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Last November, the IADS had the opportunity to visit the recently revamped Oxford Street John Lewis store with its higher management. This was the perfect opportunity to review John Lewis's recent history and see how this overhaul fits into a larger narrative of change for a company that has been going through difficult moments in its recent history.

John Lewis & Partners: the English Grand Old Lady

John Lewis was founded in 1864 as a drapery shop on Oxford Street by the eponymous businessman. He then acquired the Peter Jones store (opened in 1877 in Sloane Square) after Jones passed away in 1905. That was the beginning of the expansion: the Jessops & Son store in Nottingham was the first store outside London to be purchased in 1933. It was rebranded as a John Lewis store only in 2002 . Then, the company acquired the Selfridges Provincial Stores company in 1940  and a store in Reading, Heelas, in 1953 (here again, the name survived untouched until 2001).

Going beyond acquisitions, the department store company started in the seventies to build new stores to relocate city-centre units in the then-newfound malls: the Jessops store in Nottingham was relocated from its historic city-centre location to the Victoria Centre mall in 1972, the Bainbridge’s store in Newcastle (founded in 1838 and sold to John Lewis in 1952) was relocated to the Eldon Square shopping centre in 1976, for instance. Soon, the company started to build from scratch new units without a pre-existing base, such as London’s Brent Cross in 1976 (in a new mall), Milton Keynes store in 1979 (in the middle of a newly-erected city), the Cheadle store in Manchester (1995), Canary Wharf in 2011, or the White City store in the Westfield mall in 2018. Today, the company operates 34 stores exclusively under the John Lewis name across England, Wales and Scotland. The largest is the historical Oxford Street store (39k sqm), followed by the Glasgow store, which opened in 1999.

The department store group acquired a supermarket chain, Waite, Rose & Taylor (later shortened to Waitrose), in 1937. Today, Waitrose operates 329 stores in the UK, including 65 “little Waitrose” stores (a convenience store format) and several locations in the Middle East.

As a group (including Waitrose), John Lewis is special because it was designed as a “partnership” back in 1929: every team member is a de facto company shareholder. While the partnership constitution was published in 1928, promoted by John Spedan Lewis, son of the founder, it was not coming out of the blue: he had set up a staff council and a charitable donation committee as early as 1919, and in 1920, then de facto partners received their first bonus in the form of share promises. Caring for employees has been in the DNA of the company since its inception: John Lewis Partnership implemented a medical service in 1929, 19 years before the National Health Service was created in the UK, and in 1950 the partnership was secured through the Second Trust Settlement (ultimate control of the company was secured to Trustees). Finally, starting in 1970, partners began to receive their bonuses in cash rather than cash and shares.

Finally, the last iconic element about John Lewis & Partners is the pledge, made in 1925, known to every English citizen: “never knowingly undersold.” In effect, this meant that any customer seeing a price difference with the competition (national chains) during a period of 28 days after purchase could claim a refund of the difference. This was a very powerful marketing tool for 97 years until the pledge was retired in August 2022.

Recent ups and downs

John Lewis recent difficulties did not start with the COVID-19 pandemic as, in 2018, profits slumped to almost zero due to the cost of the Never Knowingly Undersold pledge. While Brexit did not foster a positive mood in terms of inflation, this situation came from the increasingly competitive landscape, including online, with pure players who had different cost structures. No wonder, therefore, that the pledge was changed in 2022 to “for all life’s moments”, to the country's dismay, a measure seen as vital to balance the business in the wake of a continuous online business progression (even though this was a costly £500m decision).

Leadership, as a consequence, was challenged: the fifth Partnership Chairman, Sir Charlie Mayfield (a company veteran, who joined John Lewis in 2000), stepped down in 2020 after thirteen years, to be replaced by Dame Sharon White, while then Executive Director, Paula Nickolds (who had joined John Lewis in 1994 and succeeded to Andy Street in 2017), was replaced the same year by Pippa Wicks, coming from Coop.

new, sometimes non-retail related projects:

Facing a growing discontent, Pippa Wicks left in 2023 and Dame White became increasingly challenged. The same year, the CEO position was created to address the needed changes, with Nish Kankiwala appointed with the mission to cut costs, which generated much speculation about the Partnership’s specific structure’s future. After immediate measures (such as headquarter size reduction, jobs cuts, and the scrapping of non-retail plans), 2024 saw the appointment of a new Managing Director, Peter Ruis, the company’s former buying and brand chief, a new chairman, Tesco veteran Jason Terry as a replacement of Dame White (whose tenure was the shortest in the partnership history), and the “Never Knowingly Undersold” pledge return in September, with great success: 25 online retailers (including Amazon) are now systematically monitored in all categories, and customers are given a 7 days price guarantee, through cash refunds (not vouchers). The pledge return had immediate results within the two weeks following its re-implementation, in terms of sales, margin and NPS.

These changes coincided with a change in John Lewis’ fortune since the company posted a £42m pre-tax profit in 2023-2024, up from a £78m loss the previous year, which gave the company enough confidence to confirm their target of reaching £400m profit by 2027-2028. Under Ruis’ leadership, John Lewis focused on its retail assets to become relevant again, and this translated into team reorganisations and new investments, with the Peter Jones store slated for a massive overhaul, coming on top of a £800m budget dedicated to stores improvements, including £6.5m to immediately inject novelty in the Oxford Street store. In parallel, John Lewis improved its private labels, customer services (it recently announced a deal with Pay Now Buy Later operator Klarna) and additional sources of revenue (through, for instance, a retail media platform operated with Dunnhumby unveiled last October).

In its latest financial exercise (2023-2024, closed in January 2024), the John Lewis department store unit posted a total of 4,765£m in trading sales (-4%), a revenue of 3,644£m (down -4% vs. 2023, and from 3,961£m at its peak in 2018), and a trading operating profit of 689m£ (+2%), i.e. 14% on trading sales, and a net operating profit of £147m, up from a loss of £160m the previous year, and three years of continuous losses. These results were achieved through a total of 13.4m customers in the year, of which 53% used digital channels for their shoppers. The rest visited the remaining 34 department store units in the UK (completed by smaller format stores and community-centric units).

The loyalty program has 6m members, who spend triple the average clientele and are growing +15% year on year. A new app, co-developed with Dunhumbby (the Tesco Club card creator and John Lewis’ partner for retail media), has been launched with new, individualised services, such as individualized coupons and promotions or exclusive events.

What is new in Oxford Street?

The John Lewis Crown Jewel store is the company’s oldest and largest, covering 39,000 sqm on seven floors. It includes food in the basement, tech on the top floor and a roof garden with F&B options (the store boasts cafes, bars and restaurant options on each floor). Regarding traffic, the store welcomes 22,000 customers a week, primarily domestic (all the more since the tax-free shopping scrapping ), and coming with public transportation (the nearby car park does not seem to impact traffic), with an average conversion rate of 35% in regular weeks and 65% during peak times, mainly coming through the two main entrances on Oxford Street (one leading directly to beauty, the other one to fragrances).

To give a sense of comparison, the Peter Jones store is the third largest but posts half of the Oxford Street store’s turnover. Also, compared to the rest of the John Lewis stores, the Oxford Street one is rather specific regarding customer nature, younger and more affluent than the average John Lewis client. Therefore, it is no surprise that the new management focused on producing extremely quick results in this location to materialise the change (through new brands, new instore design, emphasis on quality, services and experience) and invested £6.5m in revamping specific zones in the store, such as the beauty hall, a long-time traffic magnet and now the largest in the country.

