What: India's consumer landscape is undergoing a fundamental shift as affluent households are projected to reach 30% by 2035, while digital infrastructure, Gen Z preferences, and women's increasing economic influence reshape retail dynamics.

Why it is important: As traditional retail markets mature, India's evolving consumer landscape offers a blueprint for future growth, with its unique combination of digital innovation, demographic dividends, and infrastructure development creating new paradigms for global retail.

India's transformation into a global consumer powerhouse is reshaping retail paradigms, with affluent households projected to increase from 19% to 30% by 2035. This shift is characterized by a dramatic evolution in consumer behavior, moving beyond basic necessities to discretionary spending in education, travel, health, and leisure. India's Gen Z, surpassing the entire US population in size, is emerging as a powerful force that prioritizes immersive experiences and authentic engagement. The rising influence of educated women, whose literacy rates have doubled over four decades, is driving growth in sectors like packaged food, appliances, and online shopping. This transformation is supported by robust digital public infrastructure enabling seamless connectivity and personalized experiences, while massive infrastructure investments exceeding a trillion dollars are upgrading roads, bridges, and ports, fundamentally transforming logistics and connectivity.

IADS Notes: Recent market developments validate BCG's projections, with 27 new international brands entering India in early 2025 and the country ranking as the most attractive emerging market for retail expansion. The digital transformation is evident in Coresight's identification of GenAI-driven personalization as a key trend, while Euromonitor reports 48% of brands incorporating experiential rewards. This evolution is supported by substantial infrastructure development, with plans to add over 2 million square feet of retail space and a 46% increase in retail space leasing across major cities, creating new opportunities for retail expansion beyond Tier 3 cities.

When Indian consumers shape global trends

What: Capri Holdings' vice president of global analytics has transformed the company's data culture through a comprehensive consumer feedback system that predicts sales performance and shapes creative decisions.

Why it is important: The transformation reflects a crucial evolution in luxury retail, where consumer insights directly influence product development and marketing, potentially reducing the risk of unsuccessful launches and improving inventory efficiency.

Capri Holdings has revolutionised its approach to luxury retail by establishing an extensive consumer research programme encompassing 75,000 global participants. Under the leadership of Manuel Neto, vice president of global analytics, the company has developed a sophisticated system that surveys three distinct customer segments: existing purchasers, potential customers, and those planning future purchases. This innovative approach enables the company to test campaigns before launch, gathering vital feedback on brand heat and affinity. The research lab's influence extends beyond marketing, informing inventory management and regional distribution strategies. Initially met with resistance during budget planning, the programme now shapes nearly every aspect of the brands' output, from campaign shoots to influencer collaborations. The integration of data analytics with creative processes has required careful cultural transformation, with Neto developing specialised approaches to communicate with different teams. The success of this strategy is validated by the correlation between consumer intent data and actual transaction outcomes, demonstrating the effectiveness of this data-driven approach to luxury retail.

IADS Notes: Capri Holdings' innovative consumer research strategy aligns with broader industry transformations observed throughout 2024-2025. As seen in March 2025, when Michael Kors launched its Amazon storefront, luxury retailers are increasingly embracing data-driven decision-making to enhance digital distribution. This trend parallels the January 2025 Bain-Altagamma findings emphasising the need for stronger customer connections in luxury retail. The success of such approaches is evident in Mytheresa's December 2024 acquisition of YNAP, which demonstrated how data-driven operations can transform luxury retail. The integration of digital tools and physical experiences, as highlighted in October 2024, has become crucial for customer engagement, while Saks Fifth Avenue's July 2024 expansion of its personalised shopping services underscores the industry's shift towards data-informed experiential retail.

How Capri Holdings uses a 75,000-strong consumer ‘lab’ to shape luxury retail

What: Gartner study reveals modest AI productivity gains with only 37% of traditional AI users and 34% of GenAI users reporting high improvements, challenging widespread optimism about immediate impact.

Why it is important: This reality check on AI productivity gains helps business leaders make more informed decisions about AI investments and implementation strategies, particularly crucial for the retail sector where technology spending must demonstrate clear returns.

Gartner's comprehensive survey of 724 business professionals reveals a sobering reality about AI's impact on productivity, with only 37% of traditional AI users and 34% of GenAI users reporting significant gains. This finding challenges the prevalent optimism surrounding AI implementation and points to what some experts call the "AI productivity paradox." While AI shows promise in specific segments like call centers, broader organizational benefits remain elusive. The research highlights several factors contributing to limited productivity gains, including inflated expectations, implementation delays, and measurement challenges. Marketing teams demonstrate the highest success rates, while legal and HR functions lag behind, indicating the importance of context-specific applications. The study suggests that successful teams approach AI with a learning mindset rather than focusing solely on job displacement concerns. For CFOs and business leaders, this indicates the need to reset expectations and focus on creating internal conditions that enable AI to deliver its full potential.

IADS Notes: Recent market research reveals a complex landscape of AI implementation in retail, with significant gaps between investment and actual productivity gains. According to BCG's "From potential to profit" in January 2025 , only 25% of companies report meaningful value from their AI initiatives, despite high investment levels, with successful companies focusing on fewer, more strategic use cases. A Salesforce study published in Retail Dive in March 2024  highlights a critical challenge: while 93% of retailers use AI, nearly half struggle with data integration and accessibility, potentially explaining the modest productivity gains. Bain & Company's research, reported in WWD in November 2024 , adds another dimension, revealing that consumer awareness and trust remain significant hurdles, with many shoppers unaware they're using AI-powered features. This aligns with AlixPartners' findings published in April 2024 , emphasizing that successful AI implementation requires focusing on practical applications with clear business benefits rather than following technological hype. These insights collectively suggest that achieving meaningful productivity gains requires a more measured, strategic approach to AI implementation, with particular attention to data integration, consumer trust, and clear business outcomes.

CFOs should reset expectations about AI’s impact on workforce productivity and headcount

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What: Lower-tier Chinese cities are emerging as new luxury retail powerhouses, driven by stronger purchasing power and cultural adaptation.

Why it is important: This evolution signals a new era in luxury retail where brands must balance expansion with local cultural integration to succeed in the Chinese market.

China's luxury retail landscape is undergoing a significant transformation, with lower-tier cities emerging as key growth drivers for international brands. Cities like Chengdu, despite their second-tier status, have become luxury capitals due to lower living costs and stronger consumer purchasing power. This shift is exemplified by Ralph Lauren's success in these markets and Lemaire's strategic entry into Chengdu, where the brand created a culturally integrated store design incorporating local elements like Cizhu bamboo and Tanzi pots. The evolution marks a departure from previous mass expansion strategies, with brands now adopting a more nuanced, culturally sensitive approach to growth. Industry experts emphasise the importance of understanding regional differences and creating resonant cultural connections, moving away from the standardised global marketing campaigns of the past. This transformation reflects broader changes in Chinese consumer behaviour, where local cultural elements and thoughtful brand positioning have become crucial factors in retail success. The trend has prompted luxury brands to reconsider their expansion strategies, focusing on creating unique, locally relevant experiences rather than rapid store proliferation.

IADS Notes: Recent market data validates this strategic shift in China's luxury retail landscape. As reported in January 2025, while Tier-1 cities experienced a 4% decline in luxury spending, Tier-2 and Tier-3 cities saw remarkable growth of 9% and 22% respectively. This trend is further supported by March 2024 findings showing increased purchasing power in lower-tier cities. The success of this approach is evidenced by SKP's August 2024 expansion into Wuhan, generating significant opening day sales. Meanwhile, July 2024 reports highlight how luxury brands are deepening their investment in local cultural integration, demonstrating the industry's commitment to this new strategic direction.

Succeeding in China’s new reality

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Annual Department store results

The IADS Global Department Store Monitor was originally launched in May 2021 by Dr. Christopher Knee as the ‘IADS 100 Report’ after realising that comparable department store data was either unavailable, poorly understood, or not exploited by analysts. This was characteristic of an ever-evolving industry, making it difficult for outsiders to understand, including events such as privatisation, mergers, change in ownership, or simply not categorising numbers by business uniti.

Since then, the report has been renamed and rebuilt into a new format to enable dynamic comparison among department stores over a specific period and a series of years. To track and compare sales and profits from companies worldwide while accounting for fluctuations in exchange rates, the renewed version of the monitor includes current (as of today) and fixed exchange rates (as of 2021) to isolate the impact of sales growth from the effect of exchange rate changes.

Also, given that accounting standards across countries are not uniform, the fiscal year is referred to as FY 2023-2024 throughout the monitor to compare results across the occurrence of the same world events. This uniformity helps maintain a baseline in the events that have occurred throughout the year to draw fair conclusions. The conception of this monitor was driven by the need to juxtapose pre- and post-COVID-19 results. The 2025 edition of the IADS Global Department Store Monitor reviews 59 department stores with publicly available information to create a benchmark for global department store stakeholders regarding the 2023-2024 period.

This report attempts to capture the global economic retail scenario post-COVID-19 and whether pre-COVID-19 numbers have been regained or are faltering.

Fiscal Year 2023-2024 : Slow and steady resilience

The global outlook during this period was characterised by uncertainty amid turmoil in the financial sector, high inflation, the impact of Russia’s invasion of Ukraine (which started in February 2022) and marking three years of the COVID pandemic, which was finally declared over as a health emergency in May 2023. Recovery was slow but steady due to widening divergences among economic sectors and regions. 2024 also saw a changing political landscape with over 70 elections globally. However, despite fears of a hard economic landing, the global economy was surprisingly resilient despite significant central bank interest rate hikes. Inflation also began to decline across emerging and advanced economies.

During FY 2023-2024, major retail industry transformations were afoot:

• From a regional perspective, US department stores saw their market share decline, dropping from 14% in 1993 to less than 3% in June 2024. This prompted strategic consolidations such as Saks Fifth Avenue’s USD 3 billion offer for Neiman Marcus Group that was turned down (eventually closing the deal at USD 2.7 billion in December 2024). Macy’s received a USD 5.8 billion offer from private equity firms Arkhouse and Brigade Capital Management however ended takeover talks in July 2024. The department store also announced its plan to shutter 150 stores while shifting its focus to attracting younger customers in February 2024.
• In Asia, India solidified its position as a growing luxury market with an expansion of around 3.4% in 2023 and attracted 27 new international retail brands in 2024. Not just domestically, Indian brands such as SABYASACHI arrived at Bergdorf Goodman in November 2024. On the other hand, China faced a retail slowdown commencing in July 2024 due to economic challenges such as rising local government debt and reduced private-sector spending. Hong Kong saw a similar decline in the second half of 2024 due to the shift in consumer behaviour among mainland Chinese visitors. In Japan, Seven & i Holdings completed the sale of Sogo & Seibu department stores to Fortress Investment Group in October 2023.
• The retail industry is undergoing a transformation due to AI-driven hyper-personalisation, with the global market for AI in retail valued at USD 11.61 billion in 2024 and projected to grow at 23% annually through 2030.
• Department stores advanced their sustainability commitments against growing regulatory demands. Harrods published its first-ever ESG report in June 2024 highlighting its progress in the reduction on Scope 1 and 2 carbon emissions and setting future goals.

Fiscal Year 2023-2024 financial results: The post-Covid boom in retail is tapering off

In 2024, the global economy, including the retail sector, faced significant market uncertainty, slow economic growth, and unfavourable interest rate environments across regions.  The post-COVID-19 peak of 2021 and 2022 has passed, and growth has now stabilised across the retail sector, with department stores largely following this trend, albeit with regional divergences. Some broad observations from the Global Department Store Monitor for FY 2023-2024 covering 59 department store companies indicate that:

• The average global year-on-year sales growth in FY 2023-2024, after two years of significantly positive sales growth in 2021 and 2022, shows a slightly negative sales trend of around –1.6%.
• The share of department store sales in total retail sales is stabilising and has almost returned to pre-COVID levels.
• This is also due to the reduction of total global retail sales after hitting a peak in 2021 and 2022. Global retail consumption is starting to slow down due to considerations such as reduced purchasing power, slowdown in the luxury sector, environmental responsibility considerations and other factors that differ regionally.

In the Americas, department store sales have stabilised and are contributing more to their owners’ retail sales than pre-COVID. This is due to increased department store sales and lower total retail sales per company. The average sales trend for these group-owned department stores is negative compared to 2021 and 2022, suggesting that the post-Covid peak has passediii. On the other hand, stand-alone department stores are almost stable and slightly positive in year-on-year sales growth.

In the Asia-Pacific region, department store sales have stabilised but have not yet reached pre-Covid levels regarding contribution to their owners’ total retail sales. Department store sales have reduced due to a global retail slowdown, especially in Japan, South Korea and Hong Kong. The average sales trend for department stores was negative, after two consistent years of sales growth in 2021 and 2022. In India and the Philippines, on the other hand, department stores saw a positive sales trend.

Similarly, in Europe, sales in group-owned department stores have risen and crossed the pre-COVID contribution to their owners’ total retail sales. European department store performance has been decent on average. However, total retail sales have reduced. Both, department stores owned by groups and standalone department stores saw a muted positive sales trend of less than 1% on average.

