Italian media outlet, Distribuzione Moderna has written an article based on IADS findings on private labels, reporting that the market shares of private labels are growing, even in the most sought after department stores.

Read the article below.

Distribuzione Moderna article

Comparing department stores' 2021 financial results to 2019 numbers show stark differences according to the region:  -20% in Asia, -8% in Europe… and +10% in the Americas.

The IADS 100 monitor, launched in May 2021, observes and tracks changes in the department store retail format and how players in various markets adapt to challenges and change. Based on data and results captured from a selection of global department store companies (out of the 211 companies still operating in 2023), the IADS 100 aims to step away from the immediate and constant stream of news to analyse the situation based on actual and reliable numbers.

Department stores can no longer compare their recent businesses to 'normal times' as they hoped to with 2019 figures as they are operating in a new era of radical changes. Between 2019 and now, the amount of ground-breaking and disruptive global events has multiplied, thus impacting the business operations of retailers around the world. From a global pandemic, a war in Europe, supply chain blockages, to sustainability regulations and revolutions in tech leading to the emergence of new business models, department stores can no longer refer to their baseline figures when comparing annual results to 'business as usual' times. Therefore, decision-makers in the space are having to learn how to operate in such dynamic times in order to get ahead of the next block in the road.

2021: still considered a recovery year

While the impact of the global Covid pandemic seem to be in the rear-view mirror, other economic events have not paved an easy road ahead for department stores. Based on their fiscal results, here are how parts of the world fared by the end of 2021 results:

Asia (2021 panel average: turnover decrease of -20% vs. 2019): Many companies in the region struggled to get their feet on the ground due to repeated waves of Covid lockdowns and strict travel bans, particularly in Japan and Korea, with a -32% decrease of the business on average on the panel for those countries. It is worth remembering that in 2021, China was less prone to massive lockdowns throughout the year compared to 2020 and other countries in the area, even though Shijiazhuang (11m people) was closed in January and X'ian (8.5m people) in December. For that reason, and also thanks to local demand, high disposable income and the nature of the market (social commerce as a habit, high rates of smartphones among the population and logistical infrastructure), a number of Chinese department stores (BHG, Wushang Group, and Golden Eagle) were able to go against the tide and outperform 2019 numbers, IADS member BHG (owner of SKP in Beijing, X'ian and Chengdu) growing +62% vs 2019, and Wushang Group (formerly known as Wuhan) at +42% vs 2019.

Europe (2021 panel average: turnover decrease of -8% vs 2019): In 2021, department stores started to bounce back from 2020 results, but were still feeling the effect of recurring lockdowns, decreasing local customer morale and the lack of tourists due to closed borders, preventing them from reaching 2019 levels (not to mention that the products sold during the lockdowns, such as food, home equipment or tech, provided lower margin levels than personal equipment products and fashion). Only Marks & Spencer, Coop Group, John Lewis, and NK outperformed 2019 results in 2021, suggesting that department stores with a grocery arm tended to perform stronger, while those that rely on tourism continued to suffer (NK being an exception due to the acquisition of a new business in 2021).

Americas (2021 panel average: turnover increase by +10% vs. 2019): The sampling of department stores from the US, Mexico, and Chile all reported positive sales trends between 2020 and 2021. However, the situation was more contrasted in the US when it came to recovering back to 2019 levels, as only Dillard's and Neiman Marcus managed to reach the target. In Central and South America, the situation was different: in Mexico (IADS member El Palacio de Hierro, and Liverpool) performances surpassed the 2019 reference, and in Chile (IADS member Falabella, and Ripley, Cencosud, owner of the Paris department stores) the target was significantly surpassed. While the pandemic did not hit this region as hard as it hit other parts of the world, the next string of challenges might be the tipping point for these retail players.

While department store leaders around the world have learned to pivot their businesses to remain relevant in volatile times, they need to remember the lessons learned during the recent challenging times (i.e., pandemic, war) and be ready for the next wave that might question their business model (i.e., regulation, recession, AI).

2022 and beyond

Currently, retailers are gathering and reporting 2022 fiscal results, but there were clear obstacles that presented themselves over the 2022 fiscal exercise that will be sure to impact retailers. In Asia, tourism was hurt due to extended border lockdowns and the ban of outside spectators at the 2022 Winter Olympics. With consumers stuck in China, European department stores that cater to Asian tourists also needed to rethink their strategy and target customers. Europe was also heavily impacted by the crossfire of the war between Ukraine and Russia as this impacted store operations, supply chains, and contributed to an energy crisis. Nearing the end of 2022, the world was looking at inflation with consumers keeping their spending money in their pockets with fear of a recession in 2023, thus resulting in questions about the 2022 holiday sales season. Finally, sustainability is becoming a more concrete topic as regulators impose new laws for businesses of all shapes and sizes to comply.

While these obstacles may seem daunting, difficult times can be eased for retail leaders by understanding how similar business cases have been dealt with by department store partners around the world. Expert bodies such as the IADS give global retail leaders an opportunity to ask hard questions when facing difficulty and share the lessons of their triumphs.

List of companies updated in the IADS 100 list:

|  |  |  |  |  |

| --- | --- | --- | --- | --- |

| Region | Country | Company | | |

| Americas | Chile | Falabella | | |

| Americas | Chile | Ripley | | |

| Americas | Chile | Cencosud Paris | | |

| Americas | Mexico | Liverpool | | |

| Americas | Mexico | El Palacio de Hierro | | |

| Americas | USA | Macy's |

| Americas | USA | Kohl's |

| Americas | USA | Nordstrom |

| Americas | USA | Dillard's |

| Americas | USA | Neiman Marcus |

| Asia | China | BHG |

| Asia | China | Wangfujing |

| Asia | China | Rainbow |

| Asia | China | Maoye |

| Asia | China | Parkson Retail Group Ltd |

| Asia | China | Wuhan |

| Asia | China | Golden Eagle |

| Asia | China | New World |

| Asia | Hong Kong | Sogo (Lifestyle) |

| Asia | Hong Kong | Wing On |

| Asia | India | Lifestyle (Landmark group) |

| Asia | India | Shopper's Stop |

| Asia | Indonesia | Matahari |

| Asia | Japan | Takashimaya |

| Asia | Japan | J Front (Daimaru Matsuzakaya) |

| Asia | Japan | H2O (Hankyu Hanshin) |

| Asia | Japan | Isetan Mitsukoshi |

| Asia | Japan | Tokyu |

| Asia | Japan | Marui (0101) |

| Asia | Japan | Tobu |

| Asia | Korea | Hanwha Galleria (Hanwha group) |

| Asia | Philippines | SM | |

| Asia | Sri Lanka | Odel (Softlogic Group) |

| Europe | Estonia | Kaubamaja |

| Europe | Finland | Stockmann |

| Europe | Spain | El Corte Ingles |

| Europe | Sweden | Ahlens (Axel Johnson) |

| Europe | Sweden | NK |

| Europe | Switzerland | Coop group |

| Europe | Switzerland | Jelmoli (Swiss Prime Site) |

| Europe | UK | Marks & Spencer |

| Europe | UK | John Lewis |

| Europe | UK | Selfridges group |

| Europe | UK | Harrods |

| Europe | UK | Fenwick |

| Europe | UK | Fortnum & Mason |

| Europe | UK | Liberty |

| Oceania | Australia | Myer |

| Oceania | Australia | David Jones (Woolworth) |

Download the full IADS 100 data sheet with FY2020 & FY2021 department store figures below:

IADS 100 DATA SHEET

Read the full press release below:

IADS Press Release: IADS 100: Comparing department stores' 2021 financial results to 2019 numbers

Read the full press release, in French, below:

IADS - Communiqué de presse - Moniteur IADS 100

LSA has quoted IADS' General Manager, Selvane Mohandas du Ménil, on the strategy behind Galeries Lafayette's sale of Le BHV Marais to Société des Grands Magasins (SGM), and the potential future for Le BHV Marais.

Read the article below.

LSA quotes IADS about Galeries Lafayette's sale of BHV Marais

LSA 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.

Read the article below:

LSA covers findings from IADS' private label meeting

Fashion Network has written an article based on IADS findings on private labels. Research suggests that private labels are a key competitive advantage for department stores that could prove to be very profitable, provided they receive the right amount of investments and attention.

Read the article below:

Fashion Network Article (French)

FASHION NETWORK ARTICLE (ENGLISH)

FASHION NETWORK ARTICLE (German)

Fashion Network article (Spanish)

Research suggests that moving upmarket their private labels could be a way for department stores to kill two birds with one stone: increase profitability and recognition in the eyes of customers. Thanks to business rationalization and the ability to deal with CSR complexity, tapping into the competitive advantages of private labels could be a strategic move for the department store's business model.

On average, the private label business represented 16% of total IADS members' turnover in 2022, up from 9% in 2019. This increase stems from the pre-pandemic efforts to improve this product category, and the impact of Covid-19, which nudged price-conscious customers to switch from national brands to private labels.

Aware that this part of their business could be improved and can contribute to regaining productivity points, IADS members constantly re-evaluate their private labels: El Corte Inglés reduced the total number of labels with the ambition to transform them into brands (Sfera and UNIT in the young fashion segment are good examples), El Palacio de Hierro launched a 5-year plan combining brand recognition ambitions and new organisation, while Galeries Lafayette and Manor doubled down on targeting specific categories (for instance, the home category, or mono-product segments such as cashmere or men's shirts).

Although there is no one-size-fits-all strategy or internal organisation, all companies pursue the same goals: review their business organisation, move towards more sustainability, revise price points to improve margins, and contribute to the retailer's brand recognition. This is why the IADS dedicated its 2022 Academy research program to this strategic topic, as private labels are key in department stores' economic equation.

Private labels' supply chain objectives: deliver, de-risk, re-deploy… and dilemmas

Last year, the IADS identified the supply chain as the most critical topic for private labels. 2022 brought a number of new uncertainties (war in Ukraine, energy shortage, Covid-19 impact in China…), resulting in a longer production lead time. As a result, late deliveries were an issue for the Spring-Summer season, for instance, some companies only received 70% of their expected stock by March 2022 compared to 90% in 2019. The answers were swift: materials were pre-booked well in advance, production planning started earlier (which saved 2 months on the overall schedule), and reliance on Chinese suppliers was reduced, sometimes by up to 6%, in favour of Southeast Asian countries (+6%) and the Euromed zone (+1.5%).

Interestingly, nearshoring redeployment in the Euromed zone remains shy. Taking into account production and shipping, delays are reduced by up to 8 weeks, which considerably improves operations. However, this comes at a price: production costs can vary by as much as +3% when switching from China to Euromed, while they can decrease by -4 to -8% in other Southeast Asian countries. Given the rise in the cost of materials, additional product costs obviously raise the question of the retail price point and how much customers are ready to pay for these brands.

Sustainability and private labels: the compliance complexity

In Europe, the constant and complex changes in regulation add costly difficulties to the compliance process. As shown in France with the AGEC law (anti-waste and circularity law), enforced since the 1st of January 2023, providing transparency and traceability is really complex, and this affects private labels in the same manner as international brands.

For all members, the goal is to pursue already engaged sustainable efforts and increase the share of sustainable products, knowing that reaching full transparency is the biggest challenge and expectation from customers. The ambition is to reach 100% sustainable collections by 2024 or 2025 (Go for Good already accounts for 68% of Galeries Lafayette's private label products), while also pursuing other structural efforts, such as reducing the amount of packaging used.

When it comes to social compliance, it is all about auditing, de-risking and teaming up: Breuninger helps its suppliers become 'BSCI-compliant' (Business Social Compliance Initiative), while Galeries Lafayette audits its suppliers' production facilities and teams up with third parties such as Emmaüs.

In any case, finding the right way to clearly communicate sustainable and social efforts as well as legal information remains a headache. Initiatives such as QR codes tagged on each product and linking to the website are on the way, however, once again, all these efforts come at a price when it comes to production costs.