Given the store's size and the many categories presented, the below list of points of interest is a subjective selection based on what has been renovated and upgraded.

Ground floor: the beauty hall

The ground floor includes a rather disconcerting number of categories: beauty, hairdryers, women’s accessories and handbags, menswear and men’s shoes, and sunglasses.

The beauty zone (20% of the total business) was one of the main areas of focus for the store revamp: For the first time, John Lewis separated beauty from fragrances, introduced 75 new brands, teamed up with majors to renovate 90% of the 41 beauty counters in the past nine months, and launched a self-discovery area where customers can spot new beauty brands without salespersons’ assistance.

Make-up is located close to hair care; it is a new category per se, including brands such as Dyson. Finally, fragrances are presented in a new self-standing concept that will be reproduced in other John Lewis stores.

First floor: jewellery, watches and women’s shoes 

The first-floor houses lingerie, nightwear, women’s shoes, womenswear and jewellery.

Initially located on the ground floor, the jewellery category was set up in an entirely new concept on the first floor. It uses a profusion of light and open space to give an impression of choice while focusing on the products. It also addresses profitability concerns (and leaves more space for more profitable categories on the ground floor). Open displays with small brand reminders allow for stacking more brands and easing their change when needed. It is interesting to note the attention to lighting: products are emphasised thanks to the ceiling spots and smaller, focused lights integrated into the tables themselves.

The piercing stand, a must for many Brittons, is strategically located nearby. This stand allows customers to select their piece of jewellery and wear it on the go (it is operated through a concession model). Interestingly, the personal shopper area is also very near, which allows customers to potentially complete their looks with shiny accessories while transitioning to the nearby womenswear area.

The “Shoe Room” is entirely new, with an open concept, a radical difference from the previous structure with “brand boxes”.

Womenswear (40% of the total business) has also evolved, introducing 100 new brands each half of the year, an unprecedented rhythm for the company, to become the “house of best brands”. Regarding the business model, the store dropped SOR and went into full concessions, allowing for more high-profile collaborations. This approach has been implemented in the 4 top John Lewis stores since September 2024. The department also emphasizes the John Lewis private label, which in the WRTW category represents 50% of John Lewis' total private label sales (which, in turn, represent 20 to 25% of the total store sales).

Second floor: Waterstones bookstore, Benugo Café

This floor houses bed, bath and linen products, home accessories, gifts, lighting, mirrors, the first Waterstone’s shop-in-shop, and the Benugo Café.

It took 6 months from initial conversations to opening a 200 sqm Waterstone bookstore on this floor, selling 20,000 titles. Due to the speed of execution, some crucial details remain to be fixed. For instance, the Waterstone cash desks cannot process John Lewis’ sales and vice versa. Teams are actively working on this crucial point, which prevents from mixing loyalty programmes in the store.

Both Waterstones and Benugo are concessions (Benugo operates various shops in the store). Their rather surprising location (in front of beds and pillows, a rather quiet section) is simply due to the fact that they took a former back-of-store space that was available and ready for a productive upgrade. Waterstones has proven to be a real traffic magnet since then.

Third floor: furniture studio and the upcoming Jamie Oliver school

This floor is home to beds, bedrooms, furniture, a kitchen, sofas and seasonal stores (Christmas, with a stunning 85% sell-through rate).

While the set-up is inspirational and allows customers to project themselves, IKEA-style, John Lewis leaves much liberty to brands to fit their shops in shops, contrary to the lower floors. Here, the most striking is the profusion of customer promises, from free delivery to free return, the possibility of choosing every detail and customizing sofas, for instance, and the return of the 100-year-old pledge in a very visible manner.

John Lewis executives were excited to announce the planned opening of a Jamie Oliver café and cookery school next spring. This is obviously a very efficient way to signal all the ongoing changes at John Lewis and generate buzz.

Fourth floor: the Lego stand

This floor is home to baby & children wear, haberdashery and crafts, and everything kids. The most striking is probably the very large Lego shop in shop with a complete offer and decor, located at the exit of the escalator. Toys remain a very efficient category for John Lewis (a stark difference with other department stores in the world, and which shows also how John Lewis has managed to remain connected to its customers’ everyday lives). It struck a deal with Lego, trading a prime location in terms of visibility and traffic, for a complete revamp of the space at the brand’s expenses.

Fifth floor: computers

This floor houses TV, audio and everything tech (5% of the total business), sports, and travel goods.

John Lewis has put much effort into their tech space, reproducing a 1960’s IBM machine as a central display unit. The rationale was to upgrade the overall feeling to remain competitive with the nearby Apple concession (the second brand in sales for the whole store). Each brand is given demo space, screens, stools to allow customers to stay and test in actual conditions laptops… but the most intriguing is, here also, the repeat of customer promises as well as the educational effort: operating systems, screens and CPU capabilities are explained in simple terms to allow customers to make their choices confidently.

How does John Lewis cope with the promise of a superior standard of service?

To stand with its promises, John Lewis is counting on its app to measure in real-time its customers’ satisfaction, but not only. They also measure customers’ trust through a panel of 1,000 members that answer questions every month, coming on top of stores’ individualised NPS.

This goes hand in hand with new initiatives: for instance, in-store mobile payment was launched and generalised to the whole store in August 2024. To further differentiate from online competition, John Lewis also emphasizes its guarantees (visible all across the store). When it comes to online sales, stores are incentivised when sales are made from their POS (even though products are then shipped from the central warehouse).

Conclusion: what to think of the much-hyped Oxford Street store revamp?

*According to people familiar with its previous version, the store's changes bring a radically different experience during a visit. According to them, a visit to the basement, which has not been revamped in a similar fashion, gives a proper idea of what the store was like a year ago (or, from that perspective, the luggage section on the fifth floor).

From that perspective, this is, therefore, a success, even though it has to be euphemised by the fact that the relatively low investment (6.5m£ does not represent much to spend in a 39,000 sqm store) also meant that some aspects were left aside: what to think, for instance, of the fact that the escalators paintings were not retouched?

The new spaces (beauty, jewellery, womenswear) and partnerships (Waterstone, Benugo, Jamie Oliver) can instead be seen as “proofs of concepts” that change can happen even at John Lewis, and its materialisation to the general public and the associates (one must remember that they have gone through serious challenges in the past years). From that point of view, this is a total success, as a new type of energy was clearly palpable during the visit, with sales associates enthusiastic and proud to explain how they were doing things differently.

Another striking point was the transparency and reassurance given to everyone: customers on the sales floor (with guarantees in terms of price-matching, delivery delay, 25 years guarantee on sofas, free delivery upon a sales threshold, and return options) but also to staff, through clear, transparent explanations on how bonuses are calculated, for instance. It is difficult to know if this is a new initiative or a well-established tradition. Still, one must recognize that even visiting John Lewis’ offices gives an entirely different impression from its competitors not so far away. The new company management seems confident that their actions will bring concrete and quick results, and they might be right in thinking so.*

Credits: IADS (Selvane Mohandas du Ménil)

What: Global retailers face urgent pressure to redesign their store networks as extreme weather events cause unprecedented operational disruptions and financial losses totalling USD 320 billion in 2024.