Americas: Marked by restructuring and innovation

In Chile, Falabella (-10.7%) saw a negative sales trend but increased its profit. Falabella’s increase in profit may be explained by its sale of two major assets during the financial year. It also invested over USD 100 million into enhancing its omnichannel capabilities, store network expansion, and sustainability efforts. Cencosud Paris (+6.6%) saw an upward sales trend but declining profit. Cencosud Paris undertook several store transformations and launched its digital wallet CencoPay. Ripley (-7.1%) saw a declining sales trend and increased its losses. It introduced cafés and beauty salons in its flagship Lima stores following its strategic decision to reinvent itself as a lifestyle destination.

Mexican department store El Palacio de Hierro (+10.6%) increased its sales and profits during this fiscal year. It recently revamped two stores and relaunched one in Mexico City. Similarly, Liverpool (+23.2%) also saw rises in its profits and sales. Post-pandemic consumer sentiment in Mexico has tended towards value for money and convenience. Liverpool acquired Nordstrom in the US and established a significant North American-Mexican retail alliance.

In the US, Nordstrom (-5.7%) and Macy’s (-5.5%) saw a decline in sales and reduction in profit, although it stayed positive. Nordstrom was privatised by family ownership and Mexican retailer Liverpool. Macy’s announced that it would close 150 stores and focus on expanding Bloomingdale’s and Bluemercury operations. It also faced pressure from investors to create a real estate subsidiary for better asset management citing Dillard’s successful operating model. Similarly, Dillard’s (-1.73%) and Kohl’s (-3.35%) saw fewer sharp sales downturns but while Dillard’s saw a slight dip in its profit, Kohl’s plunged much further into loss. Dillard’s was the best performing department store among its competitors; it achieved superior results through focused operations and disciplined capital management. Kohl’s undertook leadership changes and tightened its budget to cope with its results. All major US department stores went through a tough financial year prompting mergers such as Saks- Neiman Marcus which was finalised in December 2024 and privatisations such as Nordstrom.

Asia-Pacific: Diverging results across South, East and South-east Asia

The 2023 sales trend in China has been fairly stable. Parkson Retail Group Ltd (+9.9%), Wangfujing (+13.2%) and Wushang (+13.2%) reported positive sales growth. Several Chinese department stores included in the Global Department Store Monitor showed stable sales numbers with negligible deviation. New World (-34.4%) and Maoye (-5.1%) reported negative sales trends; while the former’s negative sales growth mounted, the latter was able to reduce its negative sales growth from the previous financial year significantly. In FY 2023-2024, the Chinese economy was characterised by real estate crises, high youth unemployment rates, and a generally cautious consumer sentiment. With moderate expansion, China saw the emergence of new trends; rural areas outperformed urban areas regarding consumption. The luxury sector showed a decline of 18-20% overall but rural consumers showed more propensity for luxury consumption while their urban counterparts exhibited luxury fatigue. Government stimulus measures and local economic conditions also influenced rural customers. Aspirational urban consumers that once fuelled luxury growth preferred products and services that enhance their quality of life like travel and health.

In Hong Kong, Wing On showed modest sales growth of almost 1.5% but was able to achieve a good pre-tax profit after marked losses in the previous year. Sogo was privatised mid-2022 and has not released public financial statements sinceiv. Hong Kong saw a shift in consumer behaviour from mainland Chinese consumers. Inbound tourism has not recovered as quickly as expected and tourist expenditure saw a drastic fall compared to 2018 levels. The Hong Kong Dollar was strong which encouraged locals to shop abroad, adding to the decline of retail sales in Hong Kong. Given this perspective of the Hong Kong retail scene, department stores have been remaining afloat.

Indian department stores, Lifestyle and Shopper’s Stop have been performing well. While the 2023 sales numbers for Lifestyle are not available yet, it has been consistently growing sales since the COVID-19 pandemic and announced plans to open at least 50 new stores in the next three to four years. Shopper’s Stop reported a positive sales trend of 5.4% after two consistent years of double-digit sales growth. Despite Amazon divesting its stake in Shopper’s Stop, the department store saw a growth in sales driven by beauty. The Indian retail market is booming with several foreign brands entering the country during the year. In Sri Lanka, Odel (-11.5%) saw a continuing downtrend in sales and almost doubled its losses. The country saw a sluggish economy ridden with inflation and political instability. The consumer expectation of digitisation and personalisation is strong and sales at Odel have consistently declined with its owner, Softlogic Group, seeking investors for the retail store.

Japan has seen a strong pattern of recovery post-COVID, with all department stores finally achieving the green in this financial year. Tobu (+3.45%), Kintetsu (+4.39%), Takashimaya (+5.1%), Marui (or 0101) (+7.97%), and H2O (Hankyu Hanshin) (+9.6%) showed growth with Tokyu (+11.44%), J Front (Daimaru Matsuzakaya) (+15.3%) and Isetan Mitsukoshi (+17.54%) reaching double digit sales growth. Isetan Mitsukoshi especially has shown steady recovery since experiencing a significant operating loss in Financial Year 2020-2021 due to the impact of Covid-19, with particularly strong performance in Financial Year 2023-2024 which represented the highest operating income since the merger of Isetan and Mitsukoshi in 2008. All reported department stores had positive profits surpassing 2022 levels. In Japan, department stores saw their growth rate decline dramatically from 10.8% in the first half of 2024 to just 2.3% in the second half. However, stores in tourist areas outperformed other stores by a large margin. Japan's luxury market experienced a significant sales spike driven by international tourists capitalising on a weak yen and resilient domestic spending. The weakened domestic currency overinflates Japan’s retail performance and is likely economically unsustainable.

Korea has seen an overall decrease in sales growth, with the most severe decreases being in Lotte (-5.9%), Shinsegae (-12.8%), and Hyundai (-16%), while Hanwha Galleria (+0.5%) was the only department store to remain stable. The spinoff of Galleria can explain this as a separate entity starting in 2023. Following this trend, there have been slight decreases in operating profit figures. During the fiscal year, the South Korean economy saw a downturn marked by high interest rates and rising prices. While department stores posted growth in the previous fiscal year, they could not maintain it in the rough economy during FY 2023-2024.

Interestingly, the pre-owned luxury market performed well and much better than the declining luxury sector in both South Korea and Japan. Even before the depreciation of the Japanese yen in the first half of 2024, Japan’s secondhand market saw strong growth driven by TikTok where secondhand shopping in Japan has become a trend. In 2023, South Koreans were the world’s largest online shoppers in resale with almost 62% shopping for secondhand luxury goods.

In the Philippines, SM (+6.8%) showed a positive sales and profit trend. Robinson’s Retail (+7%) showed a positive trend for sales but reduced profit, though the latter remained positive. The FY 2023-2024 growth was attributed to store expansion initiatives and recovery from pandemic restrictions. Robinson’s Retail’s department store segment grew at more than its combined retail operations at 8%. It was driven by improved category performance in travel-related items, sportswear and improved gross margins from a better category mix. The retail industry in the Philippines has seen steady growth, driven by rising consumer spending and a youthful population. The focus of Philippine retailers has now turned to expanding omnichannel integration.

In Malaysia and Singapore, Parkson Retail Asia faced concerns regarding operating as a going concern. Its subsidiary for Vietnam operations filed for voluntary bankruptcy later in April 2023. The Singaporean economy saw declining growth in the retail sector. This was also driven, in large part, by tourists opting to shop in cities that provide cheaper alternatives. Though Malaysia posted decent growth in the retail sector, this did not translate into better performance for department stores.

In Indonesia, Matahari (+1%) saw a small positive sales trend combined with a massive jump in profit. Overall, Indonesia’s retail sector has perfomed well.

Central Retail in Thailand saw modest sales growth of 5% and a slight increase in profit. The country also experienced strong economic growth and an uptick in luxury sales.

Australian department store David Jones was sold by Woolworth’s in March 2023 hence no results are available for the last fiscal year. David Jones saw a significant decline in sales after its sale to Anchorage Capital Partners. However, reinvestment was planned for both in-store and online shopping experiences. Myer (-2.9%) saw a slightly negative sales and profit trend. It purchased Apparel Brands in October 2024 to expand its loyalty programme, Myer One. Both Australian department stores are reducing their number of stores overall; while David Jones is reducing the size of its physical stores, Myer is reducing its locations while focusing on a younger consumer.

Europe: Decent performance across countries

The UK saw mixed results with rising profits and reducing losses being the broad trend. However, Selfridges (according to press sources) and Fenwick (-14%) saw deepening losses attributed to high inflation, increased competition, and a challenging retail environment. Selfridges saw notable property devaluation, changes in ownership stakes, and impending loan repayment. This decline in valuation was attributed to external market factors including rising interest rates and rents. Fenwick closed its flagship and sold it to developers, reflecting its sales decline. Harvey Nichols decreased its losses but remains in the red. On the contrary, John Lewis (+1.4%), Liberty (+6.6%), Harrods (+8%), Fortnum & Mason (+9.1%) Marks & Spencer (+9.6%), all showed positive sales trends and an increase in profit. John Lewis reduced its losses and increased its profit. This was attributed to the effectiveness of strategic initiatives such as relaunching the ‘Never Knowingly Undersold’ promise and joint loyalty programme with Waitrose that showcased its resilience and market adaptability. Liberty saw success across product categories and subscription services despite a decline in e-commerce revenue. Harrods was sued by the victims of alleged sexual abuse by its previous owner but managed to post a notable sales growth and profit despite this bad publicity. At Fortnum & Mason, sales recovered, and turnover returned to pre-COVID levels. This was primarily driven by international customers supported by opening a new store at the Hong Kong airport. It was also reported to have been considering entering the US market. Marks & Spencer saw a big rise in profit supported by a substantial investment in enhancing staff compensation and family leave policies. It saw private label success including its own beauty brand. The UK saw an unexpected upswing in department store and non-food store sales during the year's second half. Despite the calculated loss of over GBP 10 billion due to the removal of tax-free shopping for tourists in 2021, UK department stores managed to grow their sales.

In Denmark, Illum (+10.5%) and Magasin du Nord (+0.5%) reported positive sales trends; Illum lessened its loss while Magasin du Nord saw a slight decrease in its profit. Denmark saw positive consumer sentiment but a reduction in net spending for all categories except groceries.

In Finland, Stockmann (-3%) saw a negative sales trend but a rise in its operating profit. Due to its struggling financials, Stockmann in Helsinki considered a potential name change to that of parent company Lindex and the sale of the department store.

In Sweden, Ahlen’s (-19.5%) saw a downtrend after consecutive years of growth after the pandemic. After its ownership change in 2022, it has not broken out its profit for department stores. Sweden saw higher prices due to inflation, with consumers transitioning to lower-cost goods and actively reducing consumption for environmental reasons. NK (+4.2%) saw a positive sales trend, but it reduced its profit during the 2023 financial year.

The Norwegian retail market showed signs of expanding with potentially becoming a new luxury destination driven by currency devaluation, tax-free shopping and disincentivising luxury imports, as well as an uptick in tourism during warmer months. According to press sources, Steen & Strøm in Oslo witnessed sales growth of 14% in the first half of 2024v.

Kaubamaja (+9.8%) in Estonia saw a significantly positive sales trend and rise in profit. However, Estonia saw a 1% reduction in total retail trade volume, comprising a 3% drop in textile, clothing, and footwear store sales.

In France, while Galeries Lafayette does not release its financial results, according to press sources, the company returned to its pre-COVID sales volume of EUR 3.85 billion by the end of 2024 and is currently implementing its EUR 400 million investment plan over the next five years. Similarly, Printemps does not share revenue or profit figures but confirmed in the press that it entered 2023 profitablyvi.

In Greece, Attica (+18.8 %) saw an upward sales trend and an increase in its profit. Although it was fined EUR 400,000 for misleading pricing practices, it was still able to grow financially. In general, the rent for retail spaces in Greece followed an upward trend.

El Corte Inglés (+2.6%) in Spain saw a positive sales trend and a drastic rise in its operating profit. Spain saw robust growth in consumer spending reflected in department store sales.

In Switzerland, Jelmoli (-4.2%) saw a negative sales trend and improved its EBIT while remaining in the red. Coop (+1.34%) saw a positive sales trend and an increased profit figure. In Switzerland, luxury department stores such as Jelmoli and Globus faced declines due to a shift in the retail landscape. Jelmoli’s flagship store in Zurich is now closed waiting for Manor to takeover.

Middle East and Africa: Operating in a complex environment

In South Africa, Woolworth’s (-16%) showed a significant drop in sales and profit explained partly by the closure of over 30 stores. Woolworth’s sold David Jones to Anchorage effective in March 2023. The South African economy saw an increasingly complex environment due to load shedding, inflation, and global supply chain disruptions. The South African Reserve Bank raised interest rates multiple times to combat persistently high inflation of almost 6% as of August 2024. The national power crisis required retailers to undertake substantial costs for alternative energy sources like generators and battery systems.