Raising the price point: an obligation, or a strategic choice?

In order to maintain viable margins, private labels retail prices increased in line with the general price inflation. However, this opened the debate of going premium to be able to justify a new price point. Across the board, motivation is different: some department stores see it as a way to compete with some international brands, while others are pre-empting the high-quality basics segment. In the US, Target is a good example of this strategy, as the price is no longer the primary factor for customers when buying private labels, but rather quality and value for money. In addition, the IADS Academy's research argues in favour of brand premiumization by showing that high discount rates did not improve sell-through. In other words, price point is not a sales argument for private labels as important as initially believed. As a matter of fact, among the IADS members' private labels roster, it appears that the ones with the highest gross margins have better sell-through rates.

The debate remains open, as many questions around private labels still need to be answered: how can the price limit be gauged? Is premiumization a question of upgrading the brand itself, or targeting a new audience? How can retailers create a strong brand identity that can co-exist with the overall company brand without dedicating too much overhead and resources? Indeed, unlike Marks & Spencer, one of the business cases analysed by the IADS Academy, not all department stores have a namesake private label brand. Also, in the case of Target, promoting awareness of its private labels usually goes hand-in-hand with opening shop-in-shops and conducting advertising campaigns, which can prove to be very costly, and risky.

Conclusion: private labels have everything department stores need to keep going and growing

Since Covid, supply chain disruptions have continuously impacted the private label business. After dealing with the cost increase for raw materials and transportation, most members are now trying to anticipate production lead time and favour near-importing to reduce their dependence on Chinese suppliers. Such a major shift implied increased costs, and by extension, increased retail prices.

While the efforts in CSR are continuing, they create an additional and major extra value to the private labels supporting brand awareness and attracting customers. Going further, the IADS Academy's overarching theme centred around the importance of transforming private labels into real, independent brands. Department stores have a reputation and resources, so they benefit from competitive advantages provided they are able to overcome internal price resistance, (based on the traditional belief that private labels are competing on low price points), and, by extension, align priorities, investments and scale across all departments (general management, private label teams, merchandising and marketing departments, stores and space allocation).

Despite the difficulties private labels are facing, they have a generous margin level when compared to other business models that can be found in department stores. For that reason, private labels remain a key competitive advantage that could prove to be very profitable provided they receive the right amount of investments and attention.

IADS Press Release: Private labels: the future of luxury department stores? (English)

IADS - Communiqué de presse - Marques Propres (Français)

Mind Retail has quoted IADS' General Manager, Selvane Mohandas du Ménil, on the strategy behind Galeries Lafayette's sale of Le BHV Marais to Société des Grands Magasins (SGM).

Read the article below.

IADS quoted about Galeries Lafayette's sale of BHV Marais (In french)

No longer a must-have but rather a bare necessity, sustainability is a chance for department stores to reinvent their business model, provided they find profitable ways to overcome the remaining unresolved challenges.

While the sustainability topic is not new in retail, customers have been facing the actual impacts of climate change and are increasingly asking market players to act and adjust, to the point of turning sustainability into a major factor in business decisions and investments. However, to the dismay of retail leaders, sustainability also reveals itself to be Pandora's box, with a seemingly infinite list of complex questions. The difficulty lies in the nature itself of a challenge in perpetual motion, making sustainability "a framework rather than a destination".

Department stores, due to their size which involves dealing with many suppliers, their central position in cities and customers' lives, and their complex business model often including historical practices, are on the frontline of the needed changes. While they have already proven their ability to adapt to business disruption, they now face a much more holistic problem, of either radically reinventing themselves or becoming irrelevant.

In its new White Paper, "Reinventing department stores through sustainability", the IADS extensively reviews the sustainability topic from department stores' point of view, including where they stand, their initiatives and remaining challenges. Hard questions are raised, and potential directions are identified, keeping in mind that while sustainability is not a trend but a true structural change, the solutions built by department stores cannot be cosmetic but need to efficiently and financially address the topic if they want to survive.

The variety of stakeholders complexifies an already fuzzy question: what does sustainability mean in retail?

At first glance, the situation looks overwhelming as even just defining where to start is hard. Retailers started moving by defining a Corporate Social Responsibility (CSR) framework, soon completed by trackable metrics compiled in Environmental, Social and Governance (ESG) reports. However, they quickly realised that properly addressing sustainable issues required more than reports or guides of good conduct. Simply being able to track greenhouse gas emissions requires nothing less than re-engineering the entire supply chain systems. To make things more complicated, retailers also must deal in real-time with many stakeholders with different views:

-    Customers, who require immediate and impactful actions, but do not always align intentions with their purchasing behaviour, especially in an inflationary context (not to mention that the very notion of sustainability has a different interpretation according to the age group or socio-economic cohort),

-    Pressurised governments, accelerating regulatory efforts without global coordination, leading to a variety of constraints that retailers must comply with, sometimes in a record time (the French AGEC law was enforced in 9 months) leading to the multiplication of non-scalable short-term compliance investments,

-    Suppliers, nudged by retailers to heavily invest to make their production output sustainable, in addition to auditing their carbon emissions to help fill in retailers' Scope 3 tracking (a titanic task for department stores working with international brands contracting factories dotted across the planet).

Finally, shareholders and employees are worried that retailers will end up paying for the transformation bill, estimated from €315bn to €615 bn between now and 2030, in a shrinking profitability context (-6.5% in the past 6 years in France).

Travelling a long and winding road: an overview of department stores' initiatives so far

Aware of their social role and seeing a transformative opportunity in this inescapable challenge, department stores have already initiated their journeys towards sustainability, despite not being all at the same stage of progress due to different local geographical and political situations. To document and draw a dynamic picture of these efforts, the IADS used its privileged ties with its members to conduct several studies, the first one just at the beginning of the pandemic, in March 2020, then another one in June 2021, followed by one in 2022.