Why it is important: The convergence of physical climate risks, insurance challenges, and regulatory pressures is forcing retailers to fundamentally rethink their store network strategies, marking a pivotal shift in how the fashion industry approaches physical retail planning.

Recent climate catastrophes, from Los Angeles wildfires to European floods, are compelling the fashion industry to reassess its approach to retail store networks. The unprecedented scale of these events, resulting in global losses of USD 320 billion in 2024, has exposed vulnerabilities in traditional retail strategies. While retailers have historically relied on insurance to manage climate risks, this safety net is showing signs of strain, with some insurers in California already withdrawing wildfire coverage and similar trends emerging in Europe. The fashion industry's sprawling retail footprint, often concentrated in major cities and tourist destinations, faces particular exposure to these risks. A new sector of weather risk analysts is emerging to help retailers map climate risks and adapt their strategies accordingly. The European Union's mandatory climate risk reporting requirements, coupled with similar proposals in the US, are adding regulatory pressure to this challenge. This convergence of factors is pushing retailers to consider not just immediate physical risks but also long-term viability of store locations and network design.

IADS Notes: Recent industry data strongly reinforces the article's concerns about climate impacts on retail operations. In May 2024, Visa reported a significant drop in consumer spending due to severe weather conditions, while July 2024 saw Hudson's Bay forced to close multiple Canadian locations during an unprecedented heat wave that overwhelmed store HVAC systems. These incidents align with the article's emphasis on increasing weather-related disruptions to retail operations. The industry's response has been evident in strategic adaptations, as demonstrated by major retailers like Macy's announcement in December 2024 to close 150 stores and Kohl's January 2025 decision to shutter 27 locations. These moves suggest that retailers are not only reacting to immediate climate threats but are also fundamentally rethinking their physical footprint to create more resilient and adaptable store networks.

Faced with extreme weather, should fashion rethink its store network?

What: Major retailers abandon century-old inventory accounting method as modern technology enables more accurate cost-based approaches.

Why it is important: This transition represents a fundamental shift in retail operations, enabling more accurate inventory management and better decision-making through modern technology, while addressing long-standing issues with traditional accounting methods.

The retail industry is moving away from the retail inventory method (RIM), a century-old accounting practice that relies on retail prices to estimate inventory value. Despite its widespread use by major retailers including Target, Walmart, and Kohl's, RIM's limitations have become increasingly apparent in the digital age. The method's reliance on retail prices for inventory valuation can distort business metrics and influence merchandising decisions, particularly around markdowns. Modern retailers like Macy's and Nordstrom are transitioning to cost accounting, which leverages current technology to provide more precise inventory tracking and valuation based on actual costs. While this transition requires significant operational changes, it promises better inventory visibility, more accurate financial reporting, and improved decision-making capabilities.

IADS Notes: The industry's move away from the retail inventory method (RIM) reflects broader retail modernisation trends. This shift aligns with Macy's November 2024 three-part strategy emphasising operational modernisation and technology integration, though the recent discovery of hidden delivery expenses highlights ongoing challenges in financial controls. The transition comes as retailers seek greater operational efficiency, with October 2024 data showing promising results from Macy's innovation strategy in modernising operations. The urgency for change is underscored by a March 2024 report identifying 4.5% average revenue loss due to inventory inefficiencies. December 2024's Q3 results from Macy's further demonstrate the complex balance between transformation initiatives and maintaining operational oversight. The shift from RIM to cost accounting represents a fundamental change in how retailers approach inventory management, reflecting the industry's broader evolution toward data-driven, technology-enabled operations that provide greater accuracy and transparency.

Nordstrom and Macy’s abandoned the ‘retail inventory method’ after using it for decades

What: A new framework built around fairness, access, inclusion, and representation (FAIR) emerges as retailers move away from conventional DEI practices, focusing on measurable results and systemic changes rather than symbolic initiatives.

Why it is important: This strategic pivot responds to the dual challenge of maintaining inclusive workplaces while addressing criticism of conventional DEI approaches, offering retailers a practical framework for achieving meaningful organisational change.

The evolution from traditional DEI practices to a FAIR framework represents a significant shift in how organisations approach workplace equity. With 91% of workers reporting discrimination experiences and only 52% supporting current DEI approaches, this new framework addresses fundamental workplace challenges through measurable outcomes rather than symbolic gestures. The FAIR model emphasises systemic changes in four key areas: fairness in success opportunities and discrimination protection, access to full participation across all environments, inclusion that ensures respect and safety for all identities, and representation that goes beyond demographics to focus on advocating for diverse needs. This approach moves away from individual-centered, isolated interventions toward coalition-driven, systems-focused solutions that benefit all stakeholders while maintaining accountability for measurable progress.

IADS Notes:The retail industry's evolution toward a FAIR framework is evidenced by recent strategic shifts among major players. On November 28, 2024, Walmart pioneered a significant transformation by removing explicit DEI language while maintaining core inclusion practices, demonstrating a shift toward outcomes-based approaches. This was followed by contrasting responses in the first week of January 2025, when Costco chose to maintain its traditional DEI policies despite activist pressure, while other retailers sought middle ground. By January 13, 2025, Amazon's decision to rebrand its diversity initiatives under "Inclusive eXperiences and Technology" further validated the article's emphasis on focusing on measurable results rather than terminology. These developments collectively illustrate the retail industry's move toward the article's proposed framework of fairness, access, inclusion, and representation, with companies increasingly prioritising tangible outcomes over symbolic gestures.

What comes after DEI

What: Amazon Stores CEO Doug Herrington identifies AI as the most significant technological revolution since the internet, predicting its potential to create entirely new retail formats while transforming existing operations.

Why it is important: The comparison to the internet revolution underscores the magnitude of AI's potential impact on retail, suggesting that companies must prepare for radical changes in how they operate and engage with customers.

Doug Herrington, CEO of Worldwide Amazon Stores, emphasised at the National Retail Federation's Big Show that AI represents the most transformative technology since the internet's advent. While acknowledging that mobile and social media were significant developments, he believes AI's impact will be far more comprehensive. The technology is already showing its value through applications like Rufus, Amazon's conversational shopping assistant, which has handled half a billion customer queries that traditional search couldn't address. AI is also revolutionizing customer reviews through automated summarization and tackling persistent challenges like sizing and fit in fashion through sophisticated data analysis. Herrington highlighted Amazon's unique approach to innovation, revealing how the company's culture encourages risk-taking and experimentation, allowing projects to move forward with minimal senior approval to foster innovation. This philosophy, established by founder Jeff Bezos, emphasises that more value has historically been lost by companies failing to innovate than by those who try and fail.

IADS Notes: Amazon's vision of AI as a transformative force in retail aligns with broader industry developments throughout 2024. The NRF conference in January 2024 established AI as the primary driver of retail transformation, setting the stage for major innovations. This was exemplified by Walmart's launch of its Wallaby AI system in October 2024, demonstrating how retailers are developing proprietary AI platforms to create new shopping experiences. The industry's commitment to AI adoption is further evidenced by the widespread shift from traditional tools to AI-driven solutions, though a significant gap is emerging between AI-ready retailers and those lagging behind. Amazon's emphasis on allowing innovation to flourish, even at the risk of failure, represents a crucial approach as the retail industry navigates this technological revolution, potentially spawning entirely new retail formats.