What to expect from Fiscal Year 2024-2025 and beyond

Retailers are presently gathering the results for the current FY 2024-2025. However, clear global challenges throughout the year will undoubtedly impact their results:

• the election of President Donald Trump in the US and impending tariffs, some of which have already been enforced, across the globe are sure to restructure global retail supply chains. Though inflation across other economies has been decreasing, the US market fears stagflation – a combination of high inflation and slow growth - despite Trump’s pro-domestic growth agenda. The ripples of US American economic actions will no doubt be felt worldwide, with the EU, China and Canada, among other countries, discussing retaliatory tariffs. Canadian department store Hudson’s Bay has already applied for creditor protection given a weak recovery post-COVID and tensions with the US. India, conversely, is preparing a tariff reduction proposal with the US.
• The potential US TikTok ban pending its sale to a US owner adds to the uncertainty, given that it is an essential social media channel that drives trends and influences consumer behaviour in the fashion industry. Furthermore, the rise of TikTok Shop, which emerged as the second-largest e-retailer behind Amazon during UK's Black Week, represents its influence over the fashion and retail sectors. Already available in the US, the UK and Spain, it is poised for entry in other European markets later this year. The global economic forecast of 2025 is hence dodgy and will digress from 2024 results sharply.

In Asia, Vietnam’s total retail sales are projected to reach USD 350 billion this year and with a young, expanding middle class with rising purchasing power, Vietnam is rapidly becoming a key player in Asia’s retail landscape. Luxury retailers such as Tiffany & Co and Montblanc have opened their first flagship stores in Hanoi and Ho Chi Minh City. The Indian market will continue to grow with Galeries Lafayette’s first Indian department store set to launch this year in Mumbai and a second one in Delhi in 2026 in partnership with Aditya Birla Group.

In the EU, revised sustainability directives CSRD (Corporate Sustainability Reporting Directives), CSDDD (Corporate Sustainability Due Diligence Directive), and ESPR (Ecodesign for Sustainable Products Regulation) mandate comprehensive environmental reporting and due diligence from retailers by 2028. Nordic countries such as Norway are seeing dramatic rise in tourist shopping due to tax-free benefits. Steen & Strøm doubled its tax-free shopping revenue in 2024. This is further supplemented by an increase in climate tourism where visitors flock to cooler countries due to climate change.

The next edition of the Global Department Store Monitor will examine the results from FY 2024-2025. While the global retail landscape is constantly changing, the factors discussed above will have a definite impact on department stores, adding to their current transformation, which includes prioritising omnichannel presence, experiential retail, and adapting to changing consumer preferences.

[i] And a reason for international analytic platforms such as the International Association of Department Stores to exist in the first place.

[ii] Companies’ accounting standards reflect both whole and broken fiscal years which is indicated in the monitor by marking it as Fiscal Year 2023-2024.

[iii] Note: here are only three Latin American department stores owned by groups that are analysed in this section due to the limited availability of public financial data, so inferences may not be fully extrapolatable.

[iv] Since results are not published, this department store is not included in the Global Department Store Monitor.

[v] However since results are not published, this department store is not included in the Global Department Store Monitor.

[vi] Ibid.

Credits: IADS (Anchita Ranka)

What: Companies maintaining inclusive workplace practices achieve significant financial benefits, with potential global profit increases of USD 3.7 trillion through improved employee engagement and retention.

Why it is important: The financial impact of effective inclusion strategies demonstrates how workplace fairness translates directly to business success, making it a critical factor for retail competitiveness and growth.

In today's politically turbulent environment, business leaders remain committed to diversity and inclusion as fundamental drivers of business success. Research demonstrates compelling financial benefits, with inclusive workplaces showing a 50% reduction in turnover risk, 56% increase in performance, and 75% decrease in employee sick days. The potential impact is substantial, with estimates suggesting global profit increases of USD 3.7 trillion through better alignment between leadership perceptions and employee experiences. Despite ongoing efforts, the European CPG and retail industry still shows room for improvement, with women holding only 37% of executive roles. The consequences of exclusion are significant, with even single instances of micro-exclusion leading to immediate performance declines of 25%. The disconnect between leadership perception and employee experience remains notable, with 68% of leaders believing they create empowering environments, while only 36% of employees agree. This gap underscores the importance of moving from intention to action in creating truly inclusive workplaces that leverage the full spectrum of available talent.

IADS Notes: Recent retail industry developments strongly validate the article's emphasis on inclusion as a business imperative. Late last winter, research revealed a USD 32 trillion opportunity in women-focused products and services, reinforcing the text's projection of women controlling 75% of discretionary spending by 2028. The industry's response to inclusion has evolved significantly, as evidenced by Walmart's successful autumn strategy of maintaining inclusive practices while modifying terminology. This approach has influenced others, with Amazon subsequently rebranding its initiatives as "Inclusive eXperiences and Technology." However, the challenges highlighted in the text persist, particularly in leadership representation, as shown by recent data revealing only four of nine new creative director appointments representing women or people of colour. The emergence of the FAIR framework (Fairness, Access, Inclusion, and Representation) offers retailers a structured approach to achieving the article's vision of "going all in" while navigating complex market pressures.

The USD 3.7 trillion opportunity of inclusive leadership

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A store fostering a community of customers

Established in 1881 in Stuttgart, IADS member Breuninger has long been a cornerstone of the city’s retail landscape. It has evolved from a single department store located outside of the city’s retail centre into the multi-faceted and lively mixed-use Dorotheen Quartier that has redefined urban shopping and leisure in Stuttgart. Attached to this 62,000 sqm project, Breuninger’s flagship store plays an integral role, showcasing a curated blend of luxury goods, private-label success, and customer-centric services and experience. Together, these elements illustrate how Breuninger has managed to not only maintain its relevance as a modern department store but also lead the way in building an active community of local customers.

The Dorotheen Quartier : an example of a successful mixed-use area

As a company, Breuninger imagined and built Stuttgart’s Dorotheen Quartier in 2007, with the department store as its anchor. After 10 years in the making and a EUR 200 million investment, the company opened this 62,000 sqm mixed-use project in 2017 to revive the area located between Stuttgart’s gourmet Market Hall, the historic Karlsplatz and the Breuninger store. Complementing it and constituted of three 6-storey buildings, the area offers a mix of luxury-oriented retailers (including Louis Vuitton, a Porsche dealership and the newly opened Tiffany store), restaurants, apartments, offices and a 350-slot underground parking lot. The project included the transformation of a street into a retail space, the Karlspassage, now a small mall connected to the Breuninger store. Overall, the Dorotheen Quartier feels very lively and offers an alternative to Stuttgart’s high-street shopping area, the Königstrasse, which feels outdated (home to Peek & Cloppenburg and Galleria mid-range department stores).

The Breuninger store : five floors catering to casual, premium and luxury customers

The Stuttgart store has grown over the last decades, adding a second and a third building to reach 42,000 sqm of retail space. 900 people are working in the store (in total, Breuninger has 6,800 employees). The store has three managers:

• In charge of luxury, visual merchandising, marketing, and customer relationship.
• In charge of the men’s department, cashiers, cash desks and store finances.
• In charge of the beauty and sports department as well as store replenishment.

The customer base is mostly local, with only a few tourists coming from Switzerland and Italy.

With three buildings built at different times, the store has uneven ground levels, preventing some of the floors from connecting to one another. For example, the -1 level is home for women’s shoes, kidswear and men’s and women’s underwear: while the shoe department connects to kidswear thanks to a short escalator linking two of the three buildings, these departments don’t connect to the underwear section. This makes customer circulation a bit more complicated than in other department stores.

The store floors offer:

• Ground floor: home of luxury leather goods, beauty and casual women’s fashion. It took seven years to build the leather goods department as luxury brands were reluctant to come to Breuninger in Stuttgart as they had successful businesses in Munich, a 2-hour drive away that people easily do. The brands operate under the wholesale business model. The leather goods section offers large shop-in-shops: Dior is the best brand, followed by Gucci, Saint Laurent, Loewe and Bottega Veneta. This section has been beautifully renovated and is very airy. In comparison, the beauty department design looks a bit outdated and cluttered. With 1,500 sqm, it is rather small compared to the overall store surface. Breuninger considers redoing it and will focus on leading brands and niche brands, removing the “unremarkable middle.”1 Niche fragrances are numerous and have impressive results, with this section packed on Saturdays. Not directly connected to these sections, women’s fashion casual brands are also on the ground floor. It also accommodates a small Breuninger-owned mall in the Karlspassage with stores such as a florist, a newsstand, fashion and beauty stores, a Breuninger restaurant and Breuninger confectionary, a retail hit with locals that achieves way more in sales than neighbouring successful cosmetic brands. Located at one of the store entrances, the Breuninger champagne bar is a famous and packed meeting point for local customers, acting as a community-builder. Overall, the nature of the stores in the Karlspassage and the shopping mall relatively small size contribute to the impression of a community anchor.
• First floor: women’s fashion premium and luxury sections span 7,500 sqm. Brands are mostly run under the wholesale business model and don’t have their brand concept fixtures. Instead, Breuninger set up a harmonised store concept. The first floor also offers a large sunglasses section, premium handbags, jewellery and watches. A coffee place is available on this floor.
• Second floor: men’s fashion (with the same casual, premium and luxury segmentation as for women’s) and men’s shoes span 6,800 sqm and have an even better profitability per sqm than women’s. Men’s fashion achieves roughly the same turnover as women’s fashion. A coffee place is available on this floor./nbsp]
• Third floor: sportswear and sports equipment, including a large ski section and a ski workshop. Customers can either buy or rent ski equipment (skis and shoes). There is also a bike section that grows bigger during the summer. At the time of the visit, the store staff was setting up a new Lululemon shop-in-shop. Also, there is a unisex streetwear-oriented space catered to younger generations, but its location is not optimised. In the future, Breuninger might switch this section with kidswear. Finally, there are outwear sections for both men and women and women’s occasionwear on this floor. A travel agency partially owned by Breuninger is available on this floor.
• Fourth floor: home offerings, luggage, a 44-seat hairdresser, a large restaurant, and busy customer service are available on this floor.
• -1 floor: women’s shoes, kidswear and men’s and women’s underwear are spread out in the three different buildings, as explained above. The shoe department is very airy and has club vibes thanks to special lighting. In that perspective, Breuninger is considering hosting an actual party at night. A tiramisu coffee shop is available in this section. The kidswear department has a busy kid's hairdresser and a candy tunnel offering all sorts of sweets.

Private label successful segmentation

The Stuttgart store visit is also  an occasion to highlight Breuninger’s private label strategy defined by clear segmentation, with each brand targeting specific customer demographics and market segments:

• Darling Harbour has the highest turnover, representing 50% of women's private label turnover and the second-best margin. Positioned to compete with Marc O’Polo, Darling Harbour is contemporary, cashmere-focused, with 5 to 6 collections annually. With large displays, the brand is extremely visible and has additional locations (in the outerwear section for example). Sweaters are priced between EUR 50 and EUR 230.
• Mrs. & Hugs is a bit more modern, having great success with cashmere in winter and summer dresses. The brand has the best private label margin, representing 40% of the women’s private label turnover. Customers think it’s a real brand. It is positioned at the same aspirational level as Essentiel Antwerp and Samsoe Samsoe. Since the brand is the most aspirational of all Breuninger’s private labels, they advertise the brand a lot online, on social media and in the store windows. The brand appeals to younger demographics and offers more frequent drops. Sweaters are priced between EUR 100 and EUR 300.
• Lilienfels represents 10% of the women's private label turnover. The brand is very classic, offering great materials like cashmere and leather. The margin is lower than for the other private labels (approx. the same margin as for national brands) as products are primarily ready-made designs from external suppliers. They maintain the brand as it sells well and doesn’t require too much manpower. Sweaters are priced between EUR 80 and EUR 350
• Johann & Johanna is a new premium brand with a higher price point, inspired by a traditional German wardrobe. The first results are great, with items 100% sold out in 2 months. Sweaters are priced between EUR 100 and EUR 200, with dresses up to EUR 530.
• Paul targets men between 30 and 50 and competes with brands like Fred Perry and Samsoe Samsoe. Shirts are priced between EUR 40 and EUR 200. The brand is showcased in different locations in the store.
• Strokesman’s is designed for older men as it is more classic. The brand competes with Marc O’Polo and Mr Marvis. Shirts are priced between EUR 50 and EUR 80.
• Finally, Breuninger has a home called Private Label, E.B. Home, which mainly offers home textiles.

