stores are facing issues when it comes to the level of inventory and end-of-season stocks.

While casualwear remains the driving force of the category, workwear is making a comeback with people returning to work. Overall, Men's Fashion contours are less precise with casualwear and sportswear mixed with more formal attire. Going beyond products and despite having different projects, e-commerce is a priority for all. Also, department stores are facing a challenge relating to the consequences of inflation which are affecting consumers' shopping purchasing power and habits as well as causing inventory issues.

Read the full press release below:

IADS PRESS RELEASE: Men's Fashion

Read the full press release, in French, below:

IADS - Communiqué de presse - Le prêt-à-porter masculin

Luxus Plus highlights IADS' announcement of Ms Kamshim Lau as the first female President of the Association. in 95 years, during its General Meeting in London, succeeding Holger Blecker. The article details her incredible former contributions to the Association as Vice President and her roles in the Executive Committee of the Hong Kong Retail Management Association (HKRMA) and the Retail and Tourism Committee of the Hong Kong General Chamber of Commerce.

Read the article below:

Luxus Plus Article

IADS press release -New President, Ms Kamshim Lau

Fashion United echoes IADS' announcement of Ms Kamshim Lau as the first female President of the Association. in 95 years, during its General Meeting in London, succeeding Holger Blecker. The article details her expertise and her future role in the Association and it also mentions the addition of two new members, Boyner (Turkey) and the Chalhoub group (United Arab Emirates).

Read the article below:

Fashion United Article 

IADS press release -New President, Ms Kamshim Lau

LSA echoes IADS' announcement of Ms Kamshim Lau as the first female President of the Association. in 95 years, during its General Meeting in London, succeeding Holger Blecker. The article details her expertise and her future role in the Association and it also mentions the addition of two new members, Boyner (Turkey) and the Chalhoub group (United Arab Emirates).

Read the article below:

LSA Article 

IADS press release -New President, Ms Kamshim Lau

The IADS contributed to the WRC Annual Report 2023 with an article about the significance of store windows in the digital age, along with a special report on Christmas windows in department stores.

Read the article below:

IADS contributes to WRC Annual Report 2023

Fashion Network echoes IADS' announcement of Ms Kamshim Lau as the first female President of the Association. in 95 years, during its General Meeting in London, succeeding Holger Blecker. The article details her expertise and her future role in the Association and it also mentions the addition of two new members, Boyner (Turkey) and the Chalhoub group (United Arab Emirates).

Read the article below:

fashion network Article - French Version

IADS press release -New President, Ms Kamshim Lau