Amazon Stores CEO says AI may spawn new retail formats

What: Payment terminals evolve into multifunctional tools combining AI-driven personalisation, enhanced security, and omnichannel capabilities to meet evolving consumer demands.

Why it is important: This evolution addresses growing consumer demands for seamless, secure, and personalised payment experiences across all retail channels. The payment landscape is undergoing a significant transformation as terminals evolve beyond basic transaction processing.

Contactless and mobile payments are becoming increasingly dominant, with digital wallets and NFC technology driving this shift. The integration of artificial intelligence enables sophisticated personalisation, allowing merchants to offer tailored payment options and gain real-time insights into customer behaviour. Alternative payment methods, including Buy Now, Pay Later (BNPL) and cryptocurrencies, are gaining traction, particularly among younger consumers.

Enhanced security measures, including biometric authentication and AI-powered fraud prevention, are being implemented to protect against increasingly sophisticated threats. The push towards seamless omnichannel payments reflects consumers' expectations for a unified experience across physical and online retail environments, with features such as QR codes and click-and-collect integration becoming standard. This comprehensive evolution positions payment terminals as crucial tools for both transaction processing and customer experience enhancement.

IADS Notes: Recent data from December 2024 shows that mobile payments now account for 70% of global sales, up from 67% in 2023. The impact of AI in retail has been substantial, with 38% of consumers utilizing AI tools for shopping assistance by late autumn. The adoption of alternative payment methods has accelerated, as evidenced by Klarna's expansion into physical retail in the third quarter. Security concerns remain paramount, with Stripe processing USD 31 billion during the holiday season while successfully blocking 20.9 million fraudulent transactions worth USD 917 million. These developments confirm the article's predictions about the future of payment technologies and their impact on retail operations.

Smart, secure, seamless: Payment methods 2025

What: TikTok's imminent US ban threatens to disrupt USD 12.3 billion in advertising revenue and reshape how retailers engage with 170 million American consumers.

Why it is important: This regulatory action will significantly impact retailers' ability to reach Gen Z consumers, who control USD 360 billion in spending power and heavily rely on TikTok for product discovery and purchasing decisions.

The US Supreme Court's scepticism towards TikTok's challenge against President Biden's legislation signals a significant shift in the digital retail landscape. The law, which would force ByteDance to sell or cease operations by January 19, threatens to disrupt a platform that has become integral to modern retail strategy. The immediate impact will prevent new downloads and updates of the app, while existing users will face gradual degradation of service without security updates. For retailers, this presents a complex challenge as TikTok's advertising platform has become a crucial channel for reaching younger consumers, with projected ad revenue of USD 12.3 billion in 2024. Content creators and small businesses face particular challenges, as exemplified by entrepreneurs like Nadya Okamoto, who leveraged TikTok's organic reach to grow her brand. While some users may attempt to circumvent the ban through VPNs, the long-term implications for retail marketing and social commerce are substantial, potentially forcing a fundamental restructuring of digital engagement strategies.

IADS Notes: The potential TikTok ban in the US comes at a critical juncture in retail's digital evolution. As observed in August 2024, major retailers had been increasingly integrating TikTok Shop into their core strategies, with companies like Asos reporting that 57% of their platform transactions came from new customers. The platform's effectiveness was further demonstrated in July 2024 when it captured 37% of Chinese e-commerce sales in the US during its "Deals for You Days" event, and by December 2024 , it had achieved a remarkable milestone of USD 100 million in sales on Black Friday alone. The ban's timing 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. This disruption will force retailers to rapidly recalibrate their digital strategies and find alternative platforms to maintain engagement with the crucial Gen Z demographic.

What retailers need to know when TikTok’s US ban comes into effect

What: Retail organisations must balance AI agent autonomy with human oversight to maximise benefits while minimising risks, as excessive supervision reduces productivity gains while insufficient control threatens brand reputation and customer relationships.

Why it is important: The retail sector's leading position in AI deployment, marked by a 304% increase in AI-directed traffic, makes establishing appropriate supervision frameworks critical for sustainable technological transformation and competitive advantage.

The implementation of AI agents in retail requires a delicate balance between autonomy and supervision. Organisations face a critical challenge: too much oversight diminishes the productivity gains that make AI valuable, while too little control risks damaging brand reputation, customer relationships, and financial stability. The article presents a novel approach, suggesting that effective AI governance should be based not on the magnitude of risks but on their nature and our understanding of them. This framework categorises challenges into complicated problems suitable for high autonomy, ambiguous problems that benefit from data-driven learning, and uncertain problems requiring significant human oversight. The key to success lies in allowing AI agents enough freedom to learn from real-world situations while maintaining appropriate safeguards. This approach aligns with emerging trends in retail technology adoption, where successful implementation requires both strategic vision and practical risk management.

IADS Notes: The article's emphasis on balanced AI agent autonomy strongly resonates with current retail industry experiences. As noted in March 2024, while 93% of retailers have embraced AI for personalisation, nearly half struggle with effective data integration, underscoring the importance of supervised implementation. This cautious approach is validated by June 2024 findings showing the retail sector leading AI deployment with a 304% increase in AI-directed traffic, demonstrating the benefits of well-managed autonomy. However, November 2024 research revealed retailers still lose 4.5% of gross sales due to inefficiencies, while companies with properly supervised AI systems achieved 30% faster development and 60% higher user satisfaction. The implementation gap remains significant, with December 2024 data showing only 10% of companies successfully scaling their AI applications despite 70% planning implementation, reinforcing the article's argument for finding the right balance between AI autonomy and human oversight.

How much supervision should companies give AI agents?

What: New research reveals trust-building through reliability, capability, transparency, and humanity as key drivers of successful workplace AI adoption.

Why it is important: With retailers achieving 60% higher user satisfaction through properly supervised AI systems, this methodology addresses the critical gap between technological capability and workforce acceptance.

Deloitte's innovative approach to AI implementation reveals how trust-building initiatives can dramatically improve workplace technology adoption. Through a pilot programme involving 750 consultants, the company demonstrated that addressing four key trust factors—reliability, capability, transparency, and humanity—led to significant improvements in AI tool acceptance and usage. The initiative resulted in a 49% increase in perceptions of tool reliability and a 52% rise in transparency understanding, ultimately driving a 65% increase in average user visits. The research highlights that successful AI integration requires more than just technological capability; it demands a comprehensive strategy addressing employee concerns and skepticism. Through targeted interventions, including savvy user profiles, interactive Q&A sessions, and practical workshops, organisations can effectively build trust and drive adoption. The study particularly emphasises the importance of clear communication about data protection and output quality, addressing two primary concerns that often hinder AI acceptance. These findings prove especially relevant as organisations struggle with low daily AI usage rates, with only 11% reporting successful integration into employee routines. The research demonstrates that trust-building initiatives can bridge the gap between AI potential and practical implementation.

IADS Notes: The Deloitte study's findings on trust-building in AI implementation come at a crucial time for the retail industry. As revealed in January 2024, only 20% of executives felt prepared to address AI skills needs, highlighting the significance of the trust-focused approach. The success of this methodology is exemplified by IKEA's comprehensive AI literacy programme launched in April 2024, which trained 3,000 workers and 500 leaders, demonstrating how structured educational initiatives can drive adoption. This approach gains further validation from Bain & Company's July 2024 report, which found that whilst 87% of companies are deploying AI projects, only 36% have developed a clear implementation vision. The impact of trust-based implementation became evident by November 2024, when retailers with properly supervised AI systems achieved 30% faster development and 60% higher user satisfaction rates, reinforcing Deloitte's emphasis on the connection between employee trust and ROI.

