Department stores are being challenged to rediscover what it means to serve their local customers. Going local in retail has been a trend for some time but the Covid-19 pandemic has brought it into focus and perhaps accelerated the trend. What does this mean for department stores and their business model?

Traditionally, department stores have relied on economies of scale: centralised management and support departments have allowed larger companies to get better prices for volume from suppliers, to minimise supply chain costs per unit, to rationalise management processes to reduce the marginal cost of growth etc. And these might still be relevant, to some extent, for some businesses.

But we need to begin to challenge the assumptions of economies of scale which the volume-based department stores have been wedded to since their inception. Arguably, technology, processes and management today allow a shift towards economies of scope, and a vastly different model of the department store.

IADS provides its members with a weekly in-depth analysis on retail-oriented topics. This is an example of the themes the Association regularly addresses, and the topic of an article  from the IADS members-only newsletter date 03 September 2020.

Covid-19 changed people's consuming habits, as lockdowns boosted trends that were already emerging before the pandemic.

Lockdowns forced many of us to stay home, creating long-term new habits in terms of work mobility. It reinforced the needs and demands for home and lifestyle items, from furniture to wardrobe. Retailers, including department stores, need to adapt their assortment quickly to respond to the new behaviours.

In order to do so, retailers should know more about their customers, especially in large cities. As the pandemic froze travels for a while, adding up to the lack of tourists in capital cities, flagships stores need to adapt their offer to cater to their local audience.

IADS identified the new trends and reviewed some examples from various markets for inspiration.

IADS provides its members with a weekly in-depth analysis on retail-oriented topics. This is an example of the themes the Association regularly addresses, and the topic of an article  from the IADS members-only newsletter date 28 August 2020.

Nike opened its newest "House of Innovation 002" in Paris this summer. IADS analyses the novelties of the format, comparing it to other innovative business models (Live, Rise, outlets).

Is putting screens in a store and QR codes on items enough to call a venue innovative?

Nike House of Innovation 002 is more than just a shiny, screens-filled new store; and department stores could learn a few things from the sports retailer, especially on building a strong community.

IADS provides its members with a weekly in-depth analysis on retail-oriented topics. This is an example of the themes the Association regularly addresses, and the topic of an article  from the IADS members-only newsletter date 06 August 2020.

In a recent book entitled The Future of Department Stores, a number of owners, CEOs and top leaders of the format express their views and make a number of interesting and insightful points about the format. Do these views still hold after our recent experience of a global pandemic? Do they provide a guide to the future in "the new normal"?

What is clear is that department stores cannot remain a volume business; that they need to know their customers better; and in particular their local customers; that they will need to make sometimes difficult choices relating to targeting, curation, convenience, experience, value and innovation; and that the model needs to be drastically simplified.

IADS provides its members with a weekly in-depth analysis on retail-oriented topics. This is an example of the themes the Association regularly addresses, and the topic of an article  from the IADS members-only newsletter date 29 July 2020.

Recent events of 2020 including protests around the world have highlighted a a long-felt sense of injustice that has found an echo so deep that it has forced media, businesses and politics into a frenzy of self-justification and defensive posturing.

The reaction has some things in common with the viral spread of the MeToo movement three years ago following the revelations of harassment and sexual abuse by Harvey Weinstein.

Any imbalance in employment of different social groups represents potential waste of talent as employees at all levels may be excluded in spite of their high ability. A number of reports have considered this angle and by and large link lack of diversity to underperformance: the World Economic Forum argues that "diversity brings many advantages to an organization: increased profitability and creativity, stronger governance and better problem-solving abilities". BCG claim that "diverse leadership teams boost innovation"; and for McKinsey, "many successful companies regard I&D (inclusion and diversity) as a source of competitive advantage".

At the present moment, racial diversity is under the spotlight. It is a perfect moment to learn that our customers are diverse beyond simply age, and if we are to keep them, we will need to cater to that diversity, whether ethnic, gender, sexual, disability or other. We will not have the means to do so successfully if we rely on a traditional uniform leadership. "To start building diverse senior teams for the future, retailers need to take deliberate and proactive action" …. Only this "will ensure the pipeline is filled with leaders of the future".

IADS provides its members with a weekly in-depth analysis on retail-oriented topics. This is an example of the themes the Association regularly addresses, and the topic of an article  from the IADS members-only newsletter date 21 July 2020.

Fashion is the second most polluting industry worldwide, which is now a top worry for retailers. Consumers want to reduce their environmental impact and shop "green". Retailers realise they need to follow their customers to avoid becoming irrelevant.

Department stores have several options to engage on sustainability: corporate initiatives, eco-friendly brands, rental clothing, and resale. But how far have we gone?

What are the priorities? Is it the buildings or the merchandise?

What do customers want?

Better communications and transparency; no green washing: we need real measures and offer real answers to customers; communicating on eco-friendly assortment does not exempt department stores from taking ecological measures at the corporate level.

Some are also piloting resale and rental.

Crucially, it has become a positive business strategy as an increasing number of customers are demanding green and are willing to pay for it.

Sustainability: department stores' destiny - Full article (IADS members only)

IADS provides its members with a weekly in-depth analysis on retail-oriented topics. This is an example of the themes the Association regularly addresses, and the topic of an article  from the IADS members-only newsletter date 09 July 2020.

E-commerce has become an essential part of the department store toolkit. It is tasked with increasing sales, improving service to customers and, thanks to an optimised structure, boosting profitability in the same way the return on space did in yesterday's model.

However, e-commerce pure players and most of the e-department stores are losing money in operations, competing for a fickle customer who appears to chase the cheaper option in their mostly indistinguishable offers.

Is that an inescapable fate? If it is, why are some department stores entering the game now, when so few have succeeded so far? Learning lessons from the small number of best-in-class players, the few who are making money, might be a good idea for the newcomers.

And for others too.

E-commerce and department stores; becoming rich online - Full article (IADS members only)

IADS provides its members with a weekly in-depth analysis on retail-oriented topics. This is an example of the themes the Association regularly addresses, and the topic of an article  from the IADS members-only newsletter date 03 July 2020.