Services build and nurture an active community of customers

With 636,000 residents, Stuttgart is a relatively small city. Besides, having a vast majority of local customers makes it key for a luxury retailer such as Breuninger to build a strong community of customers. To that end, they offer remarkable services:

• Recently rebuilt, the Beyond store loyalty programme is paramount to Breuninger’s strategy, knowing that more than 80% of the customers are local. The programme has four tiers: bronze, silver, gold, platinum. It is point-based (EUR 1 spent = 1 point) and offers various benefits such as cashback, early access to products and discounts, free shipping, event invitations, birthday presents, longer product returns and dedicated customer service.
• Most importantly, the loyalty programme offers two credit cards (basic and platinum), with which EUR 1 spent = 2 points. Seventy-one per cent of the turnover is made with Breuninger credit card holders. The platinum level equals EUR 7,000 spent annually and grants customers access to invitations to specific events and their dedicated customer service, fostering a sense of belonging and community.
• Seven personal shoppers pamper 3,100 active customers who are extremely attached to the store. The average basket with a personal shopper is more than ten times higher than what a customer purchases without such service. Several private lounges are available for personal shopping appointments. To increase the personal shopper customer base, Breuninger finances tickets to the opera or any relevant event for them to attend, introduce themselves, mingle and attract these potential new customers to Breuninger.
• Events: Breuninger was used to organise paid events proposed to their best customers. They were, for example, buying opera tickets to organise a special night for their best customers who pay for their tickets. These initiatives have been so successful in the past that Breuninger is now organising its own events. For example, they hire a singer, rent a venue, hire a catering company, and organise the whole event. Only customers who are part of the loyalty programme and spend at least EUR 7,000 annually are informed and can access those events. This is probably one of the most remarkable community-building initiative run by Breuninger.
• Customer service: in addition to traditional customer service, gift-wrapping and tax-free shopping, it includes a separate service for platinum customers, which is connected to the store staff office space. It is very common for customers to enter the office and ask for anything that they might desire. As a result, it is not the usual small and uncomfortable store office space: it’s airy, properly furnished and tidy.
• Click & collect: included in the customer service, it offers approximately ten fitting rooms equipped with special lights to try garments in different lighting conditions. Click & collect represents 28% of online orders.

They also offer services related to product categories:

• Runners: the women’s shoe section has runners to better serve customers who complained about being left alone when the sales staff went to the stockroom to fetch shoes. All shoes are equipped with a bar code scanned by the sales associates, who then choose the required size. During weekdays, the sales associates alternatively sell and act as runners. On Saturdays, Breuninger has dedicated runners. Depending on how busy the store is, shoes are delivered to the shop floor in one to three minutes.
• Made-to-measure: the department can make anything from suits to knitwear, shoes, belts and even denim pants. A suit is sold for between EUR 5,000 and EUR 10,000. The service is extremely successful. Breuninger is considering expanding it but lacks the highly skilled staff needed.
• Ski department and workshop: customers can buy or rent skis and ski shoes as Breuninger runs a ski workshop. During wintertime, customers must book appointments on Fridays and Saturdays as the department is extremely busy. During summertime, the staff working in the ski department is attached to the bike department.
• Luxury buyback: Breuninger partners with a luxury second-hand company coming in-store four times a year for customers to sell their luxury goods. Customers are given a Breuninger store voucher in exchange for the products. Breuninger finances an additional 10% voucher value.
• There are many F&B options, with almost one per floor: a candy tunnel in the kidswear department, a tiramisu bar in the women’s shoe section, Breuninger Sansibar restaurant, a champagne bar and confectionary on the ground floor, coffee shops on the first and second floors, a large restaurant on the fourth floor.

The Dorotheen Quartier exemplifies how Breuninger leveraged a real-estate project to create new sources of revenue. The thoughtfully designed mixed-use project has invigorated the area and set an alternative city centre, seamlessly blending luxury shopping, dining, residential, and office spaces to create a lively urban ecosystem. Meanwhile, the flagship Breuninger flagship store showcases a deep understanding of consumer needs with its curated and clearly segmented departments, strategic private-label offerings, and exceptional customer services, from personal shoppers to bespoke tailoring and a tiered loyalty programme that fosters long-term engagement. Ultimately, Breuninger’s success is rooted in its ability to maintain deep and personalised connections with its community of customers.

Credits: IADS (Christine Montard)

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Every IADS event is designed to allow the Association members to learn from each other, and the General Assembly is no exception. This is why the 2024 edition took place in Türkiye. It was the perfect opportunity for one of the IADS’ newest members, Boyner Grup, to showcase the progress made since the COVID-19 pandemic and how it radically reinvented itself to adapt to the new market conditions.

The text below is a synthesis of a presentation by Cihan Yildiz, Boyner's CTO, describing the company’s journey into this field. Today, Boyner Grup uses AI in various use cases after taking the necessary steps to ensure the company structure was adapted.

It has been stripped of confidential information, including the Q&A section, which IADS members can find in the meeting recap related to the 2024 General Assembly on the IADS Website

Introduction: how AI is a game-changer for all industries

Artificial Intelligence (AI) has traditionally been defined as replicating human intelligence using machine algorithms. Over time, research and technological advancements in machine learning and deep learning have substantially expanded the scope of AI. These developments enabled computers to recognise images, understand speech, and perform tasks like facial recognition, which once seemed futuristic. The arrival of Generative AI, propelled into the mainstream by solutions such as ChatGPT, represents a particularly significant milestone. Some commentators describe the launch of ChatGPT as an “iPhone moment,” meaning it heralds a new phase of AI maturity where advanced language capabilities become available to a broad audience.

Yildiz attributes this accelerated growth in AI partly to the near ubiquity of smartphones, which now serve as vast data generators. This surge in data, coupled with more sophisticated algorithms, has opened the door to various innovative solutions that were almost unimaginable a few years ago. Generative AI exemplifies these advancements by using large datasets and specialised learning techniques to produce new content, drive complex analysis, and engage in nuanced conversations in efficient and highly adaptable ways. It is this aspect of AI—its agility and creativity—that many experts believe will shape the next wave of business and consumer applications.

Business perspectives

Boyner regards Artificial Intelligence (AI) as a powerful catalyst for transformation across numerous industries, especially retail, where data-driven decision-making can dramatically improve efficiency and spark innovation. According to Yildiz, who has led several AI initiatives at Boyner, businesses should adopt a systematic approach to AI implementation to leverage its full potential. During his presentation, he underscored the importance of understanding AI’s evolving capabilities, its immediate applications, and its expected long-term impact on operations and customer engagement. His perspective highlights that AI can remarkably quickly reshape an organisation’s strategies, processes, and culture when introduced through carefully chosen projects.

Current forecasts suggest that Generative AI will attract around three trillion US dollars in investment between 2023 and 2027 globally, indicating the extent to which companies believe in its transformative capacity. Nearly half of all technology companies are expected to embed Generative AI into their offerings, a sign that AI is becoming not just a technical addition but a foundational element of future products and services. Enterprises typically move through three distinct phases when they adopt AI: first comes the learning phase, during which teams become familiar with AI tools and concepts; second is the testing phase, which involves running small pilots to validate new ideas; and finally, the investing phase, where proven AI models are scaled to the enterprise level.

Even though only a fraction of AI use cases today explicitly involve Generative AI, results show that those use cases alone can drive notable increases in efficiency and customer satisfaction. Studies indicate a nearly thirty per cent improvement in operational efficiency, matched by a thirty per cent uplift in customer experience measures. Projections for the future amplify this trend. By 2028, a third of enterprise software is expected to include agentic AI features, compared to a negligible portion in 2024. Similar shifts are anticipated in digital storefronts, where a significant share of interactions could be managed by AI tools rather than human agents, and in daily work decisions, an increasing number of which will be delegated to AI systems that can analyse data and deliver real-time recommendations.

How Boyner crafted its vision and roadmap

In its approach to AI, Boyner has closely followed Gartner’s strategic guidelines, focusing on high-impact opportunities, including price promotion strategies, optimisation of markdown processes, and improvements in in-store product availability. The company also prioritises personalisation, social media monitoring, and demand forecasting. Leveraging these focus areas, Boyner articulated five central pillars that define its AI roadmap: personalisation, data-driven insights, efficiency, innovation and creativity, and continuous improvements.

The company’s priority is personalisation, which aligns with the ongoing Boyner Now initiative and other efforts to tailor experiences for individual customers. Boyner also intends to develop a platform that generates data-driven insights, allowing it to consolidate all relevant data and transform it into accessible, actionable information.

Furthermore, Boyner remains committed to operational efficiency, building upon Gartner’s assessment that AI could help address nearly a quarter of retail's overall costs. Alongside these goals, the organisation embraces creativity and innovation as essential catalysts for new AI-driven solutions, ensuring that experimentation is encouraged at all levels.

The final pillar is the cultivation of a Kaizen-style system of continuous improvement, a principle that guides Boyner in regularly assessing and refining its AI applications to keep pace with rapidly evolving technologies and market demands.

Using partnerships to become AI-ready

To put these ideas into practice, Boyner devised a strategy it calls “AI readiness,” designed to ensure that every relevant stakeholder, from data scientists to C-level executives, understands AI's value proposition and is equipped to manage its risks and benefits. This process begins by defining a clear vision and identifying what AI can accomplish for the organisation. Boyner also articulates key performance indicators that guide measuring success, highlighting aspects such as revenue impact, customer satisfaction, and risk mitigation.

Collaborations with key partners like Gartner and Microsoft form another critical dimension of this readiness strategy. While Boyner maintains in-house development capabilities, it also relies on external expertise to stay aligned with cutting-edge advancements. Aligning AI with Boyner’s broader organisational strategy is a critical first step, ensuring that all departments recognise how AI projects serve shared corporate objectives. Boyner invests in awareness programs, teaching employees about Generative AI and providing them with tools built on Microsoft’s OpenAI services. The company encourages grassroots innovation by offering workshops and safe sandbox environments and ensures that the best ideas are brought to light. Following these initial learning and testing stages, Boyner evaluates all AI use cases and solutions based on ethical principles and data privacy standards and ultimately presents a tactical roadmap backed by executive sponsorship.

Current AI use cases

Boyner’s commitment to AI is exemplified by the fact that every new or experimental AI solution it develops moves swiftly into production, where it can deliver real value.

One such example is the automation of order and product sorting, allowing the logistics team to handle items more efficiently across the supply chain. In addition, Boyner has introduced an AI-based product import tool that extracts attributes from product images and retrieves any missing details through web scraping, significantly reducing the time and manual effort required to add items to its e-commerce catalogue.

Personalisation efforts take shape through micro-segmentation, allowing Boyner to offer tailored promotions, such as raincoat discounts only in regions experiencing adverse weather conditions. The marketing team has also implemented sophisticated in-house Marketing Mix Models to allocate budgets strategically, incorporating profitability targets and, in the future, data from CRM systems and omnichannel sources.

Another key innovation involves a Semantic AI Assistant that improves the e-commerce platform’s user experience through content summarisation and intelligent responses to customer inquiries. Moreover, Call Center voice-to-text transcription has been introduced to capture and analyse customer conversations, further enhancing service quality.

While these AI solutions bolster operational efficiency and customer satisfaction, Boyner has also championed Generative AI-driven chatbots. These include tools that assist customers in choosing gifts, manage stock levels in real time, and even handle internal human resources inquiries, as evidenced by the success of the People Chat application.

To unify these efforts, Boyner consolidated four disparate data warehouses into a single AI-ready platform, making it easier to draw connections between different data points and support informed, evidence-based decision-making.

Boyner’s journey with AI offers a compelling example of how an organisation can systematically integrate data-driven solutions into its operations and thereby reshape its future. By paying close attention to the learning, testing, and investing cycle, and by forming strategic alliances with prominent technology partners, Boyner has managed to introduce AI solutions that deliver tangible benefits. These benefits range from logistical efficiencies and robust customer experiences to increased creative capacity and a forward-looking corporate culture.

Yildiz concluded that Boyner’s focus on empowering all employees to experiment with AI tools—while maintaining strict safety and privacy protocols—goes a long way toward embedding AI in the company’s DNA. This approach secures buy-in from both leadership and frontline staff. As Generative AI continues to mature, Boyner looks to deepen its expertise, exploring new frontiers in retail automation, customer personalisation, and knowledge management, all while keeping an eye on responsible practices. In doing so, Boyner serves as an illustrative case study for other organisations: the potential of AI to drive meaningful change is substantial, but realising that potential requires consistent engagement, thorough preparation of data, and a measured, adaptable roadmap.

Credits: IADS (Selvane Mohandas du Ménil)

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Riding the AI wave: decision-making tools for department stores

The IADS Academy programme, a 29-year-old tailor-made mentoring workshop open only to our members’ high potentials, promotes cooperation and future orientation. Over the years, the IADS Academy has trained 190+ executives from 29 companies in 22 countries, some of whom reached top positions in member and non-member companies (for IADS member companies alone, 4 CEOs).

The 2024 topic was as follows:

AI and department store activities - Given the number of possible AI applications, how can retailers develop a decision-making tool (in terms of investments, teams and time)?

Once in the forecast, how can they decide and prioritise the right areas of application (examples: product development, customer loyalty, in-store operations, productivity-saving operations...)?

The following is an attempt to report all insights the Academy group considered and worked on during the journey to their final presentation shown to the IADS member CEOs.

Introduction: department store's never-ending transformation

The retail industry is undergoing the AI seismic shift and department stores, long-standing symbols of traditional commerce, are in the midst of this transformation. AI is no longer a futuristic concept but a technological breakthrough, as were the printing press, electricity, and the internet, making it a present-day reality and necessity. As for those game-changing innovations, AI is designed to make life easier, especially in an increasingly complex world.

To navigate this complex landscape, department stores need tools that not only assess their readiness for AI but also guide their strategic decisions. Those are the two value propositions introduced by the 2024 IADS Academy cohort. This article explains their findings on creating a decision-making tool for AI initiatives in department stores, exploring the challenges, solutions, and opportunities that lie ahead.