If you want your team to use gen AI, focus on trust

What: Asian markets are leading a fundamental transformation of global trade patterns, with 18 of 20 fastest-growing business corridors creating unprecedented opportunities for retail expansion and innovation.

Why it is important: This shift represents a pivotal moment for global retail, as evidenced by recent major investments like Central Retail's USD 665 million expansion and MM Mega Market's strategic entry into Vietnam, demonstrating how retailers are capitalising on Asia's emerging corridors to drive future growth.

Asia stands at the epicenter of a major transformation in global business corridors, where geopolitical shifts and structural realignments are creating new opportunities for growth and innovation. The region's dominance is clear, hosting 18 of the 20 fastest-growing business corridors and 13 of the 20 largest, positioning it as a crucial driver of global economic development. This transformation is characterised by five distinct growth highways: new and renewed partnerships, China-to-world connections, technology corridors, services expansion, and green initiatives. The evolution is particularly significant given Asia's projected share of the global middle class, expected to reach two-thirds by 2030, and its 60 percent contribution to global growth. Companies operating in the region are adapting to this new landscape by reimagining interconnection rather than retreating from it, developing strategies that balance growth with resilience. The shift from a "just in time" to a "just in case" mindset is reshaping value chains, while increasing sophistication in Asia's skills and capabilities is creating new opportunities for local, regional, and multinational companies to emerge as global leaders.

IADS Notes: Recent developments in Asian retail strongly validate the text's analysis of emerging business corridors. In November 2024, MM Mega Market's USD 20 million investment in Vietnam exemplifies how retailers are capitalising on the region's growth potential, with Vietnam's market alone projected to reach USD 350 billion by 2025. This expansion trend is further evidenced by Central Retail's USD 665 million investment announced in February 2024, focusing on AI integration and ecosystem development. Cross-border partnerships have become increasingly strategic, as demonstrated by Hyundai Department Store's collaboration with Thailand's Siam Piwat Group in February 2024, leveraging K-culture to attract younger demographics. The technology corridor's significance is highlighted by Central Retail's August 2024 Alipay+ partnership, enhancing digital transactions for international tourists. These developments align with the broader transformation of Asian retail, as seen in January 2025 when Korean retail giants Lotte and Shinsegae began aggressively expanding into Southeast Asian markets, demonstrating how established players are adapting to the new business landscape while maintaining their competitive edge through technological innovation and strategic partnerships.

Asia’s emerging business corridors: New highways to growth

What: Costco faces a proxy battle over its DEI initiatives as shareholders demand risk assessment whilst the board maintains commitment to diversity programmes.

Why it is important: This proxy battle represents a pivotal moment in retail DEI policies, as major retailers like Walmart and Target have recently modified their approaches amidst legal and market pressures.

Costco Wholesale confronts a significant challenge as the National Center for Public Policy Research (NCPPR) initiates a proxy battle over the company's diversity, equity, and inclusion programmes. The controversy centres on NCPPR's proposal for a comprehensive risk assessment of Costco's DEI initiatives, particularly following recent Supreme Court rulings affecting race-based policies. Despite pressure, Costco's board firmly supports its current DEI approach, citing its code of ethics and commitment to stakeholders.

The situation has sparked calls for boycotts and drawn attention from anti-DEI activists who previously influenced Walmart's policy changes. The proposal specifically requests research into potential risks, citing recent legal precedents including a USD 25.6 million judgment against Starbucks for racial discrimination. While other major corporations like Ford, Toyota, and Microsoft have scaled back their DEI initiatives, Costco maintains its position, arguing that further study would not benefit shareholders. The upcoming January 23 vote represents a crucial moment in the ongoing debate over corporate diversity policies and their implementation in the retail sector.

IADS Notes: The Costco DEI controversy emerges amid a significant transformation in retail industry approaches to diversity initiatives. In November 2024, Walmart led a strategic pivot by modifying its DEI policies, while Target faced substantial financial consequences from DEI-related issues, including a USD 10 billion valuation loss and legal challenges . These developments highlight the delicate balance retailers must maintain between social initiatives and business performance.

Notably, Walmart's success in December 2024, achieving its best stock performance since 1998 , demonstrates that retailers can effectively navigate these challenges through strategic adaptation. The situation reflects broader industry dynamics where major retailers must carefully position their social policies while maintaining competitive advantage, particularly as Amazon and Walmart reshape the competitive landscape through technological innovation and market expansion.

Costco is caught in the crosshairs of the DEI controversy

What: Latest consumer research highlights shifting retail dynamics in Asia-Pacific, where market-specific trends and omnichannel adoption are reshaping shopping behaviors across Australia, China, India, Japan, and South Korea.

Why it is important: Understanding these regional variations is crucial for retailers as they indicate fundamental shifts in consumer behavior, with omnichannel shopping becoming dominant in South Korea, while India shows unprecedented growth in experiential retail, requiring tailored market approaches.

The Asia-Pacific retail landscape demonstrates remarkable diversity in consumer sentiment and shopping behaviors across its major markets. Australia exhibits strong consumer optimism, with increased spending intentions across all income groups and categories. China shows resilience amid uncertainty, with Gen Z optimism rising despite overall cautious sentiment, particularly among older consumers. India's market reveals dynamic growth, with consumers embracing omnichannel shopping at unprecedented rates, though sentiment varies significantly by gender. Japan and South Korea maintain stable consumer behavior while showing strong shifts toward omnichannel shopping, with Korean consumers increasingly favoring online platforms. The research highlights how economic conditions, generational preferences, and technological adoption rates are creating distinct retail environments in each market. This diversity requires retailers to develop market-specific strategies while acknowledging the common thread of increasing omnichannel adoption across the region.

IADS Notes: Recent market data underscores the complex evolution of Asia-Pacific retail throughout 2024. In January, Coresight Research identified key trends in China's retail landscape, projecting sales to reach ¥44.2 trillion. India's retail sector demonstrated significant transformation with the expansion into Tier 2 and 3 cities, while emphasizing experiential retail and AI-driven personalization. A notable milestone was reached in South Korea, where online shopping surpassed in-store sales for the first time, capturing 50.5% of the market. These developments align with broader regional trends, as evidenced by Visa's Economic Insights showing a 20-25% projected growth in outbound visitor numbers for 2025, indicating strong consumer confidence and spending potential across the region.

Asia-Pacific consumer sentiment: A mix of growth and challenges

What: Alibaba Cloud expands its AI capabilities with enhanced language models and a comprehensive platform for training and deployment, positioning itself as a major competitor in the global AI landscape.

Why it is important: This strategic move challenges Western AI dominance while democratising access to sophisticated AI tools, particularly beneficial for retailers seeking to expand their global presence through multilingual capabilities.

Alibaba Cloud's latest AI developments mark a significant evolution in the retail technology landscape. The cloud division has introduced several large language models, including Tongyi Qianwen and Tongyi Wanxiang, alongside the ModelScope platform, creating a comprehensive ecosystem for AI development and deployment. The Qwen model, initially released in April 2023, has evolved to support 29 languages and now features versions ranging from 0.5 to 72 billion parameters, making it more energy-efficient while maintaining high performance.

