What: Retailers face a complex balancing act in implementing GenAI, needing to address infrastructure and data integration challenges while building robust monitoring systems, as the technology moves from experimental to essential for competitive advantage.

Why it is important: The gap between successful GenAI implementers and those struggling with infrastructure and data integration challenges threatens to create a growing competitive divide in the retail industry, making strategic implementation crucial for long-term survival.

The implementation of GenAI in retail is reaching a critical phase where success requires mastering multiple technical and operational elements. Companies must carefully select between open-source and closed-source foundation models while building robust enterprise AI foundations - a challenge evidenced by only 10% of companies successfully scaling their GenAI applications. Data integration remains a significant hurdle, with nearly half of retailers struggling to make their data accessible and connected. However, the potential rewards are substantial, as demonstrated by early adopters reporting revenue increases of over 6%. Success requires not just implementation but also robust monitoring systems, with leading companies achieving 30% faster application development and 60% higher user satisfaction rates through structured evaluation approaches.

IADS Notes: The retail industry's approach to GenAI implementation is reaching a critical juncture in 2024. While retailers must navigate the choice between open-source and closed-source foundation models, with 70% planning implementation this year , the technical infrastructure remains a significant challenge, as evidenced by only 10% of companies successfully scaling GenAI applications. Data integration poses a particular challenge, with a recent Salesforce study revealing that nearly half of retailers struggle with data accessibility despite high AI adoption rates. However, success stories are emerging, with 87% of early adopters reporting revenue increases of 6% or more. The emphasis on operational monitoring is growing, with companies implementing structured evaluation approaches that have led to significant improvements, including 30% faster application development and 60% higher user satisfaction rates . Walmart's success in enhancing 850 million product catalog data points demonstrates the potential when these elements are effectively combined.

Laying the tech foundation for Gen AI success

What: BCG research reveals major untapped potential in women-centric offerings, with consumers willing to spend 15% more for better quality products.

Why it is important:  The findings highlight a critical gap between women's spending power and available products, presenting an immediate opportunity for retail innovation and growth.

BCG's groundbreaking research reveals a substantial USD 32 trillion opportunity in women-focused products and services, highlighting significant gaps across consumer goods, financial services, and healthcare sectors. Despite women controlling nearly 75% of discretionary spending worldwide, companies are failing to meet their specific needs effectively. The study, based on approximately 15,000 respondents across 12 countries, shows that even top-performing sectors like grocery and personal care achieve only 66% and 64% favourable ratings respectively.

Notably, women demonstrate a willingness to spend more for quality, with US consumers prepared to pay premiums of up to 15% for better clothing and safer sports products. The research outlines a strategic framework focusing on desirability, viability, and feasibility for developing successful women-centric offerings. Additionally, it emphasises the importance of female representation in leadership roles to better understand and address women's unmet needs effectively.

IADS Notes: Recent market evidence strongly supports BCG's findings about the untapped women's market potential. In August 2024, Mitchells Stores demonstrated the power of targeted women's offerings, with women's sales reaching 56% of their business through strategic category investments . This success was further reinforced in October 2024, when Falabella's Active Woman concept saw a 30% increase in women's sportswear demand . Additionally, Euromonitor's November 2024 trends report revealed premium products outpacing mass alternatives in women-dominated categories like beauty and personal care, validating BCG's observation about women's willingness to pay more for quality products.

The $32 trillion opportunity in women-focused products and services

What: Traditional loyalty programs are losing effectiveness as consumers, particularly younger generations, demand more personalised, digitally integrated experiences that go beyond points and cashback rewards.

Why it is important: With more than 35% of loyalty program members planning to cancel some memberships in the next year, retailers must urgently transform their programs to remain competitive in an increasingly saturated market.

The retail loyalty landscape is experiencing a significant transformation as consumer expectations evolve beyond traditional points-based systems. The average US consumer now belongs to more than 15 programs, representing a 10% increase from 2022, yet engagement levels are declining. This trend is particularly pronounced among younger consumers, with over 50% of those aged 18-34 planning to cancel some memberships in the coming year. Success in this new environment requires a multi-faceted approach combining personalised benefits, digital integration, and experiential rewards. Leading retailers are responding by incorporating gamification elements, mobile-first experiences, and exclusive content, while also leveraging technology to deliver more personalised interactions. This evolution reflects a broader shift from transactional relationships to experience-driven engagement.

IADS Notes: Loyalty programs are evolving beyond traditional point systems in 2024. While 48% of brands now offer experiential rewards , the generational divide is stark - 60% of millennials pay for loyalty subscriptions versus one-third of baby boomers . Digital integration has become crucial, evidenced by Siam Piwat's 102% membership growth after launching their mobile platform. Success requires combining these elements effectively, as shown by Ulta Beauty driving 96% of sales through their program . Mobile-first experiences and gamification are now essential components of modern loyalty strategies.

Loyalty programs are growing—so are customer expectations

What: The advancement of AI agents represents a pivotal shift in technological capability, requiring retailers to balance increased automation with robust governance and safety measures.

Why it is important: The paper's examination of AI agents' autonomous capabilities and governance requirements arrives at a critical moment when retailers are rapidly deploying AI systems, with only 10% successfully scaling their applications , highlighting the urgent need for structured implementation approaches.

The World Economic Forum's analysis charts the remarkable evolution of AI agents from basic rule-based systems to sophisticated autonomous entities. This transformation, driven by advances in deep learning, reinforcement learning, and transformer architecture, has created systems capable of handling complex tasks with minimal human oversight. These AI agents now incorporate advanced features such as memory, planning capabilities, and tool integration, enabling them to make nuanced decisions and operate independently across various environments.

The paper critically examines both the transformative potential and inherent risks of these technologies. As AI agents become more sophisticated, particularly in multi-agent systems where they collaborate to tackle complex challenges, the need for robust governance frameworks becomes paramount. This evolution demands new standards for interoperability and communication, while raising fundamental questions about safety and accountability. The analysis emphasises that successful implementation requires balancing technological advancement with ethical considerations, highlighting the importance of developing comprehensive guidelines for responsible adoption as these systems continue to reshape various sectors of the global economy.

IADS Notes: The WEF white paper's insights parallel significant retail sector developments throughout 2024. In September , adaptive AI began transforming UK retail operations, creating a widening gap between early adopters and laggards. Walmart's processing of 850 million data points in August demonstrated the scale of potential impact.

However, as highlighted in June , retailers face substantial implementation challenges, with the global generative AI market reaching USD 79.8 billion. The NRF's guidelines published in January addressed these concerns by establishing governance frameworks for AI deployment, emphasising strong internal controls and customer trust. These developments validate the paper's core premise that AI agents require careful oversight while offering transformative potential.

White Paper 

What: Japan's luxury resale sector experiences robust expansion through international tourism revival and strategic global market penetration by major retailers.

Why it is important: The trend highlights Japan's growing influence in the global luxury resale market, as retailers leverage the country's reputation for quality and authenticity to drive international expansion while capitalising on increased tourist spending.

Japan's luxury resale market is witnessing an unprecedented surge in demand, driven by a perfect storm of tourism recovery and strategic retail expansion. The sector has recently experienced remarkable growth, with secondhand clothing and luxury goods reaching ¥818.1 billion, representing 28.2% of Japan's total secondhand industry. Major players like Geo Holding and Komehyo Holdings are capitalizing on this momentum through aggressive international expansion strategies, with plans to significantly increase their global footprint. The weak Japanese yen has attracted international tourists, particularly from Asia, contributing to record-breaking duty-free sales. This growth is further amplified by sophisticated domestic operations, with established retailers like Beams and United Arrows implementing luxury resale initiatives. The market's appeal extends beyond traditional retail, with Chinese social media platforms playing a crucial role in driving engagement, as evidenced by the #JapanVintage hashtag garnering over 8.5 million impressions on Xiaohongshu.

IADS Notes: Japan's secondhand luxury market is experiencing unprecedented momentum, as evidenced by recent developments throughout 2024. The sector's growth is particularly notable in March 2024, when department stores achieved record-breaking duty-free sales of ¥49.5 billion, demonstrating the strong appeal of Japanese retail to international visitors. This trend aligns with Japan's emergence as the strongest luxury market in Q2 2024, where major brands reported significant sales increases. The secondhand market's resilience is further underscored by its ability to attract both domestic and international shoppers through digital platforms, a trend that has encouraged major players like Geo Holding and Komehyo Holdings to pursue ambitious international expansion plans. This expansion strategy reflects the growing global demand for Japanese pre-owned luxury items and the sector's evolution from a primarily domestic market to an international retail powerhouse.