The paradigm shift: from human to “machine customers”

Attracting customers and hopefully catching a share of their wallets is at the core of any retail company. These customers, so far human beings, are difficult to navigate as their emotions drive them. Also, they are impulsive, lazy, highly demanding, and easily distracted, especially with a shrinking attention span. They are often late and lack urgency. To answer this, department stores spent decades and immense resources such as advertising and marketing campaigns, CRM and loyalty programmes, data analytics systems, and sales strategies to target and reach these coveted human customers.

Customers have always evolved over time, but technology drives a new type of evolution. What can be called “bound customers” came to life with the rise of Web 2: these human customers are supported by machines executing requests, such as when they shop online. Department stores had to adapt to answer the needs of this new omnichannel breed. The next type of customer is not totally there yet, but retailers have started dealing with what the Academy called “adaptable customers”: leads are shared with the machine, and the machine executes.

Tomorrow, retailers will serve AI-powered “machine customers”, with the machine leading and executing, a fundamental paradigm shift for retail. While its human counterpart will still exist as a department store customer, the “machine customer” will develop and require new adjustments, yet again. Analytical and logical, highly observant, goal-focused, tireless, and emotionally unaffected, equipped with a strong memory, they will operate autonomously and make purchasing decisions based on extensive research.

This future is already there, as proved by Perplexity AI's latest innovation. In November 2024, they launched an AI-powered shopping assistant in the US that allows users to research and purchase products directly through its platform. This new feature, “Buy With Pro”, streamlines online shopping by enabling one-click checkout for select products, saving users time and enhancing their shopping experience. If “Buy With Pro” is unavailable for a product, users are redirected to the merchant's website to complete their purchase. Additionally, Perplexity AI offers a visual search tool called “Snap to Shop”, which allows users to find products by uploading photos. The assistant integrates with platforms like Shopify to provide unbiased product recommendations tailored to users' searches.

AI disruption is on the way for all economic sectors. In retail, analytical AI already supports better customer segmentation, predictive maintenance and fraud detection, to name a few. For department stores, generative AI has become a reality as it already generates content, code and efficient chatbots. What comes next is multi-modal AI, which can think, feel, process, and create.

This shift underscores the urgency for department stores to adapt to a new reality where human and machine customers coexist. Using the surfing metaphor, retailers should take steps to catch the AI revolution wave, deciding whether to ride it or let it pass and paddling hard to catch it before it crashes over them. The Academy's message was clear: AI is not just a trend but an imminent wave that must be embraced.

Assessing department store AI-readiness: the AIRI framework

To help department stores navigate this wave, the Academy cohort introduced the Artificial Intelligence Readiness Index (AIRI), a comprehensive assessment tool designed by the University of Singapore to evaluate an organisation's readiness for AI adoption. Based on extensive research and testing, AIRI focuses on five critical pillars to evaluate company readiness:

• Business value to understand how AI can generate tangible benefits.
• Organisation to gauge the cultural and structural adaptability of the company.
• Infrastructure to ensure the availability of robust technological foundations.
• Data, as its quality and accessibility, should be assessed.
• Ethical practices to establish governance frameworks to manage risks and ensure compliance.

The assessment tool has four levels:

• Unaware: staff in the organisation perceive AI as a threat to jobs and do not understand its potential.
• Aware: the organisation and its employees trust AI applications.
• AI-ready: the organisation trusts AI applications, has the necessary resources and infrastructure, and is ready to move forward.
• Competent: the organisation is at the forefront of AI and sets the standards for others.

The AIRI framework operates like a game of Jenga: if one pillar is weak or missing, the entire structure risks collapse. By scoring organisations across these four dimensions, AIRI provides actionable insights into where improvements are needed. For instance, some companies might excel in infrastructure but lag in ethical practices or data quality. The tool also offers two approaches to implementation: top-down (organisational level) and bottom-up (functional level). This flexibility allows department stores to tailor their AI strategies based on specific needs and priorities.

The Academy group used the AIRI tool to assess their departments and companies and found that most department stores fall between the Unaware and Aware levels. During the Academy presentation, CEOs were invited to quickly evaluate their AI level (without using the AIRI tool), and most considered their organisations AI-ready. This discrepancy shows how relevant it would be for departments and organisations to use the AIRI tool.

A new team member: Lola, department stores’ AI instructor

The Academy introduced a second value proposition in the form of a department store-only generative AI tool, Lola (a name randomly chosen by the Academy group), a new department store team member. While AIRI provides a roadmap for readiness, Lola, the AI chatbot built by the Academy cohort, acts as a guide for execution. Developed over a few months using data from IADS members and other reliable sources, Lola is specifically tailored for the retail industry. Lola is not just another chatbot but a generative AI tool designed to provide tailored, contextualised insights and actionable recommendations.

Lola’s capabilities were demonstrated live during the Academy presentation to CEOs. Its responses were not only more relevant than any generic gen AI tool, but also enriched with examples from real-world department store information. Unlike generic AI tools like ChatGPT, Lola is fed with precise retail-specific data curated by experts. This makes it uniquely positioned to address challenges faced by department stores, from optimising foot traffic analysis using CCTV footage to improving conversion rates through advanced customer segmentation.

However, Lola is still in its “infancy”, as it is a proof-of-concept that requires continuous learning and refinement. To grow into a robust decision-making assistant, it needs to be nurtured with high-quality data aligned with ethical standards.

Building an experimental culture within organisations and beyond: leveraging the IADS resources

One of the key takeaways from the Academy cohort was the importance of fostering an experimental culture within organisations. AI adoption is not just about technology; it requires a mindset shift at all levels of management. Leaders must champion innovation while ensuring that employees feel empowered rather than threatened by AI. Management support goes beyond CIOs or CTOs, it starts with CEOs and executive sponsors who set the tone for organisational change. They also highlighted the need for upskilling employees to handle new responsibilities brought by AI technologies.

In the future, the Lola experiment should use the endless resources of the IADS. Lola would be fed not only with broad information about AI but also with AI-specific data from IADS members and all the data from the IADS years of research. While it will support IADS members' decision-making about AI, it will become a broader information tool for members to ask about any topic and get an answer instantly. To make Lola a reality, IADS members and the IADS need to establish governance guidelines, guarantee a secure environment and establish the use process.

Conclusion: catching the AI wave together

The journey toward AI adoption in department stores is akin to mastering the art of surfing: it demands observation, vigilance, preparation, and agility. Through their dual value propositions, the AIRI assessment tool and the pioneering Lola generative AI agent, the Academy group has laid a foundation for a structured and practical approach to AI adoption. By identifying readiness gaps and fostering a culture of education and trust, the AIRI tool offers a clear roadmap for organisations navigating the complexities of AI integration. Meanwhile, Lola shows how generative AI can be tailored to the unique needs of the retail sector, providing actionable insights and decision-making support. Lola can certainly become the IADS members’ private agent.

As one presenter aptly noted during the Q&A session, “AI is not just a tool; it’s a way of doing things.” By aligning AI initiatives with business strategies and fostering collaboration across teams, department stores can ride the AI wave with confidence.

Credits: IADS (Christine Montard)

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Introducing the NRF Big Show

The 2025 edition of the NRF Big Show took place last 12-15 January 2025. It was reportedly a record show, with an attendance of more than 40,000 visitors from 105 countries, 1,000 exhibitors and 500 journalists . Just like last year, the lines were long, and energy was palpable, even though one can wonder if traffic was evenly distributed over all days or if more action took place on day one, with the audience then disseminating in side events, meetings and visits during the following days.

The sense of energy was also echoed in the streets and stores of New York, with a clear message: the US market is back on track, confident and optimistic. NRF reported that US sales in December were up 2.19% month-on-month in December and +8.41% year-on-year, thanks to a well-performing Thanksgiving.

The key outcomes of the conferences and events were :

-    AI is now a tangible reality, with many exhibitors claiming to be part of the game (to the point of saturation). Many use cases are already in use in stores or within companies: Dick’s Sporting Goods uses an AI-powered pricing model to handle its markdown strategy across 11m SKUs. This re-orients the conversation: the story is not anymore about “AI or not AI” but “how to deal with investments, ROI and potential financial risks when implementing AI in operations?” as successful implementation requires substantial investment and a willingness to embrace trial and error. Somehow, this guides the implementation of new use cases towards simpler ones with more immediate ROI, which might explain the following:

• The omnipresence of computer vision in fraud detection as presented by Diebold Nixdorf, Zebra, and Microsoft,
• 3D assets for faster ad creation and “digital twins” for warehouse management, as touted by NVIDIA in the opening keynote, with Lowe’s creating a digital twin of its 1,700 stores to simulate various layouts and optimise merchandising.
• Going further than “simple” AI, Agentic AI was the big buzzword, with Microsoft presenting an agent that indicates the SKUs to move from warehouse to stores according to real-time sales. Google, NVIDIA, Salesforce, and SAP all announced similar new launch announcements.

-    Unified commerce: Customers are increasingly hungry for seamless personalisation across all channels through digital tools and platforms, interpreted by many as “physical retail has a future, provided it reinvents its stores to acquire more data and becomes competitive with e-commerce”. H&M announced during the conference a testing campaign with RFID coupled with AI, allowing salespeople to localise products better and be assisted during the sale process. Many guest speakers insisted on the importance of in-store experience, with the prediction of seeing in 2026 the rise of “fantailing”, embodied by Taylor Swift: spending is increasingly driven by entertainment, events and cultural passions.

-    Gen Z and Alpha customers are an increasing reality that retailers need to consider (especially given that Gen Z is more eager to visit a physical store than a Millennial). This raises questions about their concerns, such as sustainability, its costs, what needs to be done, the regulatory environment, or how to remain time-proof and culturally relevant.

IADS Note: From a more general perspective, our take is that this edition displayed an AI-powered frenzy, with acres of exhibition space dedicated to suppliers often offering “magical” solutions to retailers. In our opinion, which is shared with some analysts, one of the issues retailers now face is to cut through the noise and be able to select the right AI solution in a jungle of options, many of which seemed to be “solutions looking for a problem”, simply forgetting that AI is a facilitator. Another significant issue is to ensure cybersecurity as AI implementations open up the range of available vulnerabilities. This is why the IADS has re-ignited its partnership with the Retail and Hospitality Information Sharing and Analysis Center (RH-ISAC).

What follows is a subjective selection of conferences, news and stores that we believe could be interesting for our members as we try to cut through the noise and self-promoting topics.

Heritage meets innovation: Digital growth strategies with Mattel and Reebok – Jamie Cygielman, Sr VP/GM, American Girl, Ivy Solari, VP digital commerce, Reebok.

American Girl's journey from its 1986 origins as a catalogue-based business sending out 500,000 mail orders to its current status as a digital-first retailer under the Mattel umbrella demonstrates the brand's adaptation to changing consumer behaviours. The company leverages its first-party data to understand customer buying patterns, collection preferences, and demographic information. Their rewards programme has become a key tool for building customer relationships through various initiatives, including e-certificates, exclusive events, and product launch priorities.

Reebok's transformation has been equally significant, though following a different path. Originally a wholesale-focused footwear and apparel manufacturer, the company has undergone substantial organisational changes. Following Adidas's divestiture, Reebok's intellectual property is now owned by Authentic Brands Group (ABG). U.S. operations were recently transferred to Galaxy Universal from Spark, which has merged with JCPenney to form Catalyst brands.

The physical retail strategy of both brands reveals distinct approaches to customer engagement. American Girl operates flagship stores in key locations like New York City and Chicago, alongside newer expressions in Los Angeles and Dallas. These stores exemplify the "retailtainment" concept, offering experiences beyond traditional shopping, including tea services, doll hair salons, and celebration spaces. The strategy has proved successful, with store visitors spending 25% more over their lifetime with the brand than non-store customers.

Reebok's retail presence has historically focused on outlet locations targeting value-driven consumers, but plans are underway to expand into full-price, experiential stores by 2025-2026. The brand maintains a strong wholesale presence across various channels, from big box stores like Costco to fashion-forward retailers like Urban Outfitters.

Digital engagement strategies have evolved significantly for both brands. American Girl's social media success relies heavily on video content across Instagram Reels and TikTok, structured around three pillars: cultural trends, nostalgia, and storytelling through dolls. The brand has found particular success with micro-influencers, perceived as more authentic than traditional high-follower influencers. Their YouTube strategy, primarily through YouTube Shorts, has effectively driven demand among younger audiences while maintaining traditional catalogue distribution for its proven effectiveness in driving child engagement.

Reebok's digital strategy emphasises partnerships and cultural relevance. The brand recently announced collaborations with athletes like Bryson DeChambeau and maintains relationships with basketball icons Shaquille O'Neal and Allen Iverson. The brand has successfully executed cross-industry collaborations, such as its Barbie-themed product line with Mattel, demonstrating its ability to leverage partnerships for broader market appeal.

Both companies are carefully balancing upper and lower-funnel marketing investments. American Girl maintains year-round brand campaigns while intensifying lower-funnel activities during the critical fourth-quarter holiday season. Reebok has recently increased upper-funnel investment with its new brand campaign while maintaining strategic lower-funnel activities during key selling periods.