The latest iteration, Qwen2.5-72B, outperforms prominent open-source models in benchmarks and demonstrates enhanced capabilities in coding and mathematical problem-solving. Since its launch, Qwen models have achieved over 40 million downloads and spawned more than 74,000 derivative models. The proprietary Qwen-Max model has shown particular strength, surpassing GPT4-o in eight benchmarks. Complementing these developments, the ModelScope platform provides a user-friendly interface for accessing and implementing these AI tools, making advanced technology accessible to businesses regardless of their technical expertise.

IADS Notes: Alibaba Cloud's latest AI developments align with significant industry trends observed in late 2024, when the company launched its "Partner Rainforest Plan" to democratise AI in retail during a period that saw retail AI adoption in China reach 230 million users . Earlier that year, in May, the company's partnership with LVMH demonstrated practical applications of the Qwen model in luxury retail , coinciding with broader industry momentum as nearly half of retailers reported increased revenue from AI initiatives . These developments collectively validate Alibaba's strategic focus on developing sophisticated AI models for global retail applications.

How Alibaba Cloud is transforming to keep pace with generative AI

What: Middle managers face increasing burnout risks as they balance senior management demands with team leadership responsibilities, leading organisations to develop targeted solutions from early talent identification to continuous development support.

Why it is important: As retail organisations navigate complex transformations, effective middle management becomes the critical link between strategic vision and practical implementation, making their development and retention essential for business success.

Recent research highlights the growing challenges facing middle managers in retail organisations, with nearly three in four feeling overwhelmed at work and 40% of new managers actively seeking new positions. The article outlines comprehensive strategies for supporting these crucial team leaders, beginning with early identification of potential managers based on interpersonal skills and problem-solving abilities. Essential support includes structured leadership training covering self-awareness, team coaching, performance management, and mental health awareness. The emphasis on reducing administrative tasks and maintaining engagement through development opportunities demonstrates the need for a balanced approach to middle management roles. Regular feedback mechanisms, including 360-degree reviews and open discussions about career progression, are identified as vital tools for retention and growth. The article stresses the importance of proactive talent management to prevent flight risks and maintain organisational stability.

IADS Notes: Industry research confirms the mounting pressures on retail middle managers. Gartner's early January 2024 study revealed that 75% of middle managers feel overwhelmed, with luxury retail seeing 51% of employees considering departure. Central Retail Corporation's mid-July 2024 approach to multigenerational workforce management demonstrated how flexible leadership development can address these challenges, while Harvard Business Review's January 2025 analysis emphasized the critical balance between strategic understanding and implementation.

How to support middle managers

What: AI agents are revolutionizing retail through autonomous operations while presenting significant implementation challenges and risks.

Why it is important: With retailers losing 4.5% of gross sales due to inefficiencies and 73% of consumers feeling overwhelmed by online shopping choices, AI agents offer a dual solution for operational excellence and customer satisfaction.

AI agents are fundamentally transforming the retail industry, marking a significant evolution in how businesses operate and serve customers. Recent data shows that 87% of companies implementing AI have experienced revenue increases of 6% or more, while operational efficiency has improved by 15-30% in customer service operations. This transformation is particularly timely, as 73% of consumers report feeling overwhelmed by online shopping choices, and retailers continue to lose 4.5% of gross sales due to operational inefficiencies. The technology's impact is evident in success stories like Klarna's AI assistant, which has reduced customer resolution times from 11 to 2 minutes, and Intime Department Store's 15% boost in counter sales through AI implementation. However, the transition presents significant challenges: while 70% of retailers plan to implement AI agents, only 10% successfully scale their applications, highlighting the complexity of effective deployment. Risk management remains crucial, with 76% of executives acknowledging the need for improved AI cybersecurity measures. As the global generative AI market reaches USD 79.8 billion, retailers must balance autonomous capabilities with robust security frameworks and unbiased training data to ensure sustainable growth.

IADS Notes: As observed in January 2025, the retail industry stands at a critical juncture in AI agent adoption. While consumer acceptance has grown significantly, with 38% of shoppers actively using GenAI during major sales events, implementation challenges persist. The technology's potential is demonstrated by companies achieving 15-30% productivity improvements, yet only 10% successfully scale their applications. This gap between potential and achievement underscores the importance of strategic implementation and risk management, particularly as the global generative AI market expands to USD 79.8 billion.

AI agents are here. What now?

What: Organisations must shift focus from traditional security solutions to protecting employee data privacy as spear phishing tactics evolve, with 90% of successful cyberattacks beginning through phishing.

Why it is important: As cybercriminals increasingly exploit employee data from data brokers and breached databases, protecting workforce information has become crucial for preventing sophisticated attacks, particularly as recent cases like Neiman Marcus demonstrate the devastating impact of data breaches on retail operations.

The escalating sophistication of spear phishing attacks has created an urgent need for organisations to reassess their cybersecurity strategies. While 50% of organisations worldwide fell victim to such attacks in 2023, traditional security measures like antimalware and email filtering are proving insufficient against highly targeted approaches. The core challenge lies in the vast availability of sensitive employee data through the $252.12 billion data broker industry, where individual profiles can contain up to 3,000 data points. This wealth of information enables criminals to craft incredibly convincing phishing attempts, exploiting human psychology through emotional triggers and apparent authenticity. The consequences are severe, as demonstrated by cases like Leoni AG's €40 million loss from an impersonation scam. Organisations must now prioritise employee data privacy as a preventative measure, implementing comprehensive strategies that include social media education, privacy tools, and data removal services to reduce their digital footprint and vulnerability to such attacks.

IADS Notes: Recent incidents in the retail sector underscore the critical importance of employee data protection in preventing cyber attacks. The June 2024 Neiman Marcus breach  demonstrates how sophisticated cyber criminals can exploit data vulnerabilities, resulting in significant financial and reputational damage. This aligns with broader industry trends, as highlighted by the January 2025 discovery of advanced card skimming malware , which showed how attackers are becoming increasingly sophisticated in their approach to compromising retail systems. Consumer awareness of data privacy has also reached a critical point, with November 2024 research revealing that 75% of customers now base their purchasing decisions on how companies handle personal data . The retail sector's vulnerability is further complicated by the November 2024 revelation about Microsoft Office's automatic data collection practices , which creates additional challenges for protecting sensitive employee and business information. These developments, coupled with El Palacio de Hierro's August 2024 system failure , illustrate why organisations must prioritise both employee and system data protection as part of their comprehensive security strategy.

Why organisations should prioritise employee data protection to combat spear phishing

What: Italist expands its luxury e-commerce presence globally with plans for physical stores, leveraging its unique Italian pricing model that offers up to 40% savings on designer brands.

Why it is important: This expansion demonstrates how alternative pricing models and transparent operations can create sustainable growth in luxury e-commerce, even as major competitors face consolidation and market challenges.

Italist continues to expand its global presence in the luxury e-commerce sector, distinguishing itself through a unique business model that offers international customers access to Italian retail prices. The platform, which partners with over 2,000 designer brands, provides savings of up to 40% compared to other markets by leveraging Italy's lower operational costs and direct relationships with multi-brand retailers. The company's growth strategy now includes plans for physical retail presence in key markets, with potential locations in New York, Texas, Miami, and the Middle East. Italist's approach to market expansion is notably cautious in China, where regulatory challenges persist despite the market's significant potential. The platform's commitment to transparency extends to its handling of customs duties and returns, with CEO Diego Abba emphasising the importance of clear communication about costs and policies. This strategy has proven successful in building customer trust and maintaining growth, even as the overall luxury market experiences a slowdown.