When it came to defining objectives, retailers answered to mounting legal pressure by teaming up and exchanging ideas and experiences with an unprecedented degree of transparency. This took place through organised bodies, such as the 2030 Breakthrough Initiatives, various retail associations and federations, such as the IADS, helping department stores exchange with strict respect of antitrust guidelines, but also by talking with new third parties (NGOs, trade unions or consumer associations). Such a degree and scale of openness from notoriously secretive department store organisations is new and considered critical in order to help them set goals and update them in real-time.

This cooperation allowed department stores to take control of their Scope 1 and 2 emission rates rapidly, as shown by El Corte Inglés' reduction of its Scope 2 emissions by 78% between 2017 and 2021, Breuninger's offer of CO2-neutral shipping or Galeries Lafayette's entire store electricity consumption being 100% renewable. Dealing with Scope 3 emissions (95% of the total emissions) proved trickier. Collaboration groups and think tanks helped review market initiatives, such as Macy's reducing its use of virgin plastic by 50%, or Selfridges' plan to achieve 45% of its sales through a circular economy by 2030. It is also widely understood that the next area of focus is the supply chain, seen as the second most beneficial area of investment after digitalisation in terms of ROI.

Department stores are also experimenting with their own private labels, which in turn raises the painful question of the lack of a relevant global standard applicable to all brands and marketable in a simple way to customers. For that reason, Green Pea in Italy, "the first 100% sustainable department store in the world", can provide some ideas of what the answers could be. In addition to finding new ways to deal with the environmental impact of their real estate footprint, normally estimated to contribute up to 60% of a retailer's total emissions, Green Pea educates their customers by openly sharing simplified, but brutally honest, information about their own consumption impact.

The head-scratching has just started

The unprecedented collaboration between companies does not overcome the fact that there is not a one-size-fits-all solution for all department stores, as their customers and markets are by nature extremely different. As a consequence, the sustainable journey is a collaborative and solitary trip at the same time. In addition, each department store must figure out how to deal with problems that come on top of environmental issues and that are linked to their own social contexts, such as diversity and inclusion.

This raises questions on what to communicate and how, and above all, on what platform. The comparison of actions in 2020 and 2022 showed that department stores, always attentive not to be accused of greenwashing, also discovered that umbrella concept consistency across channels (stores, e-commerce) and partners (suppliers and brands) was necessary, but also that messages had to be adapted in each case to maximise reach and clarity.

The other question is the nature of the organisations guiding sustainability efforts. There is a wide variety of options, from a Chief Sustainability Officer to a dedicated ESG committee, also including partnerships with third parties or responsibilities dispatched between departments. Whatever the chosen option, leaders will have to be careful not to add an extra layer of complexity to their organisations, as has been the case in department stores in the past.

Finally, the most pressing topic is obviously the business itself and how to make sure that sustainable efforts are not an additional financial weight, but, on the contrary, contribute to new revenue flows thanks to the necessary reinvention of the model. While it is relatively easy for new companies such as Green Pea to propose innovative approaches, the situation is different for heritage companies, as they must be creative to into addressing the future in a sound financial manner.

Don't judge a book by its cover: sustainability is not a constraint, but a chance to be seized fast

Even though addressing sustainability might be painful, costly, and even hazardous, retailers do not have the choice and must follow the trend if they want to survive. Just like for digital transformation, they need to start their journey as soon as possible, as passing time is definitively lost and could rapidly become a competitive disadvantage. In addition, they should not be troubled about not having a perfect plan: the most important thing is to get started, and then the learning process will take place bit by bit in a non-linear progression. We identify two phases in the approach, the short-term one being to fully focus on the sustainable transformation of the supply chain, as the needed technology is already here, and the longer one being to increase collaboration between retailers to accelerate the pace of innovation. This is proof, if needed, of the relevance of collaboration groups and think tanks such as the IADS, which has been actively helping its members since 1928 address the most pressing business issues.

White Paper: Reinventing department stores through sustainability - IADS Press Release (English)

livre blanc: Le developpement durable pour réinventer les grands magasins - IADS Communiqué de Presse (Français)

Buy the white paper (in english) here

Acheter le livre blanc (en francais) ici

To help its members in their digital transformation processes and give them access to the latest technologies, the IADS signs a strategic partnership with The Retail Hub, the only innovation platform dedicated to retail in the world.

Digitalization is reshaping department stores on the front line (smart stores, e-commerce, omnichannel capabilities…) and behind the scenes (supply chain optimization, smart sourcing, advanced demand prediction capabilities…). This often involves a significant tech upgrade of heritage systems. In addition, system evolutions are more often a human question than a tech one. To support department stores in their upskilling processes and provide them support in tech sourcing, a strategic partnership has been concluded with the innovation platform Retail Hub. This synergy will provide IADS members exclusive benefits, in addition to confirming the unique status of the IADS in the world of retail associations.

Initiated in 2020, the transformative upgrade of the IADS is now taking a new dimension with the partnership signed with The Retail Hub, to provide department store members with a competitive advantage in terms of tech identification and sourcing.

According to McKinsey, on more than 100 advanced analytics use cases, 10 (including category management and supply chain management) account for 80% of the potential gains in the value chain. Even though the transformation has begun, it is expected that the pace of changes will accelerate with the maturity of new technologies (automation, advanced analytics, artificial intelligence, among others). Department stores must identify the right suppliers to harness the potential productivity gains such technologies could bring.

To support them, The Retail Hub is the ideal partner for the IADS, as its team of experts continuously source, stress-test and list every innovative company in the retail vertical, covering 26 different sectors, 10 groups of technologies, through more than 2,500 identified start-ups.

In addition to granting access to the Retail Hub's exclusive features, both IADS and The Retail Hub teams will be working together to provide department store members an exclusive made-to-measure support, answering a growing need and helping them to save time. Since November 2020, IADS members can ask operational questions to the Association, as a result, questions related to systems and tech suppliers represented 10% of the IADS activity in 2022, doubling from 5% in 2021.

The Retail Hub partnership comes as the latest element completing a one-of-a-kind palette of services that makes the IADS truly stand apart in the world of global retail associations.