Key takeaways:

1. Data-driven omnichannel integration is critical: Modern retail leadership requires seamless integration of digital and physical channels, powered by robust data analytics. American Girl's utilisation of first-party data from its house file and rewards program, combined with its experiential retail locations, has created a 25% lifetime value increase for store visitors. Data-informed omnichannel strategies can significantly enhance customer value and brand engagement.
2. Physical retail evolves beyond traditional commerce: To remain relevant, physical retail spaces must offer more than transaction opportunities. American Girl’s success with experiential elements like tea services, doll hair salons, and celebration spaces demonstrates that stores should function as brand experience centres. This is further reinforced by Reebok's strategic .pivot from purely outlet-focused locations to planned experiential stores.
3. Social media strategy requires authentic, platform-specific approaches. Both brands' experiences highlight the evolving nature of social media engagement in retail. The shift from high-follower influencers to micro-influencers demonstrates the growing importance of authentic content over reach. The success of video content across platforms like YouTube Shorts, Instagram Reels, and TikTok, combined with platform-specific content strategies, shows that retailers must develop nuanced, platform-appropriate content strategies rather than taking a one-size-fits-all approach to social media.

Game-changing: Culture’s influence on navigating volatility and fueling long-term growth – Brian Cornell, CEO, Target, Abubakarr Bangura, Group Vice President, Target, Michael Bush, CEO, Great Place To Work

Over the past 11 years, Target has added $35 billion in revenue, representing a 50% increase in size, while building 250 new stores and remodelling 1,200 locations. The company has expanded its workforce to over 400,000 team members, developed a $30 billion own-brand portfolio, and tripled its digital business. Cornell emphasised that these achievements weren't simply the result of boardroom decisions but were driven by investments in people and culture.

The company's culture, centred on “care, growth, and winning together”, has proven to be a powerful differentiator (even though Cornell admitted it was often easy to forget the “care” part of the motto). This is evidenced by metrics from Great Place to Work surveys, showing that 70% of Target employees consider it a great workplace and feel personally cared for. The company ranks third on the Best Workplaces in Retail list and leads among organisations with over 100,000 employees.

Abubakarr Bangura, a high-ranking Target executive, was invited on stage as a testimony of this policy. Bangura’s journey from Sierra Leone to leading 80 Target stores across five states in one of America's fastest-growing regions exemplifies the company's commitment to talent development. His region has experienced 14% population growth and attracted over $100 billion in new income across states like Texas, Florida, the Carolinas, Georgia, and Tennessee, serving as an innovation hub for the company's latest initiatives.

Target's approach to leadership development is particularly noteworthy. The company recently launched a six-month-long Store Director Development Programme, co-created with store directors, which has already shown remarkable results. Among the 1,000 participants (out of a total target of 2,000), 100% believe they can grow their careers with Target, and 92% report improved performance. The program's success stems from its collaborative design.

The discussion also addressed the issue of AI in retail. Target has implemented an AI chatbot called Stores Companion, which helps frontline teams with operations and customer experience. Rather than viewing AI as a threat, Target positions it as a growth enabler, similar to how e-commerce has created new opportunities. The company's unique model, where stores fulfil 95% of sales, demonstrates how technological integration can enhance rather than replace human roles.

Investment in employee education remains a priority, with Target's Dream2B program offering tuition-free education opportunities. Notably, 90% of programme participants are frontline workers, highlighting the company's commitment to developing talent at all levels.

These investments have yielded tangible results, with Bangura’s region seeing a 71% improvement in store director retention and a 63% reduction in executive team turnover over three years, leading to a 4-5 point improvement in guest experience scores.

For retail leaders navigating similar challenges, the discussion emphasised several key principles:

-    Listening to frontline teams,

-    Investing in talent development regardless of company size,

-    Maintaining human connection while embracing technological advancement.

Cornell stressed that success in retail's future will depend on effectively balancing technological innovation with meaningful human interaction.

Key Takeaways:

1. Culture of care is fundamental to success: Target's success demonstrates that prioritising a culture of care is not just about employee satisfaction but drives business performance. With 7 out of 10 employees saying they feel cared for as people (not just employees), and an 83% retention rate, Target's approach shows that investing in people yields tangible results. This is evidenced by their store director development programme, which achieved 100% of participants feeling they could grow their careers with Target, and 92% reporting improved performance.
2. Leadership development must be co-created and systematic: Target's approach to leadership development emphasises the importance of co-creation with frontline leaders and systematic implementation. Their six-month store director development programme, co-created with store directors, has been scaled to 2,000 leaders. This systematic approach to development has led to concrete results, including a 71% improvement in store director turnover rates and a 63% improvement in executive team turnover rates over three years, directly impacting operational performance and guest experience scores.
3. Technology integration requires a growth-focused culture. As retail faces AI and technological transformation, success depends on creating a growth-focused culture that helps employees embrace change rather than fear it. Target's approach includes:

• Implementing AI tools like their Store Companion chatbot while simultaneously investing in employee development,
• Offering programmes like Dream2Be (tuition-free education) with 90% participation from frontline workers,
• Maintaining a balance between technological advancement and human interaction, recognising that both will be crucial for retail's future.

Three brands, one growth strategy: The power of Macy’s, Inc.’s bold new chapter – Tony Spring, CEO, Macy’s Group, Olivier Bron, CEO, Bloomingdale’s, Maly Bernstein, CEO, Bluemercury

Macy's Inc. is implementing its "Bold New Chapter" strategy, a three-year transformation plan adressing fundamental retail challenges while positioning its portfolio brands for future growth. The strategy emerged from consumer research involving 60,000 customer interviews and focuses on enhancing retail fundamentals: merchandise assortment, service experience, marketing modernisation and supply chain efficiency.

According to Spring, early results are promising, with the company reporting positive indicators in its initial execution phase. Specifically, Macy's has seen three consecutive quarters of improvement in net promoter scores and comparable store sales growth in its first 50 focus stores, where enhanced merchandise assortment, improved visual presentation, and reinforced fitting room service have been implemented. The company also leverages advanced technologies, particularly in inventory operations, using algorithmic approaches to optimise fulfilment and reduce split shipments.

Blue Mercury has consistently performed in 15 consecutive quarters of comparable sales growth. The beauty retailer's success stems from its neighbourhood-focused approach and personalised beauty consultation model. CEO Maly Bernstein emphasised the company's strategy of creating custom beauty plans for customers, supported by enhanced staff education and training and a recent brand refresh that reinforces its position in luxury beauty for modern consumers.

Under new CEO Olivier Bron, IADS Member Bloomingdale's is executing its strategy of elevating the brand from aspirational to luxury positioning. Bron highlighted the unique customer mix and brand assortment that distinguishes Bloomingdale's, emphasising that its customers are often exclusive to the brand and not typically found in standalone luxury boutiques. In luxury, customers are not that interested in buying a product than an exciting and compelling story, which is why Bloomingdale’s focuses on experience and relationship to convey that story to them. As a consequence, Bron mentioned that a key area of investment was in the stores themselves, to be coherent with this strategy. Also, he noted that such a strategy was a good answer to the growing culture of “dupes” in the US.

Addressing the persistent question of department store relevance, Spring defended the format's viability, reframing it as a "physical marketplace" model offering unique merchandise curation and channel flexibility advantages. While remininding that the company was closing up to 150 stores, he emphasised that the portfolio approach, combining Macy's, Bloomingdale's, and Blue Mercury, provides significant operational synergies in warehousing, legal, finance, and brand negotiations (even though he acknowledged that these brands' value might not be fully reflected in Macy's share price).

Adressing integrating artificial intelligence in retail operations, all three brands leverage AI for personalisation, forecasting, and planning while maintaining a careful balance between technological advancement and human connection. Spring highlighted the ongoing tension between privacy and personalisation, emphasising the importance of responsible data usage in building customer trust.

Regarding the current retail environment and potential policy changes, Spring addressed concerns about tariffs and immigration policy impacts, noting that the company has experience navigating similar challenges from 2016 to 2017 through supply chain diversification and partner collaboration. The consequence of the upcoming regulatory shift on immigration remains a question mark.

The executives' assessment of the American consumer revealed an optimistic outlook, with customers characterised as both cautious and excited about retail's future. Bron emphasised consumers' desire for inspiration and exceptional experiences. At the same time, Spring noted the intersection of technology and humanity in current retail dynamics through establishing fair and mutually beneficial trading relationships with the rest of the world.

Key takeaways:

1. Transformation through consumer-centric strategies: Macy's Inc. is undergoing a significant transformation with its "Bold New Chapter" strategy, rooted in extensive consumer research. The company focuses on retail fundamentals such as enhancing merchandise assortment, improving service experience, modernising marketing efforts, and optimising supply chain efficiency. This consumer-centric approach is yielding positive early results, with increases in net promoter scores and store sales growth.
2. Leveraging brand synergies and AI: The portfolio of Macy's Inc., including Macy's, Bloomingdale's, and Blue Mercury, benefits from operational synergies that support backend efficiencies and brand negotiations while maintaining distinct brand identities. The use of AI across operations to enhance personalisation, forecasting, and planning exemplifies how technology can be integrated to augment both customer experience and operational efficiency, while still preserving the human element in retail.
3. Positioning for the future amidst external challenges: The leadership remains attentive to external economic and policy challenges, such as tariffs and immigration changes, which could impact operations. However, they are ready to adapt through strategic diversification and collaboration.

Lacing up for success: Transforming retail experiences and deepening customer relationships - Mary Dillon, CEO Foot Locker

Foot Locker celebrates its 50th anniversary by reimagining its approach to an evolving consumer while staying true to its heritage. Its strategic vision centres on becoming the premier destination for sneakers and discovery across its various banners, including Foot Locker Global, Kids Foot Locker, Champs Sporting Goods, and WSS.

The company's transformation is built on three fundamental principles:

• Enhancing customer satisfaction through the "Power Portfolio" initiative. A cornerstone of this effort is the new “Reimagined” store concept, with eight locations already operational worldwide, including a flagship store on 34th Street in New York City. These stores feature innovative elements such as the "Drop Zone" showcasing trending products, the "Kick It Club" for communal try-ons, and customisation stations. The basketball-focused "Home Court" section pays homage to the company's legacy while offering a multi-brand experience featuring Nike, Adidas, and Puma products. By the end of 2025, Foot Locker plans to have refreshed approximately two-thirds of its global fleet of 2,500+ stores. Regarding digital, the company launched a completely redesigned mobile app on major platforms, integrating seamlessly with its enhanced loyalty programme. This revamped loyalty system extends beyond providing access to product launches, incorporating broader rewards, perks such as free shipping and returns, and unique experiences like NBA game access.

• Leveraging the expertise of their "stripers" (store associates), thanks to a practical approach to in-store technology, including equipping them with handheld devices for improved inventory visibility and point-of-service access, as well as implementing virtual shoe sizing technology, especially in the kids' section. These technological enhancements enhance operational efficiency while allowing staff to focus on customer interaction.

• Fostering strategic growth partnerships with brands: a multi-year agreement with the NBA as an official marketing partner and a collaboration with the Chicago Bulls demonstrate Foot Locker's commitment to maintaining its leadership position in basketball culture. These partnerships manifest in various initiatives, including major activations during events like NBA All-Star Weekend.

Despite broader industry challenges, including a tough recent quarter, Foot Locker remains ahead of its transformation goals. Expanding into women's footwear has emerged as one of the company's fastest-growing segments. This expansion aligns with the company's goal of broadening sneaker culture and attracting new consumer segments while maintaining strong relationships with core customers.

Key Takeaways:

1. Reimagining the retail experience: Foot Locker's "Power Portfolio" initiative boldly redefines the in-store experience, emphasising innovation and customer engagement by focusing on creating a vibrant, experiential shopping environment that celebrates sneaker culture.
2. Digital transformation and integration: The redesign of Foot Locker's mobile app and the enhancement of the loyalty programme demonstrate a pivot towards digital integration. By linking the app with loyalty rewards and offering features like virtual shoe sizing, Foot Locker is enhancing the customer journey and ensuring that digital investments translate into tangible benefits.
3. Strengthening brand partnerships and cultural ties: Foot Locker's renewed focus on basketball, through partnerships with the NBA and the Chicago Bulls, underscores the strategic value of aligning with cultural icons and sports heritage. These partnerships reinforce Foot Locker's brand identity and solidify its leadership in sneaker culture.

Interesting stores:

Note: we will add the locations below to the New York City Guide.

Dyson SoHo, 155 Mercer St.

Banana Republic SoHo, 552 Broadway

Whole Foods Market Daily Shop, 1175 Third Avenue

Skims, 647 5th Avenue

A subjective selection of innovative startups - AI

The NRF Retail’s Big Show replaced this year the “Innovation Lab” exhibition space by the “Innovator Showcase”, a selection of 50 companies already in operation and with robust solutions (the Innovation Lab was more a showcase for POCs). Here is a selection of companies from this space:

Lili AI: a natural language tool that enriches product attributes on e-commerce platforms according to consumers’ searches and sends them to Google Ads or other recommendation tools. Revenue is said to grow +3 to +25% thanks to this solution, which is already used by Macy’s or Abercrombie & Fitch.

G2RL: a tool allowing to predict and recommend what to do with returned products, make the best economic decision and look for re-commerce opportunities.