IADS Notes: In January 2025, Italist's expansion plans emerge amid significant reshaping of the luxury e-commerce landscape. As noted in December 2024, while major players like Mytheresa acquired YNAP to create an EUR 4 billion revenue business, Italist's unique pricing model offering Italian retail prices globally presents a distinctive approach. The company's strategy aligns with trends identified in June 2024, where successful luxury e-tailers focus on specific consumer segments and avoid competing solely on price. Their planned physical expansion mirrors the industry shift observed in October 2024, where retailers like 10 Corso Como demonstrate how concept stores can successfully scale internationally while maintaining their identity. Italist's transparent approach to customs and duties, particularly noteworthy as other platforms struggle with profitability, reflects the evolving nature of luxury e-commerce noted in March 2024, where operational efficiency and clear value propositions have become crucial for success.

Italist continues to grow in the luxury e-commerce marketplace

What: Amazon extends its retail media technology to competitors, offering access to its USD 50 billion advertising business while raising concerns about data privacy and market control.

Why it is important: This development signals a potential power shift in retail media, where Amazon's technology could become the industry standard, similar to AWS in cloud computing, fundamentally altering how retailers approach their advertising strategies.

Amazon's latest venture into offering its advertising technology to other retailers represents a significant strategic move in the retail media landscape. With a commanding 75% share of retail media ad spend according to eMarketer, Amazon's proposition combines access to its massive advertiser pool with sophisticated technology infrastructure. The offering has already shown promise through beta partner iHerb, which shares 1,200 advertisers with Amazon. Despite the apparent advantages, including access to battle-tested technology that powers Amazon's USD 50 billion advertising business, the proposition raises significant concerns about data control and competitive dynamics. Major retailers like Walmart, Target, and Kroger have historically avoided Amazon's AWS cloud hosting due to competitive concerns, highlighting the industry's wariness of dependency on Amazon's infrastructure. However, the success of Instacart's Carrot ads platform demonstrates how potential competitors can become valuable infrastructure partners when the value proposition is compelling enough. The initiative particularly appeals to mid-sized and smaller retailers seeking to accelerate their retail media aspirations without significant infrastructure investment.

IADS Notes: Amazon's bold move to offer its advertising technology to retailers comes at a pivotal moment in retail media's evolution. As noted in March 2024, the industry was already on track to reach USD 100 billion in US revenue by 2027, demonstrating the sector's explosive growth potential. This timing is particularly significant given Walmart's aggressive counter-strategy, which saw its advertising business grow by 30% in August 2024, leveraging its vast physical network to challenge Amazon's dominance. The broader industry response was evident in October 2024, when major retailers like Boots and Co-op expanded their retail media networks, suggesting a growing appetite for independent solutions. However, the transformation isn't without its challenges – research from July 2024 indicated that while retail media networks could potentially double retailers' margins from 1.7% to 4.3%, success heavily depends on having the right technology infrastructure and dedicated teams. This context makes Amazon's proposition both appealing and concerning for potential partners, particularly mid-sized retailers seeking to accelerate their retail media capabilities without significant infrastructure investment.

Amazon wants to sell its ad-tech to retailers. Is it a Trojan horse?

What: Study reveals retailers should showcase human input behind AI systems rather than making AI appear more human-like to build consumer confidence.

Why it is important: This insight transforms how retailers should approach AI implementation, as recent data shows 72% of consumers expect AI enhancements in shopping experiences, but prioritise transparency and human oversight in these technologies.

The research challenges the common practice of anthropomorphising AI in retail settings, revealing that emphasising human expertise in AI development is more effective at building consumer trust. Through five comprehensive studies, researchers found that highlighting human input in AI development significantly improved users' perception of AI-generated feedback compared to both anthropomorphised and purely algorithmic presentations. The findings show that when companies clearly communicate the role of human experts in developing AI tools, consumers report better understanding and greater acceptance of the technology. This approach not only enhances perceived usefulness but also reduces resistance to AI adoption. The study suggests practical implementations across various sectors, from education to healthcare, where emphasising human expertise rather than AI humanisation can lead to better outcomes. The research also indicates that this strategy can provide a sustainable competitive advantage, as human expertise integration is harder to replicate than algorithmic solutions. For retail managers, this means reconsidering their AI messaging strategies to focus on the human element while maintaining authentic and transparent communication about AI capabilities.

IADS Notes: Recent market research strongly validates the article's emphasis on human-centric AI implementation in retail. As observed in March 2024, consumer acceptance of AI in retail has grown significantly, with Adobe reporting a 304% increase in AI-tool-directed traffic to retail sites. This trend aligns with the article's recommendation to highlight human expertise behind AI development, particularly as Bain & Co.'s November 2024 study revealed that three-quarters of consumers expect transparency in AI interactions. The business case for this approach is compelling, with an October 2024 Google Cloud survey showing that 87% of companies properly implementing AI experienced revenue increases of at least 6%. Furthermore, Coveo's June 2024 research found that while 72% of consumers expect AI to enhance their shopping experiences, they simultaneously emphasise the importance of maintaining human oversight and data privacy. These findings collectively support the article's central argument that success in AI implementation lies not in anthropomorphising the technology, but in emphasizing the human expertise that shapes it.

Consumers don’t want AI to seem human

What: The convergence of AI agents and next-generation hardware is creating a new era of personalised retail experiences that simultaneously improves customer satisfaction and operational efficiency.

Why it is important: With 73% of consumers feeling overwhelmed by online shopping choices and retailers losing 4.5% of gross sales due to inefficiencies , this technological transformation addresses both customer experience challenges and operational bottlenecks in one unified solution.

The retail industry stands at the threshold of a transformative era where AI-powered agents and innovative hardware are converging to revolutionise customer experience. This technological fusion enables brands to deliver superior service while significantly reducing operational costs, with productivity improvements ranging from 15% to 30% in customer service operations. The integration of autonomous agents transforms traditional customer journeys into comprehensive "missions," where AI systems work seamlessly in the background to complete complex tasks with minimal human intervention. Leading companies like Amazon and Klarna demonstrate the tangible benefits of this approach, with Klarna's AI assistant managing workloads equivalent to 700 full-time agents while reducing customer resolution times from 11 to 2 minutes.

The evolution extends beyond screen-based interactions to include ambient interfaces like voice commands and augmented reality, making technology more intuitive and accessible in customers' daily lives. For executives, the path forward requires a pragmatic approach: starting with focused initiatives, building for both journeys and missions, and fostering a culture of convergence between teams, functions, and skills. This strategic implementation ensures organisations can fully capitalise on the technology's potential while maintaining operational excellence.

IADS Notes: Recent retail industry developments strongly validate the article's vision of AI-powered customer experience transformation. As observed in November 2024, consumer adoption of AI shopping tools has been remarkable, with 38% of shoppers actively using GenAI during major sales events . This adoption addresses a critical pain point, as 73% of consumers reported feeling overwhelmed by online shopping choices .