Japan’s luxury secondhand sector gains popularity as tourism booms

What: Visa's latest retail monitor reveals sustained growth in both in-store and online holiday sales across five key markets, demonstrating strong consumer spending.

Why it is important: These findings demonstrate how improved payment technologies and AI-driven solutions are enabling retailers to capture increased consumer spending across channels, setting new benchmarks for holiday season performance.

Visa's Consulting and Analytics Retail Spend Monitor has documented significant growth in holiday retail sales across five markets, encompassing both physical and digital channels. The comprehensive analysis reveals robust consumer spending patterns, with retailers successfully leveraging integrated payment solutions and digital technologies to enhance the shopping experience. This growth trajectory spans multiple retail sectors and demonstrates the effectiveness of retailers' omnichannel strategies during the crucial holiday period. The data underscores the increasing sophistication of retail operations, with merchants effectively utilising digital tools and payment technologies to meet evolving consumer preferences. The growth in both in-store and online sales indicates strong consumer confidence and highlights the successful integration of physical and digital retail experiences. This balanced performance across channels suggests that retailers have effectively adapted their strategies to capture spending across all customer touchpoints.

IADS Notes: The 2024 holiday shopping season marks a pivotal moment in retail's digital transformation. The record-breaking USD 74.4 billion in global Black Friday online sales demonstrates the increasing sophistication of digital commerce, while the growth in physical store visits to 126 million reflects successful omnichannel integration. This evolution is particularly evident in the widespread adoption of AI technologies, with 38% of shoppers utilizing AI tools for deal-hunting, fundamentally changing how consumers discover and evaluate offers. The projection of U.S. holiday retail sales reaching USD 1 trillion underscores the effectiveness of retailers' more nuanced promotional strategies, while Stripe's processing of USD 31 billion during Black Friday weekend highlights the crucial role of secure, efficient payment systems in supporting this growth. These developments collectively indicate a retail landscape where digital innovation, physical experiences, and financial technology converge to create more sophisticated and seamless shopping journeys.

Five global markets experience increase in holiday retail spending

What: Luxury brands are fundamentally reshaping their relationship with subcultures through strategic digital engagement and physical retail transformation, raising questions about the balance between commercial success and cultural authenticity.

Why it is important: The evolving relationship between luxury brands and subcultures reflects broader changes in consumer behaviour, particularly among Gen Z, who demand both authentic cultural connections and innovative retail experiences, forcing brands to rethink their traditional approach to market engagement.

The intersection of luxury brands and subcultures is undergoing a significant transformation, driven by the need to balance authenticity with commercial success. While collaborations between luxury houses and subcultures aren't new, the current landscape presents unique challenges and opportunities. Brands like Dior's partnership with Travis Scott exemplify how luxury houses are attempting to bridge high fashion with subcultural elements, creating cultural crossovers that resonate with younger consumers. However, this practice raises important questions about authenticity and cultural appropriation. The period from 2022 to 2024 has seen an unprecedented surge in such collaborations, with brands like Gucci, Moncler, and Louis Vuitton actively seeking to blur traditional boundaries. The success of these partnerships increasingly depends on meaningful community engagement rather than mere aesthetic adoption, as evidenced by contrasting examples like Chanel's substantive support of young artists versus more superficial collaborative efforts.

IADS Notes: The relationship between luxury brands and subcultures in 2024 reflects a broader transformation in retail strategy. The digital evolution is particularly noteworthy, with luxury brands adapting to new forms of engagement through lo-fi content and social commerce, as seen in October 2024 . This shift coincides with the rise of 'chaotic customisation' among Gen Z consumers, demonstrating how brands must balance authenticity with commercial success. The physical retail space is evolving accordingly, with stores becoming cultural hubs that blend digital innovation with experiential elements, as evidenced by recent developments in experiential beauty retail . This transformation extends to brand identity, with luxury houses increasingly positioning themselves as cultural players rather than just fashion labels . The success of these strategies is reflected in the growing adoption of omnichannel approaches, where brands like Loewe and Tommy Hilfiger are effectively using both digital tools and physical experiences to strengthen emotional connections with consumers.

Are luxury brands killing subcultures?

What: India's Free Trade Warehousing Zones are transforming retail logistics by offering duty-free storage, value-added services, and streamlined customs procedures for global retailers entering the market.

Why it is important: FTWZs address critical supply chain inefficiencies in India's expanding retail market while enabling international retailers to test and penetrate the market without establishing permanent operations, supporting the country's projected USD 2 trillion retail growth by 2033.

Free Trade Warehousing Zones in India represent a strategic evolution in the country's retail infrastructure, operating as foreign territories within Special Economic Zones. These zones offer businesses comprehensive advantages for cross-border trade, including duty-free storage, rapid customs clearance, and various value-added services. With 100% foreign direct investment approval through the automatic route, FTWZs provide international retailers with a flexible entry point into the Indian market. The zones offer significant benefits, including duty deferment, flexible trade practices, and extended storage periods without customs duties. Notable features include 24-48 hour customs clearance, reduced licensing requirements, and the ability to operate without establishing a permanent presence. The strategic locations of these zones, such as the pioneering Sriperumbudur FTWZ, provide exceptional connectivity to major ports and industrial clusters, handling approximately 20% of India's container traffic. This infrastructure supports both traditional retail and e-commerce operations, enabling efficient inventory management and just-in-time delivery strategies.

IADS Notes: The emergence of Free Trade Warehousing Zones (FTWZs) in India aligns strategically with the country's rapidly evolving retail landscape. As noted in September 2024, India's retail market is projected to reach USD 2 trillion by 2033 , making efficient supply chain infrastructure crucial. This development is particularly timely, as a March 2024 study revealed that 90% of retailers face significant supply chain challenges resulting in substantial revenue losses. FTWZs offer a solution to these challenges while supporting the expansion into Tier 2 and 3 cities, a key trend identified in January 2024 . The zones' strategic value is further demonstrated by recent industry moves, such as Decathlon's November 2024 partnership with Myntra to reach 98% of India's serviceable pin codes, highlighting how improved warehousing and distribution capabilities are essential for successful market penetration in India's evolving retail ecosystem.

Free Trade Warehousing Zones in India and implications for retail

What: Luxury retail faces unprecedented workforce transformation as client advisors evolve from traditional sales roles into tech-savvy, multifaceted brand ambassadors driving customer experience and loyalty.

Why it is important: The evolution of the client advisor role directly impacts business performance, with research showing that 68% of VIP clients follow their advisors to new employers, making talent retention a strategic imperative for luxury brands.

The luxury retail sector is undergoing a fundamental transformation in how it approaches talent management and development. Today's client advisors must master an increasingly complex role that combines traditional retail expertise with digital fluency and emotional intelligence. This evolution comes at a critical time when 51% of luxury retail employees are considering leaving their positions, threatening the stability of crucial client relationships.

The challenge is particularly acute as research shows that emotional connections between advisors and Very Important Clients (VICs) significantly impact business outcomes, with 68% of VICs willing to follow their trusted advisors to new employers. Leading luxury brands are responding by implementing comprehensive training academies, innovative retention strategies, and technology-enabled tools to support their workforce. The future of luxury retail hinges on successfully balancing traditional excellence with modern capabilities, while creating meaningful career paths that satisfy both established and emerging talent.

IADS Notes: The luxury retail sector is experiencing a significant transformation in its approach to talent management and development. As revealed in December 2024 , the industry faces a critical challenge with 51% of luxury retail employees planning to leave their positions, and notably, 68% of Very Important Clients following their advisors to new employers. In response, leading retailers have implemented innovative solutions, as seen in January 2024 when luxury brands began introducing comprehensive training academies and AI-powered staffing optimization.

The success of these initiatives is exemplified by Neiman Marcus Group's "Magic Makers" strategy , which achieved a remarkable 34-point increase in employee engagement while generating USD 1 billion in remote selling. This evolution aligns with the industry's broader shift towards managing a multigenerational workforce , emphasizing digital transformation and personalized career development paths.

CXG Report: The Client Advisor Effect 

What: World Retail Congress has traditionally featured IADS members windows in its End of the Year report since 2020

Why it is important:  The World Retail Congress addresses a wide array of professionals worldwide, and the report has a significant visibility.

World Retail Congress reports IADS members Christmas Windows

What: Despite progress toward 2026 gender parity targets, structural barriers and traditional role segregation continue to hinder women's advancement to key operational and CEO-track positions in French companies.

Why it is important: The persistence of gender disparities in leadership roles not only impacts corporate performance and innovation but also reflects broader societal challenges in achieving workplace equality, particularly as companies face increased scrutiny of their DEI initiatives.