Vanish Standard, a Japanese company allowing store employees to create content for their e-commerce websites. The platform measures customer engagement and employees are commissioned on sales made through this new tool. CLV is said to triple for customers interacting with these videos.

Curated for you: a tool that personalises product pages and content according to customers’ tastes and expectations.

Credits: IADS (Selvane Mohandas du Ménil)

What: Major entertainment and social media platforms are aggressively expanding into retail through multi-channel strategies, capturing USD 361 billion in social commerce sales whilst launching physical retail spaces.

Why it is important: The convergence of content and commerce is revolutionising how consumers discover and purchase products, as evidenced by 57% of TikTok Shop transactions coming from new customers, demonstrating these platforms' unique ability to drive both engagement and sales.

The retail landscape is experiencing a significant transformation as content platforms like TikTok, Netflix, and YouTube venture into commerce. These companies, originally designed for entertainment and social connection, are now developing sophisticated retail capabilities through shoppable content, dedicated marketplaces, and physical retail spaces. Netflix's ambitious plans include launching 100,000-square-foot experiential venues in Dallas and Philadelphia, featuring show-inspired dining and merchandise. Meanwhile, social media platforms, particularly TikTok, are revolutionising shopping behaviors, with projected social commerce sales expected to reach USD 800 billion by 2028. The platform's success in markets like China, where its sister app Douyin has become the largest online beauty retailer, demonstrates the potential of this hybrid model. Despite regulatory challenges, including potential bans in the US, these platforms continue to reshape consumer expectations and challenge traditional retail boundaries, forcing established retailers to adapt to a new era where entertainment, social interaction, and shopping are increasingly intertwined.

IADS Notes: The transformation of content platforms into retail powerhouses, as described in the article, is substantiated by significant market developments throughout 2024 and early 2025. TikTok Shop's emergence as the second-largest e-retailer behind Amazon during UK's Black Week in December 2024 demonstrates the platform's remarkable evolution from social media to commerce. This shift is particularly significant given that 23% of Gen Z purchases are influenced by viral TikTok trends, representing a substantial portion of their USD 360 billion spending power. Traditional retailers are responding to this disruption by adapting their strategies, as evidenced by Barnes & Noble's successful leverage of BookTok's influence. The trend extends beyond digital platforms, with Netflix's planned 100,000-square-foot experiential spaces aligning with the broader industry movement toward "third spaces" that blend entertainment and retail. This transformation is reshaping consumer expectations, with retailers increasingly integrating technologies like AR and RFID to create seamless experiences that bridge the digital-physical divide.

Why content platforms like TikTok and Netflix are turning to retail

What: Baby boomers emerge as overlooked luxury powerhouse, holding 50% of US household wealth while demonstrating distinct shopping behaviors and category preferences.

Why it is important: This analysis reveals a significant opportunity for luxury retailers to better serve a wealthy demographic through targeted strategies combining heritage messaging with personalised service.

Baby boomers, holding half of the US's USD 140 trillion in household wealth, represent an underserved opportunity in luxury retail. Despite their significant spending power, which exceeds Gen X's wealth by more than double and millennials' by fourfold, this generation has been largely overlooked in luxury marketing. Their shopping behavior shows strong brand loyalty and preference for in-store experiences, though they're increasingly adopting digital channels, with TikTok usage growing 128% since 2020. The generation demonstrates distinct category preferences, shifting from fashion to experiences, travel, and wellness spending. Their connection to luxury's "golden era" of the 1990s drives preferences for heritage, craftsmanship, and quality, while demanding high-touch clienteling services and personaliSed experiences.

IADS Notes: The revelation that baby boomers hold 50% of US household wealth (USD 140 trillion) while being largely overlooked by luxury marketers signals a significant opportunity in the sector. The generation's distinct shopping behaviours, including strong brand loyalty and preference for in-store experiences, mirrors November 2024's analysis of retailers balancing traditional approaches with new engagement strategies. Their shift toward experience-based luxury spending and wellness, combined with the need for heritage-focused messaging and high-touch clienteling, reflects August 2024's observations about the importance of creating unique shopping experiences while maintaining brand heritage.

Understanding the baby boomer consumer

What: A comprehensive DEI playbook outlines five key strategies for expanding diversity initiatives beyond workplace policies to encompass customer experience, product development, and supplier diversity.

Why it is important: With major retailers like Walmart and Amazon modifying their DEI approaches, this playbook offers timely guidance for maintaining inclusive practices while adapting to market pressures.

The Executive Playbook for Expanding the Impact of DEI presents a transformative approach to diversity initiatives in retail organisations. The document outlines five essential strategies that extend DEI beyond traditional workplace policies, addressing customer experience, product development, and supplier relationships. Through detailed case studies, including the Miami Heat's innovative size-inclusive apparel line, the playbook demonstrates how inclusive practices can drive business growth and market expansion. The framework emphasises the importance of data-driven decision-making and measurable outcomes, particularly in developing inclusive products and services. The text provides practical guidance for building inclusive marketplaces whilst maintaining business performance, offering solutions for common challenges in implementing comprehensive DEI strategies. The playbook's approach is particularly relevant as retailers navigate changing consumer demographics and evolving market expectations, supported by research showing the direct correlation between inclusive practices and business success.

IADS Notes: The retail industry's approach to DEI has undergone significant transformation in recent months. In January 2025, Costco maintained its DEI policies despite activist pressure, while Amazon rebranded its initiatives as "Inclusive eXperiences and Technology" in December 2024. Walmart's strategic pivot in November 2024, which involved maintaining inclusion practices whilst modifying terminology, has proven particularly successful, demonstrating the effectiveness of balanced approaches to DEI implementation.

The Executive playbook for expanding the impact of DEI, executive summary

Check out the full playbook here

What: The evolution of retail media networks is driving brands to integrate traditional shopper marketing expertise with digital capabilities rather than treating them as separate disciplines.

Why it is important: The success of pre-planned television partnerships is creating new revenue streams and marketing opportunities for both entertainment platforms and luxury retailers.

The retail media landscape is undergoing a significant transformation as brands adapt to the growing complexity of consumer engagement. According to the IAB Australia report, 70% of retail media spend is being diverted from traditional advertising channels, while 30% comes from trade retail budgets. This shift is prompting organizations to restructure teams and bridge crucial knowledge gaps between retail veterans and digital specialists.

Companies like Tillamook County Creamery Association are maintaining separate budgets for trade funds and retail media, while others like Goodman Fielder are implementing integrated planning models. The evolution extends to team structures, with many organizations rebranding from 'retail marketing' to 'omnishopper' or 'omnichannel marketing' to reflect changing consumer behaviours. This transformation is particularly evident in measurement capabilities, with digital channels offering unprecedented tracking of sales performance compared to traditional shopper marketing activities.

IADS Notes: As observed in January 2025, retailers like Currys expanded their retail media offerings into physical stores, projecting 40 million annual impressions. This trend gained momentum in October 2024, when major retailers like Boots and Co-op enhanced their media networks to leverage customer data and improve brand engagement. By July 2024, industry research showed retail media networks could potentially double retailers' margins from 1.7% to 4.3%, while March 2024 data indicated retail media advertising was projected to reach USD 100 billion in the US market by 2027.

Retail media forces brands to rethink shopper marketing—not replace it

What: Myer and David Jones are reimagining the department store model through consolidation, experiential retail, and omnichannel innovation amid shifting consumer preferences.

Why it is important: This strategic shift demonstrates how legacy retailers can leverage their heritage while embracing modern retail practices, particularly significant given Myer's recent AUD 864 million merger and the sector's broader digital transformation.

Australia's department store sector is undergoing a fundamental transformation as it adapts to the digital age and evolving consumer behaviours. Once dominant retail destinations, these stores now face intense competition from online platforms, specialty retailers, and discount chains. While recent data shows some positive signs, with a temporary uptick in department store sales in November, the overall trend indicates ongoing challenges, as evidenced by September 2024's 0.5 per cent decline in sales. The sector's response has been multifaceted, combining strategic consolidation with digital innovation. Department stores are reimagining their role as brand houses, learning from past experiences like Myer's handling of Sass & Bide, while simultaneously developing robust e-commerce capabilities. The challenge lies in balancing traditional strengths with modern retail demands, particularly as consumers increasingly seek seamless shopping experiences across both physical and digital channels. The future success of Australian department stores hinges on their ability to create compelling hybrid experiences that leverage both online convenience and in-store engagement, while maintaining strong brand partnerships and unique customer experiences.

IADS Notes: The current challenges facing Australian department stores, as outlined in the article, are being met with significant strategic responses, as evidenced by recent industry developments. In January 2025, Myer's landmark AUD 864 million merger with Premier Investments marked a decisive move to combat digital disruption and changing consumer preferences. This consolidation follows Myer's September 2024 announcement of ambitious digital transformation goals, including a target of AUD 1 billion in annual e-commerce sales. The strategy aligns with broader industry trends identified in November 2024's NuOrder report, which emphasised the critical role of personalisation and AI-driven operations in modern retail. The rightsizing initiatives observed in June 2024, with both Myer and David Jones strategically reducing their physical footprint, demonstrate the sector's adaptation to new market realities. These transformative actions suggest that while Australian department stores face significant challenges, they are actively evolving their business models to remain relevant in an increasingly competitive retail landscape.

What does the future hold for Australian department stores?

What: A new 'goods getaway' trend is emerging where travelers choose destinations based on unique product availability, as evidenced by viral Dubai chocolate and Korean beauty product phenomena.

Why it is important: This trend signals a fundamental shift in travel retail, where product exclusivity and social media influence are becoming primary drivers of destination choice, creating new opportunities for retailers to attract international customers.

A significant transformation is occurring in global travel retail as consumers increasingly plan their journeys around specific shopping destinations and unique products. This emerging 'goods getaway' trend is particularly evident in two case studies: a viral Dubai chocolate bar that created distinct transaction peaks on delivery apps, and Korean beauty products driving increased tourist spending in South Korea.

The trend is being shaped by demographic and technological factors, with Gen Z, representing a quarter of the world's population in 2024 and projected to account for 30% of all travelers by 2030, leading this shift. Analysis of VisaNet data reveals how product availability in specific locations is no longer just a travel coincidence but a key motivator for destination choice. This evolution is creating new opportunities for both retailers and financial institutions to develop targeted strategies that cater to these travel-motivated consumers, particularly through digital platforms and exclusive offerings.

IADS Notes: The emergence of "goods getaways" in February 2025 represents a significant evolution in travel retail, building on several key trends observed throughout 2024. This shift aligns with findings from November 2024 showing how Gen Z travelers are fundamentally redefining travel retail by prioritizing immersive experiences over traditional duty-free shopping. The trend is supported by May 2024 projections indicating the global travel retail market's expected growth to USD 121.09 billion by 2029, driven by changing consumer behaviors and digital integration. This transformation is particularly evident in the Chinese market, where November 2024 data showed over 70% of travelers now plan their trips around shopping activities. The post-pandemic surge in tourism has particularly benefited fashion and beauty retailers, as noted in July 2024, though spending patterns have shifted significantly from traditional shopping to experience-driven consumption. These developments collectively signal a new era in travel retail, where product exclusivity and experiential elements are becoming primary drivers of destination choice.

Chocolate trails and beauty tales: ‘Goods getaways’ are on the rise

What: Saks Global faces significant operational and financial challenges just months after its USD 2.7 billion merger with Neiman Marcus.

Why it is important: The challenges highlight the complexities of luxury retail consolidation and the delicate balance between cost-cutting and maintaining brand value.

The newly formed Saks Global is encountering substantial challenges in its post-merger integration with Neiman Marcus. The company's vendor payment schedule has been extended to July 2026, raising concerns about liquidity despite earlier assurances of financial stability. Strategic restructuring includes significant store closures, notably the historic downtown Dallas Neiman Marcus location and the Palm Beach Saks store, whilst simultaneously announcing a GBP 100 million investment in the NorthPark Center location.

The company faces mounting pressure from brand-owned stores and online competitors, compelling a comprehensive reset of its business model. This includes reducing brand partnerships by 25% from its current 3,000 vendors and implementing new payment terms. The loss of key personnel, including super-seller Catherine Bloom to Nordstrom, further complicates the transformation. Despite these challenges, Saks Global maintains its vision of creating a technology-driven luxury retail powerhouse through partnerships with Amazon and Salesforce.

IADS Notes: The transformation of Saks Global has evolved significantly since the merger's announcement in July 2024, when it promised to create a USD 10 billion luxury powerhouse. By December 2024, the company secured USD 2.2 billion in bond financing and established partnerships with technology giants. However, February 2025 brought significant changes, including store closures and vendor payment restructuring, indicating the complex reality of post-merger integration. This evolution mirrors broader industry challenges, as luxury department stores struggle to balance traditional retail models with digital innovation and changing consumer preferences.

Is the Saks/Neiman’s merger already in trouble?

What: Workday has introduced the "Agent System of Record," a platform designed to register, manage, train, and integrate enterprise AI agents, offering businesses a centralised solution to handle their growing "digital workforce."