IADS Press Release: IADS' Partnership with The Retail Hub (English)

IADS - Communiqué de presse - Partenariat Retail Hub (Français)

The IADS contributed to this issue with an article on the acceleration and uncertainty in the latest World Retail Congress 2022 end of year issue. The report brings together retail experts from around the world to share trends from 2022  that are continuing in 2023. You will also find beautiful Christmas window displays from IADS members in the issue.

Read the report below.

IADS contributes to WRC's Retail World 2022 issue

To provide its department store members a leading edge in brand discovery and curation, the IADS signs a strategic partnership with The Style Pulse, a B2B platform operated by Lambert+Associates.

The IADS regularly takes stock of retail trends through a series of product category workshops organised with its members' buying teams. To further support department stores in their offer curation, a strategic partnership has been established with The Style Pulse, providing IADS members exclusive access to the best independent labels, and confirming the unique status of the IADS in the world of retail associations.

Initiated in 2020, the transformative upgrade of the IADS is now taking a new dimension through the partnership signed with Lambert+Associates and their digital venture, The Style Pulse, to provide department store members with a competitive advantage in terms of brand sourcing and merchandising insights.

Department stores' ability to identify emerging labels is more crucial now than ever to better serve information-rich customers who are hungry for the latest trends and are able to scout every sales channel. The Style Pulse, with its international reach, expert team, and close relationship with brands, is the perfect hub to provide IADS members with a rich, efficient and time-saving solution to help them focus on curation and uniqueness. The six categories covered by The Style Pulse (Women Fashion, Accessories, Men Fashion, Lifestyle, Beauty and soon Kids) represent the core department store businesses and the information provided will prove invaluable to the category buyers, enabling them to closely follow the trends.

In addition to granting access to the "Style Pulse Pro" exclusive features to IADS members, both IADS and The Style Pulse teams will be working together to provide department store members exclusive made-to-measure support, answering a growing need. Since November 2020, IADS members can ask operational questions to the Association, and as a result brand-related requests represented 25% of the IADS activity in 2022, up from 12% in 2021.

The Style Pulse partnership comes as the latest element completing a one-of-a-kind palette of services that makes the IADS truly stand apart in the world of global retail associations.

IADS Press Release: The IADS teams up with The Style Pulse (Lambert+Associates) (English)

IADS Communiqué de presse: Partenariat Style Pulse (Français)

Mind Retail wrote an article based on Selvane Mohandas du Ménil's findings on how London will be affected by the cancellation of the VAT-free shopping scheme in the UK. Mulberry shared that international customers, who used to represent 45 to 50% of sales in Bond Street, now account for 5%. The brand's sales in the UK fell -10% for the past 6 months, while in locked-down China they are up +6%. At Selfridges, the scene was filled with shopping bags, suggesting tat for department stores, local customers are definitively a must-have.

Read the article in French below:

Mind Retail covers IADS member's findings on the cancellation of VAT free shopping in the UK

Ghalia Boustani invited Christine Montard to reveal details about the universe of department stores and their current status in the retail environment. During the exchange, Christine shared the place of department stores in an omnichannel context, how department stores have adapted during current retail challenges, the opportunities and threats of the store format, and the experience of customers in department stores.

Watch the video below:

Ghalia Boustani interviews IADS member about department stores' current status in the retail environment

Business News has written an article based on IADS findings on the role of technology in retail and the enhancement of online and offline experiences. For example, in Turkey there is a store that can deliver any of its products to any part of the country within 90'.

Read the article below:

Business News Article 

The Power Game has written an article based on IADS' participation in the Prodexpo fair in Athens. They talk about the role of technology in retail and the enhancement of online and offline experiences. Department stores have been in a permanent crisis for the last two years due to the pandemic and have used the new technology to have their sales exceed pre-Covid levels.

Read the article below:

The Power Game Article (Greek)

Fashion Network has written an article based on IADS findings about how the men's fashion offer is undergoing several transformations that department stores must integrate. Casual wear is still on the rise, but we are also seeing the return of a reinvented formal style, and sportswear is making its way into men's fashion spaces more than ever, while non-gendered fashion corners are a new key to attracting Generation Z.

Read the article in French below:

Fashion Network Article (French)

InsideRetail has written an article based on IADS findings about how department stores are refocusing their menswear offer. Department stores are now having to balance meeting consumer demand for the long-lasting casualwear trend with the revival of occasion wear in the post-pandemic market.

Read the article in English below:

InsideRetail Article (English)

Men's Fashion, which successfully recovered from the pandemic, even leading to the reshape of in-store layouts, will need a necessary improvement of the way the category is marketed to its customers, to fuel additional growth.

The IADS and NellyRodi regularly take stock of the retail trends through a series of product category workshops. Their last one was dedicated to Men's Fashion: overall back to pre-pandemic levels, the category is quickly evolving post-Covid leading to many innovations on the point of sale. The potential is high, the category has to find efficient ways to catch over-solicited consumers' attention.

The Covid-19 pandemic and its gradual disappearance has translated into a V-shaped trajectory for the Men's Fashion category in department stores. While sales first decreased in 2020, they picked up back as soon as 2021 to their pre-pandemic levels, reaching on average 14% of the total business. When it comes to online sales, which were favored during the lockdowns, and even though they tend to decrease with life going back to normal, they on average doubled in the pace of two years, from 3% of total sales in 2019 to 6% in 2021.

Department stores are currently adjusting their product offer to both match the long-lasting casualwear trend and the occasion wear revival. In parallel, they are also reinventing their store layout to include the new emerging trends such as genderless fashion. Interestingly, to harness future growth, retailers are aware that the category faces a marketing challenge as they cannot rely on social media to catch male consumers' attention.

Casualwear dominates sales, but occasion and workwear are picking up with life going back to normal

While the price segmentation was relatively stable between 2020 and 2021 - the High Street segment remained the most important with a 44% business share on average, the Premium segment accounted for 28%, luxury represented 13%, and the Entry Level was 15%-, casualwear was still the force driving the category in department stores, representing 59% of the category sales in 2021.