The landscape of gender parity in French corporate leadership reveals both progress and entrenched challenges. While 47% of SBF 120 companies have reached the 2026 target of 30% women in executive committees, significant barriers remain. Women represent less than 20% of division directors and 13% of financial directors, while being overrepresented in HR (62%) and CSR (78%) roles. The sectoral divide shows industrial and tech sectors at 21% female representation compared to 39% in real estate. Many CAC 40 companies are choosing to expand their executive committees rather than implement fundamental change, suggesting the need for more systemic transformation.

IADS Notes: French companies face significant challenges in achieving gender parity in 2024. Sectoral disparities range from 21% women representation in industrial/tech sectors to 39% in real estate. A double glass ceiling affects both management positions and strategic roles. While women dominate HR and CSR, they remain underrepresented in operational roles. Though 47% of SBF 120 companies meet the 2026 target, only one in eight reaches the 2030 goal. The tendency to expand executive committees rather than restructure existing leadership indicates the need for deeper organisational change.

CAC 40 and Rixain law: only 50% of companies ready for 2026, Press Release, english

BCG report: Quelle place pour les femmes à la direction des entreprises du CAC 40 et du SBF 120 ?

What: Bulgari leads luxury retail's strategic pivot from China to India, launching digital operations and expansion plans as China's luxury market shows signs of maturity.

Why it is important: The initiative represents a pivotal moment in luxury retail's geographical rebalancing, as brands respond to changing consumer demographics and economic dynamics between Asia's two largest markets.

Bulgari's strategic expansion into India marks a significant shift in luxury retail dynamics, as the brand seeks to balance its portfolio amid China's changing market conditions. The Italian luxury house has launched its first digital boutique in India through a partnership with Tata CLiQ Luxury, while simultaneously addressing the slowdown in Chinese consumer spending, where luxury brands face challenges from housing market issues and growing second-hand markets.The move comes as China's luxury market experiences a notable transformation, with even prestigious brands offering significant discounts and facing competition from grey market sales. Meanwhile, India's luxury market shows promising growth potential, driven by rising disposable incomes and an expanding affluent class. Bulgari's CEO Jean-Christophe Babin emphasizes India's unique position, suggesting its potential surpasses other emerging luxury markets.This strategic pivot reflects broader industry trends, as luxury brands adapt to evolving Asian market dynamics, with India's ultra-high-net-worth population growing rapidly and Chinese consumption patterns normalizing to single-digit growth. The initiative could set a precedent for other luxury brands seeking to diversify their Asian market presence.

IADS Notes: Bulgari's strategic pivot towards India in November 2024 exemplifies a broader transformation in global luxury retail dynamics. This shift is supported by Kearney's September 2024 ranking of India as the most attractive emerging retail market , while Chinese luxury malls simultaneously face double-digit sales declines . The contrasting consumer behaviors are particularly noteworthy - while Chinese luxury consumers increasingly gravitate towards second-hand markets worth $8 billion , India's luxury market is projected to grow 15-25% annually. Bulgari's digital-first approach through Tata CLiQ Luxury aligns with India's expanding affluent consumer base, expected to reach 100 million by 2027 . This transition is further validated by McKinsey's projection of India's ultra-high-net-worth population growing 50% by 2028 , suggesting that Bulgari's India strategy could serve as a blueprint for other luxury brands seeking to diversify beyond China's maturing market.

Will Bulgari show brands the way from China to India?

What: The disconnect between AI market enthusiasm and actual business implementation suggests a longer timeline for meaningful productivity improvements across industries.

Why it is important: The gap between AI investment and implementation reflects a crucial reality for retail strategy planning, as businesses must balance technological ambition with practical adoption challenges while maintaining operational efficiency.

Despite generating substantial wealth in the technology sector, particularly for companies like Nvidia, artificial intelligence has yet to demonstrate significant impact on America's broader economy. The contrast is striking: while AI-related investments have created enormous market value, its practical implementation remains limited, with only 5-6% of American businesses using AI for core operations. This pattern mirrors historical technological adoptions, where transformative technologies like electricity and tractors took decades to achieve widespread implementation.The current state of AI adoption varies globally, with Britain showing higher adoption rates at 20% compared to America's modest figures. However, even in more advanced markets, the technology's impact on productivity and employment remains minimal. Labour markets across OECD countries are showing record-high employment rates and sustained wage growth, contradicting predictions of AI-driven job displacement. Looking ahead to 2025, the adoption rate is expected to remain measured, with only 7% of American firms planning to implement AI solutions in the coming months.

IADS Notes: The article's cautious stance on AI's immediate productivity impact finds both support and contrast in recent retail industry data. While the broader economy shows limited AI penetration, the retail sector presents a more nuanced picture. As reported in June 2024, nearly half of retailers are already seeing increased revenue from their AI initiatives , though a November 2024 study revealed that retailers still lose 4.5% of gross sales due to inefficiencies . The implementation reality varies significantly across markets, with China reaching 230 million retail AI users by December 2024 , while global adoption faces practical challenges. Regarding employment impact, October 2024 data shows AI is primarily transforming job roles rather than eliminating them, with staff being redirected to high-value tasks . This trend aligns with the article's observation about stable employment levels, suggesting that AI's impact on retail is more about role evolution than job displacement. The evidence indicates that while AI's productivity benefits may indeed be gradual, the retail sector is already experiencing tangible transformations in specific operational areas.

There will be no immediate productivity boost from AI

What: Major luxury brands are expanding their product lines to include more items priced under USD 500, including accessories and home goods, as they face declining demand for high-end products and seek to retain middle-class consumers amid economic pressures.

Why it is important: This strategic shift highlights the growing tension between maintaining luxury brand exclusivity and the need to adapt to changing market conditions, where even affluent consumers are becoming more price-conscious.

Luxury brands are confronting a significant decline in demand for their traditional high-end products, with U.S. spending on top luxury brands falling 6% year-on-year in November. In response, companies are emphasizing products priced at USD 500 and under, such as card holders, scarves, and branded lifestyle items. Gucci has introduced items like a USD 440 pet leash and USD 200 branded sticky notes, while Louis Vuitton offers accessories like a USD 395 canvas bracelet. Burberry plans to reorganize store layouts to highlight "scarf bars" featuring items from USD 450 to USD 1,050.

This strategy aims to appeal to middle-class aspirational customers following sharp price increases, with brands like Chanel and Prada raising handbag prices by over 50% since 2020. However, LVMH's CFO warns against introducing very affordable products that could damage brand exclusivity.

IADS Notes: While the global luxury market faces a projected 2% decline in 2024, brands are adapting their strategies amid declining consumer confidence. This move to expand accessible price points comes as luxury labels seek to maintain relevance with middle-class consumers, though LVMH's CFO cautions against compromising brand exclusivity.

Luxury labels bulk up on lower-priced goods to appeal to the middle-class 

What: Japan announces a JPY 2 trillion (USD 12.8 billion) stimulus package to revitalise its semiconductor and AI industries, aiming to rebuild domestic tech capabilities and support economic digitalisation.

Why it is important: This strategic investment addresses Japan's critical need for tech autonomy while supporting the retail sector's digital transformation, as Asian retailers have already demonstrated significant returns from AI implementation, with companies like Intime achieving 15% sales growth through AI adoption.

Japan's government is set to deploy a substantial JPY 2 trillion stimulus package to reinvigorate its position in the semiconductor and artificial intelligence markets. This initiative builds upon previous investments, with the government having allocated more than 4 trillion yen over the last three years under former Prime Minister Kishida Fumio. The package introduces medium-term support measures, including new bridging bonds and enhanced interest rates on treasury notes, while the Bank of Japan will utilize government bonds to support AI and semiconductor investments.The stimulus specifically targets domestic capacity building, offering continuous financial backing for new production facilities even if private sector support wavers. This approach aligns with Japan's Economic Security Promotion Act of 2022, which emphasizes stable semiconductor supply chains as a national priority. The package will support Rapidus, a coalition of eight major Japanese companies, in achieving ambitious goals including 2nm AI-enabled chip production by 2027 and the training of over 20,000 engineers in advanced semiconductor design.Despite potential challenges, including public skepticism toward digitalization and cultural resistance to technological change, the package represents a strategic move to reclaim Japan's historical leadership in sophisticated AI and chip development.