Why it is important: With companies deploying increasing numbers of AI agents, Workday’s solution simplifies governance, enhances security, and ensures seamless integration into existing workflows, addressing critical concerns like data privacy and operational efficiency in the age of enterprise AI. As the use of AI agents grows across enterprises, Workday has launched the "Agent System of Record" to streamline their management. This platform allows businesses to register, provision, and train AI agents while integrating them into the Workday Assistant for smoother operations.

The system enables companies to define agent-specific privileges, create security groups, and customise workflows through Workday Extend, functioning as a governance and innovation hub for AI agents. By offering a unified framework, Workday positions itself as a vital player in enterprise AI, ensuring customers can securely adopt and manage AI tools without risking data security or operational chaos. This move not only solidifies Workday's relevance in enterprise tech but also empowers developers and IT staff to tailor AI agents for unique business needs, reinforcing its value amid the evolving AI landscape.

IADS Notes: Workday's AI Agent System of Record launch comes at a critical moment in retail's AI transformation journey. As of January 2025, while 87% of retailers implementing AI are seeing revenue increases of 6% or more , the industry faces significant challenges in scaling these technologies, with only 10% successfully expanding their AI applications . The platform addresses crucial security concerns, particularly relevant as 76% of executives acknowledge the need for improved AI cybersecurity measures .

This solution is timely, as retailers currently lose 4.5% of gross sales due to inefficiencies , while successful implementations like Walmart's processing of 850 million product data points demonstrate the potential of well-managed AI systems. The platform's focus on integration addresses a critical pain point, as nearly half of retailers struggle with data accessibility and connecting data silos . With the global generative AI market reaching USD 79.8 billion in 2024 and 67% of executives considering AI systems as part of their transformation strategy , Workday's solution could bridge the gap between AI adoption ambitions and successful implementation.

Workday makes a play to manage your AI agents

What: Anthropic's Economic Index reveals AI adoption is concentrated in mid-to-high wage occupations, with 36% of jobs using AI for at least a quarter of their tasks, whilst favouring augmentation (57%) over automation (43%).

Why it is important: The findings challenge assumptions about AI's impact on employment, offering evidence-based guidance for retailers as they balance automation with human capabilities, especially given that only 10% of companies successfully scale their AI applications.

The Anthropic Economic Index provides groundbreaking insights into AI's impact on the labour market through analysis of millions of anonymised conversations. The research reveals that AI adoption follows a nuanced pattern, with over one-third of occupations incorporating AI into at least 25% of their tasks, whilst only 4% use it extensively across 75% of their work. Notably, the study finds that AI implementation leans towards augmentation rather than automation, with 57% of use cases involving human-AI collaboration. The concentration of AI adoption in mid-to-high wage occupations, particularly in software development and technical writing, suggests a strategic rather than wholesale approach to implementation. This pattern reflects both current technological limitations and practical adoption barriers. The study's task-based analysis methodology offers a more precise understanding of AI's integration into the workforce, moving beyond simple job displacement predictions to reveal a more complex picture of workplace transformation.

IADS Notes: The Anthropic Economic Index's findings about AI's impact on labor markets strongly align with retail industry developments over the past year. While the Index shows AI use leaning towards augmentation (57%) over automation (43%), this mirrors practical implementations in retail, where in June 2024, nearly half of retailers reported increased revenue from AI initiatives that enhanced rather than replaced human capabilities. The Index's task-based analysis approach is particularly relevant given October 2024 findings showing how retailers are targeting specific functions like demand forecasting and fraud detection rather than wholesale job replacement. The focus on mid-to-high wage occupations reflects the industry's strategic approach to AI deployment, exemplified by Walmart's August 2024 initiative processing 850 million product catalog data points. However, the implementation challenges highlighted in the Index are evident in January 2025 data showing that while 70% of retailers plan to implement AI, only 10% successfully scale their applications, underscoring the complexity of this transformation.

The Anthropic Economic Index, Press release

Which economic tasks are performed with AI - full report here

What: Young South Korean consumers are abandoning luxury brands in favor of affordable "dupe" products, marking a significant shift in Asia's luxury market dynamics.

Why it is important: This consumer behavior change in South Korea, a key trendsetting market in Asia, could indicate a longer-term restructuring of the luxury retail landscape, particularly among younger demographics.

South Korea's young consumers are increasingly turning away from luxury brands in favor of budget-friendly alternatives known as "dupes." According to Daehong Planning's social big data platform D-Bigs, mentions of premium brands like Chanel, Louis Vuitton, Hermès, and Rolex have disappeared from the top 50 words associated with "open run" on social media in 2024. The practice of queuing for luxury goods has declined, with "open run" mentions dropping from 405,736 in 2023 to 340,560 in 2024. Industry experts attribute this shift to market saturation and diminished exclusivity. Popular alternatives include Daiso's $2.06 Son & Park colour balm replacing Chanel's $43.29 product, and Uniqlo's $34.29 utility bag as an alternative to the $247.35 Yoshida Porter bag. This changing consumer behavior extends beyond products to experiences, with young Koreans redirecting spending toward travel, particularly to Japanese cities and local destinations, reflecting a broader shift in consumption priorities.

IADS Notes: The shift in South Korean consumers' luxury spending habits mirrors broader transformations observed throughout 2024 and early 2025. The trend aligns with December 2024's industry-wide challenges, where luxury sales declined by 2% globally amid changing consumer priorities. This evolution is particularly evident in Asia, where June 2024 data revealed growing "luxury fatigue" and a preference for discreet consumption. The redirection of spending towards travel experiences and affordable alternatives reflects a regional pattern, exemplified by July 2024's surge in tourist spending in Japan, where favorable exchange rates attracted value-seeking shoppers. As luxury brands adapt to these changes, many have introduced lower-priced products under $500 to maintain market share, while simultaneously pivoting towards the US market as Asian consumer behavior continues to evolve. This multi-faceted transformation suggests a fundamental restructuring of luxury retail, where value, experience, and authenticity are increasingly prioritized over traditional brand prestige.

Young South Koreans forsake luxury brands for ‘dupe’ products

What: Trump administration's new tariff policy targets 44% of US imports, with potential 25% duties on Mexican and Canadian goods and additional 10% on Chinese imports.

Why it is important: This policy shift represents the largest coordinated tariff action by a major economy, potentially triggering retaliatory measures and reshaping international trade relationships.

The US administration's announcement of substantial tariff increases marks a pivotal moment in global trade relations. The new policy would impose 25% tariffs on Mexican and Canadian imports (except for energy and critical minerals at 10%) and an additional 10% on Chinese goods. While implementation for Mexico and Canada is postponed during negotiations, the Chinese tariff increase is already in effect. BCG analysis projects USD 247 billion in additional costs based on current trade flows, with auto parts (USD 36 billion), vehicles (USD 30 billion), and metals (USD 19 billion) facing the heaviest impact.

Companies heavily reliant on these markets could see EBITDA margins decline by 6-14 percentage points. The policy's breadth affects integrated North American supply chains particularly severely, as Canada and Mexico account for significant portions of US imports in key sectors. Retaliatory measures from trading partners, including China's new tariffs on coal and oil and Canada's proposed countermeasures, further complicate the situation.

IADS Notes: The global trade landscape has transformed dramatically in early 2025. On January 14, BCG projected that a 60% tariff on Chinese goods would add USD 640 billion to US import costs , while December 19, 2024, saw Mexico implementing 35% tariffs on textile imports . The impact accelerated on February 4, 2025, when Trump eliminated the USD 800 de minimis rule affecting Shein and Temu , followed by China's immediate retaliatory measures against PVH and other US firms .

These developments compound existing supply chain vulnerabilities identified in January 6, 2025, when BCG's retail forecast emphasized the urgent need for more resilient operational models . This rapid succession of trade policy changes within just two months is forcing retailers to fundamentally restructure their global supply chains and sourcing strategies.

How to prepare for tariffs and the new reality of global trade

What: The EU launched the EUR 200bn InvestAI initiative, including EUR 20bn for AI gigafactories to advance Europe's AI capabilities and strengthen its position in the global AI race.

Why it is important: Amid intense competition with the US and China, the EU's massive investment underscores its commitment to fostering AI innovation, infrastructure, and accessibility, boosting Europe's competitiveness in future technologies.

The European Commission announced InvestAI, a EUR 200bn programme aimed at bolstering Europe's AI capabilities. It includes EUR 20bn to fund four AI gigafactories designed to train large-scale AI models, equipped with advanced chips to provide computing power to European companies. Positioned as a "CERN for AI," the initiative exemplifies a public-private partnership fostering AI innovation and accessibility. Funds will come from EU programmes like Horizon Europe, alongside contributions from member states. With heightened global competition, France and the EU's additional EUR 150bn "EU AI Champions Initiative" highlight a shift from regulation to innovation. The EU's 'competitiveness compass' aims to make the region more competitive globally.

IADS Notes: The EU's AI initiative marks a pivotal shift in Europe's technology strategy, coming at a critical time for retail transformation. While 87% of companies implementing AI report revenue increases , only 10% successfully scale their applications , highlighting the need for better infrastructure support. This initiative aligns with France's EUR 109bn AI investment commitment  and complements the private sector's EUR 150bn "EU AI Champions Initiative" , creating a comprehensive ecosystem for retail innovation. The focus on AI gigafactories addresses a crucial gap in computing power access, particularly relevant as European retailers increasingly adopt AI for hyper-personalisation . Major retailers' development of proprietary AI solutions  demonstrates the industry's readiness to leverage this enhanced infrastructure. This coordinated public-private approach represents Europe's strategic response to growing competition with the US and China , potentially establishing the EU as a key player in retail AI innovation.

EU launches EUR 200bn initiative to back AI and gigafactories

What: Autonomous AI shopping agents are emerging as retail's third wave of AI innovation, with 32% of consumer goods companies already implementing generative AI and moving towards complete shopping journey automation.

Why it is important: This evolution represents a critical turning point in retail, as autonomous agents reshape traditional retail media strategies and content requirements, while addressing the 73% of consumers who feel overwhelmed by online shopping choices.

The retail industry is witnessing a significant transformation as it enters the third wave of AI innovation through autonomous shopping agents. Following the evolution from predictive AI to generative AI, these autonomous agents can now complete entire shopping journeys with minimal human intervention. Salesforce's research reveals that 32% of consumer goods companies have already fully implemented generative AI, primarily focusing on digital commerce applications. This transition marks a fundamental shift in capabilities, moving beyond simple question-answering to autonomous action-taking. Major retailers like Saks and SharkNinja are already implementing these technologies through platforms like Agentforce, enabling sophisticated customer interactions and automated shopping processes. The impact extends to retail media networks, where traditional advertising approaches are being reconsidered as AI agents begin influencing purchasing decisions. For brands and retailers, this shift necessitates a recalibration of their digital presence, content strategy, and retail media approach. The emphasis is moving towards structured data and standardised attributes that AI agents can effectively process, potentially transforming how products are discovered and purchased. Despite concerns about outcome quality and employee acceptance, the technology's rapid adoption suggests its transformative potential is being widely recognised.

IADS Notes: The retail industry's transition to autonomous AI shopping agents, as discussed in the article, is strongly supported by recent market developments. In January 2025, research revealed that 38% of global consumers were already actively using AI tools for shopping, with an impressive 80% reporting positive experiences. This consumer readiness coincides with significant operational improvements, as demonstrated by Klarna's AI assistant reducing customer resolution times from 11 to 2 minutes. The impact on retail media is particularly noteworthy during the 2024 holiday season, where AI influenced USD 229 billion in spending through targeted offers. These developments validate the article's prediction of a fundamental shift in retail, especially considering that 87% of companies implementing AI reported revenue increases of 6% or more. The transformation is particularly timely, as 73% of consumers report feeling overwhelmed by traditional online shopping experiences, suggesting that autonomous AI agents could address a significant market need.

How autonomous AI shopping agents will transform retail

What: As consumer spending on fashion declines across major markets, retailers at all price points must increasingly demonstrate their value beyond price alone, with luxury brands particularly challenged to justify premium pricing amid heightened competition and changing consumer priorities.

Why it is important: This evolution in consumer attitudes forces retailers to adapt their strategies across all price points, balancing the need to demonstrate value while maintaining profitability in a market where shoppers are increasingly selective about their purchases.

The retail landscape faces a fundamental shift as consumers conduct increasingly rigorous internal negotiations about purchase value. With over 40% of shoppers in major markets reducing fashion spending in 2024, brands must work harder to justify their pricing. At the luxury level, brands face pressure from new competitors attempting to undercut prices, while mass-market retailers must differentiate themselves among numerous affordable options. Success requires a clear market position, differentiated products that cultivate desire, marketing that emphasizes quality and distinctiveness, and a rewarding sales experience. Retailers like Uniqlo focus on convenience and efficiency, while luxury brands emphasize personalization and service. The key lies in understanding and delivering what specific customer segments value most, whether that's customization, rarity, or experience.

IADS Notes: Recent market analysis reveals significant shifts in consumer spending patterns. According to BoF and McKinsey reports, over 40% of shoppers in major markets are reducing fashion expenditure, while luxury retail faces particular challenges in justifying premium pricing. This aligns with broader industry trends showing consumers becoming more discerning about value, forcing retailers across price points to demonstrate clear value propositions beyond mere pricing strategies.

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