In parallel, with weddings resuming, occasion wear picked up to 9% of the business in 2021, a trend expected to continue at least during the fall-winter 2022-23 season. But this comes with issues as many brands are still facing supply chain issues: as a result, many products are sold out, this translates into missed opportunities to face the strong demand on some markets, especially at Breuninger and Magasin du Nord.

When it comes to workwear, this category accounted for 18% of sales on average in 2021. With people starting to return to the office, products such as jackets are selling very well at El Corte Inglés, and semi-formal styles are increasingly selling, especially at Sogo in Hong Kong.

NellyRodi presented its exclusive selection of up-and-coming brands illustrating the importance of casualwear and the rebirth of more formal options:

• New designers and emerging talents: Botter, Hed Mayner, Henrik Vibskov, Soulland, S.S Daley, Iso Poetism, M Works.

• Casual and streetwear: Frame, Drôle de Monsieur, Holzweiler, Sunflower, Uniforme, Palmes Society, Davi, Ouest Paris, Neighborhood, JJJound, Staple, Richardson, Raeburn, Ranra.

• Formal: Sillage, Berner Kühl, Sapio.

Sportswear, multi-brand sections, genderless fashion, second-hand: Men's Fashion store layout is evolving

Including some sportswear in the Men's Fashion section currently represents a safe bet for department stores. Depending on the market, it can be high performance golf products at Sogo, or outdoor tech products at **Magasin

du Nord**. Overall, such products represented 8% of the Men's Fashion business in 2021. While the lines are blurring between sports and fashion, this also questions the store layout.

And there is more: as for womenswear, multi-brand areas gathering more confidential brands are developing as a way to differentiate from competitors and to give more flare to the product offer. But this comes with a profitability per sqm issue: layout arbitrations are necessary to increase the efficiency of such sections mainly relying on a few fashion-forward customers. Galeries Lafayette answered the question by developing lifestyle multi-brand spaces changing according to seasons (swim, outdoor…), allowing the mix of small and more established brands.

Depending on markets, offering a genderless product offer becomes increasingly important to catch GenZ consumers' attention: finding the most adequate part of the shop floor (men or women?) for such products remains a question mark. Second-hand fashion will soon develop in the menswear department, also requiring layout adjustments.

Men's Fashion has a marketing problem that social media will not solve

Catching male consumers' attention is not easy as they do not spend as much time scrolling as female consumers do. For instance, 80% of Breuninger's Instagram account followers are female. To get around this issue, department stores are creating sport-related in-store events to catch male customers' attention: this also fits post-Covid cravings for live interactions. That is the case with Beco and Magasin du Nord, whether it is a biking or golf collaborations offering matching father and son products.

Surprisingly enough, events relating to the football world championship starting November 2022 will be mostly lowkey in department stores, sometimes only affecting the electronics department. Some retailers will not even celebrate the event as it is the case with Breuninger. Only Magasin du Nord will play the football card with pop-up stores and screens to watch the competition.

Men's Fashion is a steady category and should adjust to new trends to grow

The casualization trend, far from being over, profoundly reshaped Men's Fashion in all price segments. In parallel, buying teams now have to deal with a significant spike in occasion wear thanks to ceremonies resuming. Overall, boundaries between lifestyles tend to blur with a part of sportswear sometimes included in menswear, and workwear being more relaxed.

Department stores also question the store layout to take into considerations categories blurring as well as new trends. Marketing represents a challenge as retailers cannot really rely on social media to attract consumers. In-store events are a fair option: whether they are sport-related or not, creating 'moments" and experiences work their magic to answer consumers' need for human interactions.

IADS Press Release: Men's Fashion has high potential post pandemic (English)

Communique de Presse Mode Homme (Français)

FashionUnited has written an article based on IADS findings about department stores needing to strengthen their environmental commitments. The article highlights the necessity to take immediate action, CSR and ESG going hand-in-hand, and the execution of a successful stratgey.

Read the article in English and French below:

FashionUnited Article (English)

FashionUnited Article (French)

Fashion Network has written an article based on IADS' press release reporting the results of its CSR meeting. The article titled "Department stores facing growing CSR challenges" reveals key findings and trends that are highlighted following a meeting gathering the CSR directors of the member stores.

Read the article in French below:

Fashion Network Article (French)

Climate change and department stores: now that the more elementary steps have been taken, the growing accountability to more parties, the increasing complexity of the topic and the remaining questions to solve force retailers to learn how to navigate the

Climate change became very tangible this summer. Actively taking the right measures to reduce their footprint is no longer a question of choice for retailers, but speed of execution. This is not simple: now that Corporate Social Responsibility (CSR) became intertwined with the financial requirements embedded in the Environmental, Social and Governance metrics (ESG), strategies are becoming increasingly complex to design and execute. In addition, reducing emissions turns into a headache now that the easier steps were already taken in the past years. The upside is that this situation creates a perfect context for a more open dialogue with and between every retailers' stakeholders, both for transparency reasons and financial attractivity. IADS recently took stock of its members' initiatives when it came to addressing these topics.

Initially, Corporate Social Responsibility (CSR) was the framework for retailers' first actions. When investors began to require trackable metrics, Environmental, Social and Governance (ESG) emerged with a financial standpoint to make business efforts measurable and provide quantitative results. These measurements are now also demanded by other stakeholders (employees and customers). However, ESG does not replace CSR: the latter, less measurable, continues to coexist as it can be used to build ESG measurable strategies, and adds value in the eyes of consumers.

As a result, for now, CSR and ESG represent the two sides of a necessity companies must deal with: CSR guides ESG strategy, and ESG measures the efficiency of CSR goals. Depending on how advanced they are, retailers are pursuing intertwined actions in both areas, but the challenge is to define a relevant long-term strategy in order to cope with many issues, for example, Scope 3 emissions and the associated regulations, social concerns, and governance.

In defining the adequate CSR strategy, retailers have to learn how to run fast, but one step at a time.