IADS Notes: Japan's ambitious JPY 2 trillion AI stimulus package aligns with successful AI implementations already transforming Asian retail. In July 2024, Lotte Department Store demonstrated the potential of such investments by reducing manual task time by 90% through AI chatbots , while Intime Department Store reported a 15% increase in counter sales after implementing AI systems . The stimulus package's focus on semiconductor development and AI infrastructure could accelerate similar transformations across Japan's retail sector, particularly relevant given the successful deployment of AI-powered customer service solutions by Shinsegae Department Store in October 2024 . This investment strategy mirrors the broader industry trend of moving away from traditional systems toward AI-driven solutions, as evidenced by global retailers' shift from Excel-based operations to intelligent automation . With Japanese department stores already adapting to demographic challenges through technological innovation , this stimulus package could provide the necessary foundation for widespread AI adoption in retail, addressing both workforce challenges and customer experience enhancement

Japan’s 2 Trillion Yen AI Stimulus

What: Rising living costs and environmental consciousness are reshaping retail behaviors, with 41% of consumers choosing repairs and significant regional variations in secondhand adoption rates.

Why it is important: The convergence of economic pressures and sustainability concerns is creating a fundamental shift in consumption patterns, forcing retailers to adapt their business models while presenting new growth opportunities in emerging markets.

The global retail landscape is experiencing a significant transformation as consumers increasingly embrace secondhand shopping and repair services. According to Euromonitor International's 2023 survey, 24% of global consumers are now actively purchasing secondhand items, while 41% opt to repair broken products to save money and reduce waste. This trend is particularly pronounced among younger generations, with over 40% of Gen Z and Millennials regularly engaging in secondhand shopping. The movement shows distinct regional variations, with Latin America leading in zero-waste adoption at 40%, while Europe and Asia-Pacific follow at 36%. Emerging markets are showing remarkable potential, with India leading at nearly 50% consumer participation in buying and selling used items. The trend is driven by a combination of economic pragmatism and environmental consciousness, particularly among consumers aged 45 and above, where participation has increased from 28% in 2021 to 40% in 2023.

IADS Notes: The surge in secondhand retail throughout 2024 reflects a complex interplay of economic pressures and evolving consumer values. As reported in March 2024, ThredUp's analysis projected the global secondhand market to reach $350 billion by 2028, demonstrating unprecedented growth potential . This projection is supported by significant market developments, with traditional retailers rapidly adapting their business models. In February 2024, H&M's innovative SoHo store launch featuring a dedicated secondhand section marked a turning point in mainstream retail adoption of circular fashion. The trend gained further momentum when Harvey Nichols and John Lewis expanded their resale offerings , while Le Bon Marché's luxury buyback program launch demonstrated how high-end retail is embracing circularity. By September 2024, emerging markets showed remarkable growth, with India leading at 42% consumer participation in secondhand commerce , suggesting a global shift toward sustainable retail practices that transcends economic boundaries.

Rising cost of living pushes secondhand shopping, repairs

What: As the global GenAI landscape fragments between US, China, and emerging middle powers, retailers face unprecedented challenges in balancing technology access, data sovereignty, and operational efficiency across different markets.

Why it is important: The evolving landscape forces retailers to fundamentally rethink their technology strategies, as relying solely on solutions from GenAI superpowers may no longer be viable in markets with emerging data sovereignty requirements and local AI ecosystems.

The emergence of middle powers like the EU, Saudi Arabia, UAE, South Korea, and Japan alongside the US and China is reshaping the GenAI landscape. This evolution creates both challenges and opportunities for retailers, who must balance access to cutting-edge technology with local compliance requirements. The implications affect fundamental business operations, from supply chain management to customer data handling. As countries develop their own AI capabilities and regulatory frameworks, retailers need flexible, regionally adaptive strategies while maintaining operational consistency. The stakes are high, with early GenAI adopters reporting significant revenue improvements, making strategic adaptation to this new geopolitical reality crucial for future competitiveness.

IADS Notes: The geopolitical landscape of GenAI is forcing retailers to adapt their operations to varying levels of AI accessibility and processing capabilities across regions. Market access has become increasingly complex with new regional standards and regulations , while implementation success varies significantly - 87% of early adopters see revenue increases of 6% or more. As regional AI powers emerge, retailers must develop flexible partnership strategies, particularly given the complex data localisation requirements across the EU, China, and emerging middle powers.

How CEOs can navigate the new geopolitics of GenAI

What: Luxury retail faces critical workforce crisis as 51% of employees plan to leave, highlighting urgent need for industry-wide transformation in employee experience and retention strategies.

Why it is important: This workforce crisis threatens the foundation of luxury retail's personalized service model, potentially disrupting the industry's ability to maintain customer relationships and drive sales, particularly as brands report that 68% of VIC clients follow their advisors to new employers.

The luxury retail sector is confronting an unprecedented workforce challenge as a global survey reveals 51% of employees plan to leave their current positions. This crisis emerges as retail staff face expanding responsibilities, requiring mastery of both traditional sales skills and digital fluency while maintaining high levels of emotional intelligence. The impact extends beyond mere staffing concerns, as research indicates 68% of Very Important Clients follow their advisors when they change employers. Employee dissatisfaction stems from multiple factors, including lack of empowerment (40%), feeling undervalued (33%), and poor work-life balance (61%). The situation is particularly acute in the USA and France, where 60% of staff are planning departures. Industry consultants suggest a shift from pure commission-based compensation to hybrid models that consider customer satisfaction and loyalty metrics. This crisis comes at a critical time when the luxury market is experiencing its first contraction since 2008, with Bain reporting a 2% decline.

IADS Notes: The luxury retail sector's workforce challenges identified in the CXG survey align with significant industry developments throughout 2024. While the survey reveals a concerning 51% turnover intention rate, proactive responses are emerging across the industry. In January 2024, luxury brands began implementing comprehensive training programs and retail academies to address the growing shortage of high-caliber sales associates. This approach was validated by Neiman Marcus Group's successful "Magic Makers" strategy, which achieved a remarkable 34-point increase in employee engagement while simultaneously driving $1 billion in remote selling. The industry's transformation is further evidenced by Central Retail Corporation's focus on adapting to a multigenerational workforce through flexible, individualized approaches. However, the challenge extends to leadership stability, as demonstrated by multiple CEO departures across major retailers in October 2024, suggesting that the industry's workforce challenges span all organizational levels and require comprehensive solutions that balance traditional retail skills with emerging digital requirements.

Luxury brands face a retail labour crisis as 51% of employees plan to leave their jobs

What: Major department stores implement diverse transformation strategies in 2024, with Saks and Neiman Marcus moving toward a USD 2.65 billion merger, Macy's closing 150 stores while expanding Bloomingdale's and Bluemercury, and Nordstrom showing improvement amid potential privatisation plans.

Why it is important: The diverse approaches to transformation highlight how department stores are reimagining their business models through consolidation, store optimisation, and digital integration to remain relevant in an evolving retail landscape.

Department stores are pursuing varied strategies to address market challenges, with luxury retailers leading significant changes. Saks Fifth Avenue owner HBC has secured a USD 2.2 billion junk bond to finance its acquisition of Neiman Marcus Group, while simultaneously reviewing its store portfolio. Macy's is implementing its "Bold New Chapter" strategy, closing 150 underperforming stores through 2026 while investing in 350 "go-forward" locations and expanding its Bloomingdale's and Bluemercury brands.

Nordstrom shows signs of recovery and increased privatisation potential, while other mid-tier retailers like Kohl's and JCPenney adapt through leadership changes and value-focused strategies. These transformations come as consumers increasingly prioritise travel and experiences over material goods, forcing retailers to reimagine their value propositions.

IADS Notes: While Saks and Neiman Marcus near their merger with secured USD 2 billion funding, Macy's implements its "Bold New Chapter" strategy, and Nordstrom shows signs of recovery. The luxury segment particularly struggles as consumers shift spending to experiences, forcing retailers to adapt through store closures, digital integration, and strategic partnerships with technology companies.

How US department stores tried to reverse market share losses in 2024

What: Digital fashion platform Syky expands its physical-digital retail model through a strategic collaboration with emerging designer Kate Barton, offering exclusive NFT-paired leather bags.

Why it is important: This initiative represents a significant shift in how designer brands approach digital transformation, combining NFT ownership with physical luxury goods to create unique value propositions for tech-savvy luxury consumers.

Syky's latest collaboration with CFDA/Vogue Fashion Fund finalist Kate Barton marks a significant development in the fusion of traditional and digital fashion. The partnership will debut on 5 December with an exclusive dusty sky blue version of Barton's popular Pierced Leather bag, available both as an NFT and physical product priced at $495. Limited to just 20 pieces, the collection allows customers to virtually try on the bag in a specially designed digital environment featuring metallic textures and reflective surfaces that echo Barton's distinctive aesthetic. This collaboration represents Syky's sixth curated project under artistic director Nicola Formichetti's guidance, building on previous successful partnerships with designers like Julie Paskal and Kunihiko Morinaga. The initiative comes amid renewed optimism in the Web3 fashion space, bolstered by recent market developments and growing consumer acceptance of digital fashion experiences.