The operational impact has been equally significant, exemplified by Walmart's processing of 850 million product catalogue data points and Intime's 15% boost in counter sales through AI implementation . While 70% of retailers are planning AI implementation in 2024 , the challenge lies in effective scaling, with only 10% of companies successfully expanding their GenAI applications . However, the potential rewards are compelling – 87% of companies adopting AI reported revenue increases of 6% or more , demonstrating how AI can simultaneously enhance customer experience and operational efficiency.

How AI agents are opening the golden era of customer experience

What: One-third of global companies plan significant AI investments in 2025, with retail leading adoption despite only 25% currently reporting meaningful value.

Why it is important: The contrast between high investment plans and low current value realisation highlights a critical implementation gap that industry leaders must address to remain competitive.

BCG's latest AI Radar survey reveals a significant commitment to artificial intelligence investment, with one in three companies planning to allocate over USD 25 million to AI initiatives in 2025. This substantial investment comes at a crucial time when 75% of executives rank AI as a top strategic priority, yet only a quarter report meaningful value from their current AI initiatives. Leading companies are distinguishing themselves by focusing their AI investments on core functions and new offerings, allocating more than 80% of their resources to these areas. These leaders are also taking a more focused approach, prioritising an average of 3.5 use cases compared to 6.1 for other companies, resulting in 2.1 times greater anticipated ROI.

The survey notably challenges common workforce concerns, with 68% of executives expecting to maintain current staffing levels while focusing on productivity enhancement and upskilling. The implementation of autonomous agents is gaining particular attention, with 67% of executives considering these AI systems as part of their transformation strategy. However, significant challenges remain, including data privacy, security concerns, and the need for improved AI cybersecurity measures, with 76% of executives acknowledging room for improvement in this area.

IADS Notes: BCG's latest findings about AI investment plans align with significant developments observed in the retail sector. As reported in mid-2024, the industry emerged as a leader in AI deployment, with nearly half of retailers seeing increased revenue from their initiatives . Consumer adoption has followed, with a dramatic 304% increase in AI-tool-directed traffic . The focus on autonomous agents gained momentum when Walmart demonstrated impact by processing 850 million product data points .

However, late-2024 research revealing that retailers still lose 4.5% of gross sales due to inefficiencies explains the drive for substantial AI investments. The optimistic workforce outlook is particularly significant, suggesting AI is transforming rather than replacing jobs, focusing on enhanced productivity while maintaining employment levels.

From potential to profit: closing the AI impact gap

AI radar 2025

What: Growing anti-materialist movement forces retail industry to confront fundamental changes in consumer behavior and business models.

Why it is important: The movement signals a transformative moment in retail history where consumer values are fundamentally reshaping business practices, forcing retailers to reconsider their role in society and environmental impact. The anti-materialist movement, led by Gen Z and gaining traction across age groups, is challenging traditional retail paradigms. This shift extends beyond economic considerations to encompass broader ethical concerns about environmental impact and social responsibility.

The trend is amplified through social media and alternative platforms, where influencers promote conscious consumption and underconsumption principles. Organizations like The Freecycle Network and The Buy Nothing Project, with their millions of members, demonstrate the movement's growing mainstream appeal. The Netflix documentary "Buy Now!" further highlights the consequences of overconsumption, while former corporate leaders like Eric Liedtke and Paul Polman exemplify the industry's internal transformation. This cultural shift demands retailers move beyond greenwashing to implement genuine sustainable practices and adapt to a future where success may be measured by quality over quantity.

IADS Notes: The rising anti-materialist sentiment is driving fundamental changes in retail operations and consumer behavior. December 2024 data shows 41% of consumers now choosing to repair products rather than replace them, while 24% actively participate in secondhand shopping. Retailers are responding creatively, as demonstrated by Selfridges' May 2024 initiative to make circular retail playful and engaging. This shift aligns with broader consumer trends, as April 2024 research reveals 80% of US consumers now view sustainability as an achievable goal.

The industry's response is becoming more structured, with the NRF's June 2024 report outlining key strategies for implementing circular business models. Leading retailers are taking bold steps, exemplified by Peek & Cloppenburg's January 2025 launch of the world's largest green retail outlet. These developments suggest that the anti-materialist movement is not just a temporary trend but a fundamental shift forcing retailers to reimagine their business models and value propositions.

A look at the “buy less” movement

What: The luxury industry enters a period of strategic recalibration in 2025, with BoF and McKinsey identifying five key imperatives for executives amid slowing growth and changing market dynamics, following a period of exceptional value creation.

Why it is important: The transformation reflects fundamental changes in consumer behaviour and market dynamics, requiring luxury brands to reimagine their approach to exclusivity, creativity, and customer relationships.

Following exceptional growth between 2019 and 2023, the luxury industry faces its first value creation decline since 2016. Growth engines have stalled, particularly in China, while client relationships become increasingly complex across age demographics. The sector's rapid expansion has led to overexposure and weakened its core promise of exclusivity and craftsmanship. With projected growth of 2-4% annually through 2027, industry leaders must focus on five strategic imperatives: conducting a strategic reset, restoring product excellence, rethinking customer engagement, bridging talent capability gaps, and futureproofing portfolios. Success will require balancing long-term investments with immediate market challenges, as brands navigate changing consumer preferences and the growing importance of experiences over products.

IADS Notes: The luxury industry faces a significant transformation in 2025. While Bain & Company projects 2-4% annual growth through 2027, the sector is grappling with changing consumer preferences and macroeconomic headwinds, particularly in China. The industry's self-inflicted challenges, including overexposure and weakened value propositions, necessitate a strategic reset focusing on product excellence, customer engagement, and talent development.

BoF’s State of Fashion on luxury

Check out the full report here

What: Macy's Vice President of Customer Experience reveals how data democratisation and store optimisation are driving the retailer's transformation strategy, with the First 50 initiative showing promising results in customer satisfaction and sales growth.

Why it is important: With department stores now capturing only 2.6% of retail transactions, down from 14.1% in 1993, Macy's approach shows how traditional retailers can leverage data and experience to remain relevant in a rapidly evolving retail landscape.

Macy's is undertaking a significant transformation under its Bold New Chapter strategy, with Jeff Warren, Vice President of selling and customer experience, spearheading the modernisation of customer interactions. The initiative centres on democratising access to customer data across all retail touchpoints, enabling seamless customer experiences whether in-store or online. This data-driven approach allows sales associates to maintain detailed customer histories and provide personalised service across multiple visits and channels. The transformation extends beyond digital innovation to include a comprehensive restructuring of the company's physical presence. The retailer is implementing a multi-layered plan that combines new brand introductions with strategic store network optimisation. The First 50 pilot programme has demonstrated promising results, showing growth in comparable sales and improved customer satisfaction metrics. Warren emphasises the importance of balancing technological advancement with traditional retail theatricality, maintaining Macy's heritage of creating memorable customer experiences through events like the annual Flower Show and the iconic Thanksgiving Day Parade.

IADS Notes: Jeff Warren's insights into Macy's transformation align with the company's documented progress throughout 2024. The democratisation of customer data has been a crucial component of the "Bold New Chapter" strategy launched in February 2024, which has shown promising results in pilot locations. The First 50 stores initiative has demonstrated success, with record customer satisfaction scores reported in November 2024 and a 3.3% increase in comparable sales at revamped locations by May 2024. This comprehensive approach, combining enhanced customer experience with strategic rightsizing, represents Macy's most coordinated effort yet to adapt to modern retail demands.

Macy’s Jeff Warren explains how the legacy retailer plans to turn things around