Knowing where to start is hard, and all IADS members agreed that top-down decision-making and execution cannot work for CSR: the most crucial (and delicate!) pre-requisite is to involve all stakeholders into defining and prioritizing CSR actions. The success of a strategy depends on the adherence of the whole company, from sales floor, distribution centres, to top management and investors, not an easy feat in complex organisations such as department stores. Endurance and persuasive power are therefore necessary: CSR requires all departments to be aligned and teams to be upskilled.

Listening also means involving people from outside of the company:

-    Conducting a materiality assessment is key and has proven to be more efficient with external consultants. Collaborating with NGOs (Oxfam, UNICEF, WWF, Red Cross, Sustainable Apparel Coalition...), trade unions, and industry and consumer organisations, helps learning what is relevant and which objective to prioritize, while also building trust and dialogue with such organisations in the long-term.

-    When it comes to suppliers, exchanging with fashion companies and other retailers helps as progress can't be made alone. Audits run by external organisations, such as Amfori, can be also shared.

-    Retailers also use the UN Sustainable Development Goals 17-point framework to build their actions, with a focus on recommendations referring to health and well-being, gender equality, reduced inequalities, sustainable cities, responsible consumption and production, climate action, peace and justice.

Occasionally, retailers will enter the CSR topic in an intuitive manner, and then build a strategy out of it. For instance, Galeries Lafayette created a dedicated department in 2012, which issued their first sustainable strategy in 2013, leading to the Go for Good label creation in 2018 in partnership with more than 500 brands. Breuninger started by internally publishing a CSR mission statement in 2019. Magasin du Nord used private labels as a starting point, then appointed an internal task force before entering the materiality assessment and strategy-building phases.

Communicating on CSR efforts is essential, but raises many questions. Expected to influence their customers' behaviour to purchase more responsibility while at the same time avoiding being accused of greenwashing, IADS members strive for a humble and honest communication, knowing they have to fight their stakeholders' wariness:

-    Towards customers: with Go for Good, Galeries Lafayette has been cautious to find the right balance between providing precise information and being simple, catchy and inspirational for both local and international customers, through a dedicated website.

-    Towards employees and partners: Breuninger created a dedicated video only available on their corporate website, to show the direction the company is taking.

Finally, omnichannel adds another layer of difficulties: CSR messages have to be both conveyed in stores and online, with consistent umbrella concepts adapted to all sales channels, which is an urgent challenge with e-commerce growing fast.

Lowering emissions: progress is increasingly difficult as supply chain is now under scrutiny

Covering direct and a part of indirect emissions, Scope 1 (company facilities and vehicles) and Scope 2 (purchases of electricity, steam, heating and cooling) are easier to control, and were the first steps taken by department stores, in regard to energy consumption and transport. 87% of El Palacio de Hierro's energy consumption comes from renewable sources, and the logistics fleet is now 100% clean. Compared to 2017, El Corte Inglés has reduced its Scope 2 emissions by 78% and plans to achieve zero emissions by 2050.

The story gets more complex when it comes to Scope 3 emissions (all other indirect emissions from the value chain, both downstream and upstream, a tricky issue for retailers selling a wide variety of products including their own), which represents 90-95% of department stores' total emissions:

-    Scope 3 upstream emissions are their suppliers' Scope 1 emissions, requiring retailers to be able to retrieve information from a wide variety of suppliers with different standards, thanks to tools such as the Higg Index,

-    Scope 3 downstream emissions include for instance reducing the amount of packaging, both internal and customer-facing. El Corte Inglés and Magasin du Nord are testing new packaging methods to remove internal plastics while ensuring perfect delivery and unpacking by sales associates. At the customer level, Galeries Lafayette has launched a circular packaging initiative with Hipli.

Collaborations and exchanges between retailers helps, but they are limited by the variety and complexity of national regulations, meaning there is not a single fit-for-all strategy, and also that by nature, all strategies will evolve over time.

It's not only about emissions: don't forget Social and Governance!

Social responsibility should not be overlooked, as shown by El Corte Inglés, which set actions in gender equality, harassment, LGBT diversity, health campaigns, and social and labour inclusion, or Galeries Lafayette, which promotes diversity, with the gender equality index at 94/100 and the share of disabled persons at 7.75%. In addition, there are regional and cultural differences: for instance, El Palacio de Hierro started the process by working on its social aspects more than on sustainability.

When it comes to governance, the question is not if ESG factors will affect credit ratings, but how. In order to be ready for the upcoming non-financial ratings (knowing that investors demand targets that are measurable, ambitious and aligned with the company's strategy) retailers work with non-financial rating agencies (Fitch Ratings, Dow Jones Sustainability Indexes…) in order to provide the financial community the maximum transparency possible. This is even more crucial now that loans can be linked to the achievement of sustainability targets. Retailers are forced to succeed as they will be fined if their commitments fall through. In such circumstances, reporting and KPIs are critical, they impact the whole organisation: it is a common practice to incentivize top executives on sustainable parameters.

Retailers have been struggling to design the right strategy and priorities. As their geographical and socio-political situations are different, IADS members' progress in implementing CSR and ESG strategies vastly differ from one another, from heavily-regulated European ones to countries with less obligations.

Involving all stakeholders in the strategy process is absolutely key as it encourages unprecedented exchanges with others (retailers, coalitions and NGOs) to get help on guidance and decision-making, especially regarding Scope 3 emissions. They have no choice: the scrutiny by the financial community shows that the topic is not a trend, but a major factor in the department store business strategy. Even though there is no international standard way to achieve sustainability objectives, actions related to climate change, diversity, inclusion, and socially responsible corporate governance are driving value-oriented investment. As a result, the usage of ESG criteria to determine which companies they invest in is growing, especially among Millennials.

IADS Press release: Climate change and department stores (English)

Communiqué de presse de catégorie: RSE et grands magasins (Français)

La Conceria posted about the findings from the study on the world of fashion malls conducted by IADS. The article talks about the weight of an accessory, finding the right mix in leather goods, and the interest of younger consumers.