IADS Notes: The fashion industry's integration of digital and physical experiences has accelerated significantly throughout 2024, with Syky's collaboration with Kate Barton representing a broader trend in retail innovation. In February 2024, Mytheresa's pioneering launch on Apple Vision Pro demonstrated luxury retail's commitment to immersive shopping experiences, while Zalando's introduction of AI-powered shopping assistants across 25 markets in October highlighted the industry's push toward personalized digital interactions. Mango's adoption of AI-generated models in September further exemplified how traditional retailers are embracing digital transformation to enhance efficiency and creativity. These developments, coupled with Printemps' recent acceptance of cryptocurrency payments in November, suggest that Syky's phygital approach aligns with a broader industry movement toward seamless integration of digital and physical retail experiences, particularly in luxury and designer fashion segments.

What’s next for Web3 fashion?

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The Drucker Forum, held annually since 2009, is a yearly opportunity to review management practice and question the state of research, a favourite combination from “management guru” Peter Drucker (1909-2005). The IADS attended the 16th edition of the Forum this month in Vienna. The theme was “the next knowledge work," questioning how organisations can deliver new value creation and innovation levels.

AI was obviously a centrepiece of the conversations, given the impact it has had so far on knowledge and innovation. While the overall conference themes were oriented towards knowledge workers, including researchers, scholars, and academics, it was interesting to relate them to the current situation in retail, where AI is seen as a transforming force for business models. Taking on what was discussed during the conference, AI appears to be, in fact, a pretext for more radical organisational transformations.

Paradoxically, achieving such transformation also does not systematically involve ground-breaking technological or intellectual innovation, as, many times, speakers were calling for a “back to the basics”movement in an updated way.

Introduction: the concept of “next management”

The late Peter Drucker predicted that the challenge for the 21st century would be finding ways to improve knowledge work productivity like manual and factory work did during the 20th century. He was also famous for considering management as a foundational value creating capability, rather than a mere business role. However, most of the political, intellectual and cultural elites keep on considering management as a tool serving short term goals, rather than a true social innovation able to change society at large.

This is why this 2-days session started with Richard Straub, founder and President of the Forum, introducing the audience to the concept of “next management” (new to half of the room). This five-year research initiative aims to provide organisations with a holistic method to boost knowledge workers’ productivity by continuously injecting innovative practices (and not implementing them in an incremental way as has been done so far). In addition, this method aims at optimising human investments rather than increasing them in a world where resources are increasingly limited.

Due to its englobing approach, it challenges the traditional boundaries of management and questions many of the structural elements that every professional has grown to take for granted during the 20th and 21st centuries: organisation charts, hierarchy and processes.

In short, a world which has radically changed can not be seen through lenses that have not been updated, independently of any technological breakthrough such as AI. While AI is accelerating the tempo, defining the “next management” playbook goes well beyond adapting to this new technology as it is a way for companies to adapt to the realities of a new world that has become much more complex, in many aspects.

However, for the “next management” to be perfectly accurate, one needs to review first the nature of knowledge workers and understand how it has evolved in the age of AI.

Dealing with innovation and knowledge

Where does knowledge work stand today, and where is it going?

Giampiero Petriglieri, an associate professor at INSEAD, thought-provokingly opened the topic by stating that “knowledge work as we know it is dead, and this is not due to AI.” For him, current work organisations have killed knowledge work due to their inability to evolve past a productivity-oriented model, inherited from the 20th century using measurement tools created for the industry and then transferred to intellectual work, still in use after five decades. Not only is a mechanistic approach to knowledge work, prioritising efficiency and productivity over humanistic values such as inclusion and freedom, obsolete, but it also puts the job in danger because it creates the very wrong impression that AI is a replacement for it.

However, he points out that organisations are increasingly efficient but also struggling to innovate. For him, this relates to the fact that knowledge productivity is not so much of an issue anymore but the purpose of learning itself due to the emergence of AI. To counter this, he used the analogy of a "machine" versus a "home" to illustrate the difference between instrumental and humanistic approaches to organisations, leading him to call for creating efficient but safe and hospitable workplaces, fostering a sense of belonging. AI is not enough to enable companies to be a good “home” to knowledge workers: “The knowledge world is dead...because now we realise that even when we share those humanistic values...we often do it through an instrumental lens. Let's keep people more comfortable; let's make our culture more congenial so we can all be more productive.”

The fact that AI pushes companies to re-think their core purpose and how welcoming they want to be to their teams has become even more urgent due to AI: Alex Adamopoulos, CEO of Emergn, stressed the importance of maintaining a human-centric approach amidst the AI boom, cautioning against the hype and emphasising the need for practical knowledge and a common vocabulary around AI. This remark from a practitioner suggests that fostering home-like working environments where employees feel a sense of belonging and are encouraged to grow personally and professionally is key to dealing with all the changes AI is bringing to intellectual work in general and innovation in particular.

Such views go beyond the traditional interrogations on how to deal with innovation in legacy retailer organisations (through new business units, dedicated committees, or resorting to consulting companies…). The Drucker Forum speakers suggest that to become a truly next-generation structure, current retail players need to reinvent themselves by rethinking the value proposition they want to bring forward to all their knowledge workers to get the best from them and implement a generalised culture of innovation.

But do we have the right innovation frameworks within organisations?

All Drucker Forum speakers agreed that the existing innovation frameworks are outdated. Valla Vakili, Global Head of Innovation at Visa, highlighted that AI now questions the very notion of innovation itself in an era where organisation size does not matter to be the most innovative possible. While in the past, large organisations had an edge in innovating for a simple question of available resources, we now live in a time of potential “one-person unicorns” as coined by Bain & Co during the IADS AI Retreat from last June. AI also redefines what progress is: while in the past, innovation was often associated with disruption and a defensive, antagonistic approach (the “innovator’s dilemma), AI now allows innovation to be much more offensive and imaginative. Vaikili argued that AI offers new tools to overcome past constraints on innovation, enabling a shift from a scarcity model to an abundance model (in other words,while many companies are good at innovating in a forward-thinking model, backward thinking is often overlooked).

Jayshree Seth, Chief Science Advocate at 3M, echoed this sentiment, emphasising the need to move beyond one-off initiatives like hackathons and “ideathons” towards a culture where innovation is a foundational element. She explained that “hackathons are often internally viewed as very cool, teams present beautiful ideas to ecstatic management… and nothing happens.” Instead, she stressed the importance of employee empowerment and radical collaboration within and across the broader ecosystem, a view supported by Julie Teigland, Managing Partner at EY, who explained that true innovation could only stem from “a close connection with all stakeholders, customers, employees, shareholders.”

Organisational reinvention is inescapable

Companies have little choice but to reinvent themselves in a world shifting from expertise-based to skills-based learning, as this is the only way to ensure employees can adapt and contribute in an ever-changing environment. The implications include investing in employee training and development, fostering open communication, and promoting cross-functional collaboration. Implementation requires a concerted effort from leadership to cultivate a culture that values collaboration and continuous learning.

Going further, this framework review, accompanied by a new approach to employee empowerment, is the only way out of the current lacklustre in AI block building. Vakili suggested a shift from an experimentation-focused approach to one driven by imagination, truly leveraging the power of generative AI. Organisations need to release the constraints of legacy systems (whatever their nature) to unlock this imaginative potential. This echoes a remark made by Bain & Co during the IADS AI Retreat in Berlin last June: while they acknowledged that AI had a disruptive potential for retail, they also mentioned that, so far, all the use cases looked like the same from one retailer to another, suggesting that, due to a certain mindset, innovation capabilities were hitting a glass ceiling in all companies. Vakili concluded by stating that, from her Global Head of Innovation perspective, a radical change of business model was needed to unlock new opportunities in innovation.

What AI really changes

Timing is paramount, but identifying the right people to educate too!

Professor David Beatty from the University of Toronto was very clear on how AI was seen in North America, not just as transformative but as an existential imperative for businesses: "In the United States, we regard AI...not as transformative, but as an extinction event. If you don't get started on this as a business, you're dead.” Failure to embrace AI could result in rapid obsolescence.

He also made the very interesting statement that AI was already reshaping industries at an unprecedented pace, but this was not visible in mainstream business press. This point was echoed by Rainer Zahradnik, Country Head Switzerland at Tata Consulting Services, who highlighted the "hidden revolution" of AI, where its most successful applications are often invisible to the end-user. He cited examples such as energy optimisation in Formula E cars and compliance software for banks. He also emphasised the potential of AI to push boundaries, using the example of designing a new air plane landing gear with minimal human intervention. He noted, "It's almost a hidden revolution of AI. Nobody knows that in your American car there's software that's optimising it."

Beatty was very vocal about the hurdles potentially preventing legacy companies from embracing AI:

• The average age of directors is 68 at the board level. Walmart only has 3 directors under 40. In the US, 41% of board directors are more than 70. However, this does not prevent boards from pressurising CEOs to move forward with AI; on the contrary, they are more active than CEOs. For instance, Marriott inked a deal with Alibaba only after significant pressure from the board of directors on the CEO, Anthony Capuano. CEOs have been resisting the change due to the necessity of ensuring “business as usual” was keeping the right pace. To overcome this, Beatty mentioned that an increasing number of companies were considering independent incubators, fostering innovation separate from established structures.
• Regulation also impacts the level of innovation. Beatty contrasted the relatively light regulatory environment in the US with the more stringent regulations in Europe, suggesting that the latter might stifle innovation. However, the panellists agreed that this could not be the only reason: routine and bureaucracy are also major obstacles to AI adoption in large organisations, with a strong tendency to reinvest in existing processes. Also, for Beatty and Zahradnik, Europe's risk-averse approach stifles innovation, a major source of concern at a moment when US, China and India are moving forward.

The leadership responsibility and its needed evolution in decision-making

Beatty called for a clearer understanding of everyone’s rules: the role of any growing organisation is to create procedures helping to normalise operations, while their CEO’s role is to have a clear enough mind to be able to see what is coming and might disrupt the business if no appropriate course change is taken (AI in this case).

He also urged board directors to engage with AI actively, emphasising the need for directors with relevant skill sets to help and advise CEOs. He recommended a phased approach, starting with educating the chair, then the full board, and finally the management team. Having said that, the extensive use of AI at the management level, especially to help the decision-making process, also calls for a mindset reset if leaders want to remain honest and transparent.

Matthis Bitton, a Ph.D student at Harvard University, had a fascinating exchange with Liesje Meijknecht, partner at McKinsey, on that topic. They both reminded the audience that while AI is a tool to manage complexity (which has been, in the past, traditionally outsourced to partners such as SAP or Salesforce), it is, in essence, trained on sets of data that are not neutral, objective or even fair.

From that perspective, using AI to prioritise decisions implies the acceptance that the criterium of trust does not matter at all: AI does not have any ethics and is not able to. Instead, they raised the fact that AI should be used in fields where it surpasses humans much more, such as big data, mathematics, testing. In the decision-making field, AI raises more issues than what it solves, not to mention that the more it is used, the less transparent it becomes. Bitton and Meijknecht pondered over the dangers of over-regulation (which raises the question of knowing if algorithms should be more scrutinised than humans and if yes, why) and it's contrary, i.e. granting too much power to Silicon Valley.

All in all, the panel concluded, AI creates a moral dilemma, i.e. a choice where both options are problematic. Given that AI is unavoidable, the only way for leaders to make their way through it is to define what kind of pair of “ethical glasses” they want to wear and make sure they use them. Interestingly, that also led to the conclusion that this was the opportunity for businesses and academic institutions to focus again on human sciences rather than hard sciences and data. Mattis mentioned that the Harvard Business School had not hired a single philosopher in 20 years time. It is rather ironic that AI finally pushes us into becoming more human.

How questions about AI end up reviewing the old way of seeing the world

Artificial Intelligence raises questions that go beyond it, as it actually forces us to challenge some of the visions that have shaped the business world for the past years.

Rethinking the role of offices

The expansion of remote collaborative work that was favoured during the pandemic is now ending, with many companies asking their teams to return to their office (this applies especially to knowledge workers). Giampiero Petriglieri, from INSEAD, raised the topic when discussing the fact of “humanising” the workplace by mentioning that remote working was also a trap for junior profiles, who were growing with more limited access to experience than when in the office with their co-workers. He qualified the online meeting as being “a constant reminder of each other’s absence”.

This created some exchanges between practitioners: Pierre Le Manh, President and CEO of PMI Project Management Institute, described PMI's fully remote model, highlighting the benefits of increased access to a broader talent pool and reduced environmental impact. He emphasised the importance of intentional, meaningful in-person interactions rather than forcing a daily return to the office.

In contrast, Liz Cane, VP People at Palo Alto Networks, described Palo Alto Networks' approach, which encourages a return to the office for certain roles, particularly those involving early career development, R&D, and collaboration. She highlighted the importance of in-person interaction for fostering relationships, creativity, and innovation.

The discussion concluded with a call for a collaborative design process to determine the optimal work arrangement for each organisation, considering its specific needs and goals. In other words, the topic is not so much about coming or not coming to the office but adapting physical presence according to the projects and issues currently being solved.

Redefining success

With AI allowing the phenomenon of “one-person unicorns”, the size of organisations does not matter anymore, as previously said. Going further, Julie Teigland from EY argued that this also called for a redefinition of how we measure and assess success: it might not be measurable in market shares anymore. For her, “big is no longer beautiful”, as illustrated by Tesla, which is not the largest EV manufacturer in the world (BYD produces twice as much), but generates unprecedented levels of loyalty ,or companies such as Dyson or Patagonia, all seen as market leaders in spite of them not being the largest players. She argues that large operators are under cost pressure to keep the leading position, while being smaller and more efficient, a feature allowed with the generalisation of AI, allows to be more agile.

Keiishiro Nishi, Senior VP and head of CEO office at Fujitsu, provided an interesting example of this when he mentioned that Fujitsu, a tech company, willingly decided to close its PC business and halve its revenue to launch new higher-margin businesses.

Kill “zombie ideas”

A full session was dedicated to “zombie ideas”, defined as “good old recipes” that have resisted the test of time for the wrong reasons, as they appeal to an apparent common sense that is unproven. Now that AI allows a data-driven approach, such zombie ideas should be eliminated (even though human instinct and nuanced interpretation should be kept in the loop). Michele Zanini, co-founder of the Management Lab, Tammy Erickson, Leadership Advisor at the LBS, Lenka Pincot, Chief of Staff to the CEO at PMI , and Robin Speculand, CEO of Bridges Consultancy, together reviewed the following ideas:

• “More control leads to better performance”: overemphasising standardisation, rules, and control stifles adaptation, innovation, and responsiveness to local conditions. Zanini highlighted the example of SAP riddled with 500 KPIs, demonstrating how over-standardisation can cripple a company. He advocated for mutual accountability, norms and principles over measurement.
• “Top-down changes work”: engineered, top-down change initiatives often fail due to insulation of leadership, leading to incremental or overly risky changes. Zanini advocated for syndicating responsibility for change more broadly.
• “Leadership is positional” (i.e., experience and wisdom are correlated with rank): Equating leadership with organisational rank discourages initiative and talent development outside the executive level. Zanini argued for recognising leadership competencies regardless of position.
• “Planning is everything”: sticking to rigid strategic plans in a volatile environment limits agility and responsiveness. Pincot emphasised the need for "anti-fragility" and adaptability, citing the example of athletes training for a race with obstacles. Erickson cautioned against excessive planning, which can hinder flexibility and lock organisations into outdated trajectories.
• “Strategy first, corporate culture second”: Speculand questioned the continued emphasis on strategy over culture, referencing Peter Drucker's observation that "culture eats strategy for breakfast."
• Sticking to outdated management concepts: Speculand criticised the reliance on out dated management models and frameworks, comparing it to using Windows 95 in the modern era.
• Consider that full-time employment is ideal and what all workers are looking for: Erickson suggested that work is increasingly chosen based on marketability and human asset value development rather than solely on compensation. She argued against paying based on hours worked, advocating for payment based on tasks, outcomes, and value creation. She also emphasised the need to treat employees as volunteers, recognising their autonomy and choice.

Such a conversation is not only theoretical: Speculand shared the example of DBS Bank, which successfully addressed the "zombie idea" of unproductive meetings through a structured approach, saving significant employee hours. Here, also, the panel was adamant that AI had the potential of both perpetuating and slaying zombie ideas. It concluded by emphasising the importance of thoughtful prompting and avoiding a "tyranny of data."

The 16th edition of the Drucker Forum highlighted how AI acts as a catalyst and a pretext for fundamental organisational transformations, extending far beyond technological innovation, including in the analogue world.

While AI offers unprecedented opportunities for imagination, creativity, and operational efficiency, it also underscores the importance of retaining human-centric approaches to foster innovation and adaptability. AI has an amplification effect that allows to challenge and review processes taken for granted for decades, as mentioned by Amy Edmondson, professor at the Harvard Business School. She explained that AI allowed businesses and individuals to fail more often, and take “smart risks”. AI ushered in the age of “intelligent failures” (different from “preventable failures” to avoid), which should be celebrated by “learn-it-all” teams willing to learn from every experience and learning opportunities.