Read the article below:

3 key things to know about the trend of accessories in departement stores (Italien)

Fashion Network has written an article based on IADS' press release reporting the results of its Leather Goods & Shoes meeting. The article titled "Shoes and leather goods: the right mix of niche labels and established brands, a challenge for department stores" reveals key findings and trends that are highlighted following a meeting gathering the buyers of the member stores.

Read the article below:

Fashion Network Article (French)

Fashion Network Article (German) 

IADS press release - Leather Goods & Shoes

While Shoes are recovering faster than Leather Goods from Covid, two trends are being observed: logos for locals, and the need to balance niche and blockbuster brands.

The IADS and NellyRodi regularly take stock of retail trends through a series of product category workshops. Their last one was dedicated to Leather Goods & Shoes categories, a key category for retailers. It is all about attracting local customers via a renewed brand mix, special services or partnerships, and the ability to react quickly.

Greatly suffering from lockdowns, the Leather Goods category saw its share of the total business slump from 10% in 2019 to 8% in 2021. Even though e-commerce sales tripled in the same period from 2% to 6% of the category business, it did not help compensate for the business lost due to the lack of touristic clientele in department stores. However, the luxury segment (including the affordable luxury offer) remained the biggest segment in 2021, with 36% of the sales, followed by the mid-range price point products (33%).

On the contrary, the Shoe category resisted better during the pandemic and remained at the same level in 2019 and 2021 (6% of the total business), even noting a slight increase in 2020. Similar to the Leather Goods category, e-commerce sales increased, doubling from 5% in 2019 to 10% of the category business in 2021. Luxury products were less important in terms of share of the business for this category, since the majority of the business was done with the mid-range segment (55%), the luxury segment being second with 23% of the total category business.

The challenges department stores are facing are mainly related to the business and traffic decrease. In such circumstances, their strategic priorities revolve around attracting more local customers, especially the younger generations. To that end, finding the right brand mix and matching new consumer trends is key, which, in the case of Leather Goods, is not easy given the weight of the global and well-established brands.

Leather goods: looking for the right balance between volume-driving and niche brands

Since there is not much brand renewal in the Leather Goods department, especially for Mid-Range and Premium brands able to generate large volumes (such as Michael Kors once did), local brands offer an interesting option to draw local customers' attention, especially in terms of price point and at a time when tourism hasn't fully resumed.

But introducing new or niche brands is a challenge for department stores as they are usually hardly profitable. Still, they are necessary to enhance the overall store offer, balanced with the usual players known by everyone and help the store differentiate from competitors. To be more efficient, department stores tend to gather niche brands in multi-brand areas, mixing them with other product categories (shoes, ready-to-wear and other accessories), such as the Le Labo space at Galeries Lafayette.

Another option to differentiate is to team up directly with brands to present exclusive products, such as the collaboration between El Palacio de Hierro and Versace, presented in dedicated popup spaces.

NellyRodi presented its exclusive selection of up-and-coming brands in the category: Yuzefi, Destree, My Style Bag, Medea, RSVP, Bonastre, Audette, Camille Vost, Michino, Ozias, Talel Paris, Studio Reco, Aswad, Aesther Ekme, Verwicht.

Shoes: sneakers and show-off are the new normal

In terms of trends, casual is still key in the Shoe department, with the sneakers category driving the business. But this trend also brings issues with Nike and Adidas withdrawing from department stores to fulfil their Direct to Customer strategies. Besides, department stores usually do not have access to the most attractive styles. In such circumstances, they have to find replacements: Asics, New Balance, Veja and On Running are listed as successful or promising brands. An interesting option could also be to partner with third-party vendors selling top-tier and collectible sneakers: this is what Manor is currently doing with local partner HideOut. In addition, such an initiative also represents a great opportunity to attract Gen Z consumers.

In parallel, as people are going out again, they are more prone to show off by wearing styles bearing logos. NellyRodi witnessed that the demand for such products is supported by local consumption and growing +8% compared to 2019. In the logical continuity, it is expected that occasion pieces will also rise as customers are eager to dress up again.

NellyRodi presented its exclusive selection of up-and-coming brands in the category: Miista, Hereu, Reike Nen, Rombaut, Claris Virot, Vibi Venezia, Viron, Jacques Soloviere, Yume Yume, Ilio Smeraldo, O.T.A, Moea, Tabitah Ringwood, Umoja, MLLN.

New customer's needs, adapted answers

With Covid, consumers got used to shopping distantly with the help of personal shoppers. Such a new habit is still flourishing now and the turnover generated by personal shopping continues to grow: for instance, El Palacio de Hierro more than doubled this business, while also making the store more appealing thanks to this service. It is also a way to compensate for the increased competition from both lower price point pure players (such as Farfetch) and the growing direct-to-customers online activity from larger luxury brands.

Interestingly, for these categories, sustainability is not a marketing argument to GenZ customers: for bags and shoes, the demand for sustainable products is still small, and not coming from the younger generation, but from the 25-to-35 year-old customers.

When it comes to the price point, leading in most cases to the private label business, most department stores are greatly suffering from supply chain disruptions. On top of the costs increase in raw materials and transportation, and the longer delivery delays, they are now facing additional woes due to the recent lockdowns in China. As a result, they are looking for alternatives to China for the production of private label products.

For both categories, the light at the end of the tunnel is close, but stores are not there yet

To increase the Leather Goods and Shoe business and draw more traffic in-store, finding the right brand mix able to generate high volumes and balance niche and big brands remains a head-scratcher for buyers. Department stores are also dealing with new trends induced by Covid: the sneakers trend is still very strong and more brands are needed to answer consumers' appetite.

While Covid is not over and is still a source of concern, its consequences are still very much impacting the business: the supply chain disruptions represent a threat to the business, whether it's about the costs increase, the delivery delays and the stock availability. The war in Ukraine only adds uncertainties and concerns.

IADS Press release: Leather Goods & Shoes category (English)

Communiqué de presse de catégorie: Maroquinerie et Chaussures (Français)