As the discussions at the Forum emphasised, success in this evolving landscape will depend on adelicate balance between harnessing AI's potential and reinforcing the human values that underpin sustainable and innovative workplaces. Ultimately, redefining the role of knowledge work in an AI-driven world offers an unparalleled opportunity to shape a future that is not only more efficient but also deeply human.

Credits: IADS (Selvane Mohandas du Ménil )

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Artificial intelligence (AI) is revolutionising retail, impacting everything from customer service to supply chain management. Yet, as outlined in our recent IADS Exclusive titled "AI in retail: why culture, values, and strategic goals matter more than tech," successful AI adoption involves more than simply implementing new tools. It requires deep alignment with an organisation's broader mission, culture, and values. This exclusive further addresses one of the most critical challenges in AI deployment—the "black box" problem, which refers to the challenge of interpreting or explaining how complex AI models arrive at their decisions. This piece explores how retail leaders can ensure transparency, accountability, and ethical use. Retailers can fully harness AI's potential by focusing on governance, explainability, and innovation while avoiding the risks of opaque decision-making systems. A lack of clarity can impact both customers and employees, undermining trust and creating potential issues with compliance and fairness. Our focus here is on bridging AI's capabilities with clear, human-centred governance by prioritising transparency and informed oversight to channel AI’s potential for people-first innovation.

Beyond the “black box”: accountability, explainability, and transparency

Cracking open the black box 

AI’s promise lies in its ability to make decisions faster and more efficiently than humans. However, many AI systems operate in ways that even their developers cannot fully explain, creating what is known as the "black box" problem. AI algorithms work by analysing vast amounts of data through multiple layers of complex calculations, where each layer transforms the data in ways that are difficult to track. Although developers set the initial parameters, the system's learning process often results in decision paths that are nearly impossible to map or interpret in clear, human-understandable terms. This issue becomes especially risky in retail, where decisions like product recommendations, dynamic pricing, or hiring must be accurate and fair. Unlike industries where AI operates behind the scenes, retail relies on customer- and employee-facing decisions that are immediately visible, impacting trust, satisfaction, and loyalty among both groups. As a result, explainability and fairness in AI outcomes are fundamental concerns, they are vital to maintaining competitive advantage and retention.

Retail leaders must prioritise transparency at every stage of AI development and implementation to overcome this. Documenting data sources, algorithmic logic, and decision-making processes allows businesses to provide clear explanations when needed.1 Unlike in traditional systems, where a clear set of rules may guide a process, AI often uses complex, data-driven models that can be harder to interpret. This opacity raises concerns not only for internal governance but also for customer trust and regulatory compliance.

Retailers must ensure their AI systems are explainable to stakeholders at all levels, from customers and employees to regulators and internal governance teams. By documenting and understanding each decision made by AI systems, companies can avoid the risks of operating in the dark.

Human oversight in AI 

As discussed in "AI in retail: why culture, values, and strategic goals matter more than tech," AI is not a stand-alone solution. Its success hinges on alignment with human oversight and strategic goals. AI-driven systems require ongoing human accountability to ensure they function as intended.

Leaders in retail need to establish clear governance structures for AI deployment, designating dedicated teams to oversee AI systems and address potential issues, safeguarding the interests of both employees and customers2. This was seen in Tesco's pilot program for AI-driven dynamic pricing, where IT teams and department heads collaborated closely to integrate AI without compromising existing business processes. Such coordinated efforts are critical for ensuring that AI-driven decisions align with operational goals and ethical considerations.

Keeping in mind that AI cannot operate effectively without human oversight, retail leaders should set up dedicated governance teams to monitor decisions made with the use of AI, ensuring they are both accurate and ethical.

Building trust through transparency 

Retailers can no longer rely on opaque AI systems, especially as customers, employees and regulators demand greater transparency. In today's marketplace, trust is currency and ensuring that AI tools operate transparently is vital to maintaining it. Regular audits and assessments, such as Data Protection Impact Assessments (DPIAs) and conformity assessments, can ensure that AI systems meet legal requirements and uphold responsible practices throughout their lifecycle.

Marks & Spencer, for instance, conducts ongoing assessments of its AI systems to ensure they align with both customer expectations and ethical standards. These practices help maintain transparency and foster trust across stakeholders.

Regular, transparent assessments of AI systems, paired with continuous monitoring, ensure that AI tools remain aligned with business goals, legal standards, and customer expectations.

Positioning AI as a creative partner in personalisation and innovation

While AI has traditionally been associated with operational efficiency, its potential as a creative and inclusive tool is equally significant. AI agents have revolutionised customer interactions, offering personalised product recommendations and real-time customer support through chatbots and virtual assistants3. Retailers have the opportunity to use AI not just to improve processes but to drive innovation in areas like product design and customer engagement, fostering a more inclusive and sustainable future for retail. For example, some AI-powered digital labs are demonstrating innovative uses of AI creatively to generate custom visuals and personalised content, offering valuable strategies to amplify brand identity and foster impactful customer engagement. Additionally, AI platforms in custom jewellery create unique pieces tailored to individual specifications, blending luxury with personalisation on a scalable level. There is also untapped potential in applying AI to refine employee experiences, aligning training and support with personal strengths and brand values.

AI for inclusive fashion design 

Fashion has historically struggled to cater to all body types and physical needs, but AI offers a pathway to change that. By analysing consumer data such as body measurements, feedback, and preferences, AI can help create clothing with a more inclusive fit. In the bra industry, for example, AI-driven platforms are transforming design by offering custom-made options tailored to each individual's unique measurements, promising a "perfect fit" that addresses both comfort and support. This technology not only enhances comfort but also addresses long-standing challenges in fit, design, and accessibility. As previously mentioned, parallel advancements in AI-driven customisation tools for jewellery mirror this trend, allowing customers to design pieces that reflect their personal style and requirements. Moreover, AI empowers designers to balance aesthetics with accessibility, supporting the creation of inclusive pieces that retain quality and appeal. This approach can be transformative, ensuring that new products meet functional needs and offer greater comfort and accessibility.

AI as a catalyst for sustainability 

Sustainability is an area where AI can make a profound impact. Beyond optimising supply chains, AI can help discover new eco-friendly materials, minimise waste, and predict customer demand more accurately to prevent overproduction. IKEA, for instance, uses AI to track real-time customer preferences, allowing it to fine-tune inventory and reduce excess stock, thereby cutting waste. Additionally, some digital content labs employ sustainable practices by reducing waste in production, and AI-powered augmented reality (AR) shopping solutions help consumers make more precise purchase decisions through virtual try-ons, which decreases returns and supports more sustainable consumption.4

Moreover, AI can simulate the environmental impact of materials and operational decisions, guiding retailers toward more sustainable practices. By integrating sustainability into AI-driven innovation, retailers can meet both customer demands and environmental goals, positioning themselves as leaders in responsible technology use. Overall, AI remains a powerful tool for driving sustainability in retail, from optimising supply chains to minimising waste and promoting eco-friendly choices.

The future of retail spaces: creating the "third place” 

AI can help retailers move beyond traditional shopping experiences by designing spaces that function as "third places"—spaces where customers can shop, relax, and engage with their community. AI tools that analyse foot traffic and customer behaviour enable retailers to create environments that cater to families, young professionals, and other demographics. For example, Nordstrom uses AI to enhance customer service and design spaces that foster interaction and loyalty. Retailers can use similar insights to create experiences that go beyond transactions and resonate emotionally with customers.

Increasingly, retailers are integrating extended reality (XR) technologies—comprising augmented reality (AR), virtual reality (VR), and mixed reality (MR)—to transform in-store experiences further. Each of these technologies provides unique enhancements: augmented reality overlays digital elements onto the real world, virtual reality immerses customers in fully digital environments, and mixed reality combines the two, allowing for real-time interaction between physical and virtual elements. With these tools, customers can try on products virtually, explore gamified store layouts, or engage with product details in 3D, adding new layers of interaction that make shopping both dynamic and memorable.

Moreover, gamification strategies supported by AI and XR deepen these connections by transforming shopping into an interactive journey. AI-driven rewards, achievements, and challenges motivate customers to engage more fully, creating a dynamic and memorable in-store experience. This gamified approach not only draws customers back but also shifts the retail experience from a routine task to an enjoyable, impactful activity. Together, these innovations create an atmosphere where shopping is functional, immersive, and personally engaging.

Multigenerational workforce: Millennials, Gen Z, and Gen Alpha bridging the AI gap

The rise of AI in retail is not happening in isolation. It is unfolding in an era where the workforce is becoming more multigenerational than ever before, spanning Boomers, Gen X, Millennials, Gen Z, and, in the coming years, Gen Alpha. The younger generations—Millennials, Gen Z, and soon Gen Alpha—are not only shaping consumer trends but are also at the forefront of AI adoption in the workforce. Their digital fluency allows them to bridge the gap between traditional retail practices and AI-driven innovations.

Millennials and Gen Z: leading the charge

Millennials and Gen Z employees bring a unique set of skills to the table, particularly in understanding how AI can enhance customer and employee experiences.5 These generations are digital natives, comfortable with using AI tools to create more personalised and efficient shopping experiences, ranging from tailored customer interactions to streamlined employee training and support systems. Their affinity for innovation makes them ideal candidates for roles that involve AI governance, strategy, and implementation. In many organisations, these generations are the bridge between leadership’s vision and the practical application of AI solutions on the ground. In some organisations, interns play a crucial role in advancing AI initiatives by experimenting with AI tools innovatively. This open approach allows retailers to test and refine straightforward, adaptable solutions, often achieving quick wins and practical insights into AI’s application in retail environments.

Gen Alpha: the future of AI in retail

Looking ahead, Gen Alpha—those born after 2010—will be the most AI-native generation yet. As they enter the workforce in the coming years, their expectations for seamless, tech-driven environments will push retailers even further toward AI adoption. Retailers must prepare now by fostering a culture of continuous learning and adaptability.  Unlike previous generations, Gen Alpha is growing up in an environment where AI, XR, and interactive digital interfaces are the norm. This digital immersion will likely lead them to prioritise seamless, personalised, and ethically aligned AI applications as they enter professional roles.

Gen Alpha’s digital-native perspective positions them to lead retail innovations, especially in personalisation, transparency, and sustainability. As this generation enters retail roles, their advanced tech skills and commitment to socially conscious, transparent practices will further push the industry toward robust AI adoption and integration. Preparing for this workforce shift involves fostering a culture of continuous learning, with Gen Z and Millennials guiding Gen Alpha as they begin taking on leadership roles.

Governance done right: legal and ethical compliance

AI in retail must adhere not only to business goals but also to legal and ethical frameworks. Retailers need to recognise that while AI can enhance operations, it must operate within the confines of privacy laws, consumer protection standards, and intellectual property rights. Effective AI governance requires a solid grasp of multiple disciplines, including AI, data science, law, risk management, and ethical standards. Given the rapid evolution of this field, governance frameworks and policies developed today will likely require updates and adaptations in the near future. Pragmatism is essential, as well as understanding that not using AI can pose greater risks than using it responsibly.

Staying ahead of the regulatory curve

As AI evolves faster than the law, retailers must be proactive in understanding and complying with existing legal frameworks. For instance, AI systems used for hiring or pricing must adhere to anti-discrimination laws and consumer protection standards. The U.S. Federal Trade Commission (FTC) has made it clear that AI tools cannot violate existing regulations, and failure to comply can result in significant penalties. Implementing governance frameworks like the EU AI Act or ISO 42001 can provide structure, but governance professionals must remain adaptable to navigate the changing legal landscape effectively.

Successful AI governance is not limited to enforcing rules but involves fostering a culture of ethical responsibility. This requires a mindset that balances risk with opportunity. Companies must work closely with legal teams to ensure that AI systems do not inadvertently breach regulations. This requires continuous legal oversight, particularly as AI evolves and new use cases emerge. Being proportionate in AI governance, focusing on high-risk areas and scalable oversight, is critical to effectively balancing AI’s benefits against potential risks. Retailers need to ensure that AI systems comply with existing laws and regulations, working closely with legal departments to mitigate potential risks, protecting both customer data and employee rights in the process.6

Navigating intellectual property challenges

As AI supports the creation of new designs, marketing strategies, and other innovations, intellectual property (IP) issues will become increasingly important. For example, recent rulings on AI-generated content raise questions about ownership rights. Retailers need clear policies regarding IP ownership for AI-driven innovations, ensuring they are legally protected while avoiding conflicts with third-party rights. This challenge requires AI governance professionals to understand not only the technology but also the intersections of IP law, ethical standards, and commercial pressures. A perceptive approach to AI governance (building a shared language around AI and data science) facilitates mutual understanding and credibility, strengthening governance practices across the organisation.

Continuous governance for continuous innovation

AI governance is not a one-time effort but a continuous process that requires regular updates and audits, as well as alignment with organisational values. This is particularly important when addressing dimensions such as bias, data privacy, and fairness. Retailers must adopt governance frameworks like ISO 31000:2018 Risk Management Guidelines or the NIST AI Risk Management Framework to ensure AI systems comply with legal and ethical standards. Regular audits will help navigate the complexities of AI and maintain responsible use.7

As retailers face the complexities of AI deployment, they must prioritise thoughtful planning, structured governance, and continuous adaptation to ensure successful outcomes. Here are the key practical steps for integrating AI, which serve as essential takeaways:

• Conduct a formal needs assessment: Start by understanding where AI can add the most value, ensuring alignment with both operational challenges and broader business objectives.
• Align AI with organisational goals: AI must not operate in isolation. Leadership should set a clear vision and develop a roadmap with prioritised use cases that target strategic impact.
• Develop proof of concept and pilot programmes: Test AI through controlled pilots, refine based on real-world data, and involve key stakeholders across departments to ensure AI integrates smoothly with existing systems.
• Iterate and improve before full-scale deployment: Do not rush into full implementation. Learn from pilot results, iterate, and document decisions to create a responsible and transparent AI framework.
• Plan thoroughly for full-scale deployment: Ensure detailed planning, resource allocation, and ongoing performance monitoring to mitigate risks and avoid AI becoming a “black box.”

Beyond technical steps, continuous adaptation and monitoring are necessary to keep AI systems aligned with business objectives and ethical guidelines. By continuously evaluating and refining AI systems, retailers can unlock AI’s potential as a strategic asset that drives innovation, inclusivity, and sustainability. At its best, AI governance becomes a key enabler of long-term value. Retailers who embrace governance frameworks and standards, coupled with transparent, accountable practices, will be well-positioned to succeed and thrive in a future shaped by AI, ultimately benefiting both employees and customers with a responsible, human-centred approach.

The "black box" challenge highlights the dual impact of AI in retail: AI systems shape customer experiences in areas like personalised shopping and dynamic pricing, and they influence employee-related decisions, such as hiring and resource allocation. Yet, these systems must themselves be shaped and guided by human oversight. This interdependence calls for transparency and accountability, ensuring that AI-driven decisions are effective and aligned with the core values and needs of employees and customers. AI operates as a "socio-technical system"—meaning it blends both technical processes and human influence. This requires a strong foundation of ethical, human-centred governance where AI complements company culture by prioritising people and data integrity over purely algorithmic outcomes.

AI is best used as a tool to support, rather than replace, human judgment, helping decision-makers make informed choices through simulated insights. Such a foundation ensures that AI complements organisational culture, expanding possibilities while adhering to human-centred values. A purpose-driven approach to AI integration paves the way for sustainable growth and innovation, allowing technology to amplify human values and propel the retail industry toward a future rich with meaning and resilience.

Credits: IADS (Maya Sankoh)

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Last October, Manor gathered its business partners to introduce them to its new Men’s and Women’s fashion concept, unveiled in the newly refurbished Basel store and supported by a press release issued the same day. It was the first time that Manor conducted such an event, which reminded of what Boyner does to keep connected with its local suppliers and partners in Turkey./nbsp]

For Manor, an IADS member since 1968, it was, however, an excuse for a much more comprehensive update about every category, the company itself, and where the CEO, Roland Armbruster, sees it in the coming years. This is why the format took the shape of a keynote, modelled after tech companies, with Armbruster, CMO Sandra Kottenauer and CFO Thomas Stocklin, taking the stage solo one after another to discuss product strategy, omnichannel updates, belief in more stores, retail media, and enhanced cooperation with brands and suppliers. The session ended with a Q&A with the three top executives, moderated by Sandra Kanzig, Communications and Marketing Director.

The grand event was complete with a staged visit to the revamped Basel store, so the audience could discover the new ground floor (cosmetics, perfumes and accessories) and the first and second floors (men’s and women’s fashion).

In the aim to become Switzerland’s fashion destination, Manor goes lifestyle

As Manor seeks to solidify its role as a compelling brand within Switzerland's retail landscape, it emphasises fashion, a key driver of the retailer’s brand identity. Over the next three years, Manor will invest in refurbishing its top 12 stores’ fashion areas, i.e. 20,000 sqm (which account for over 50% of the company's turnover), to create a consistent, nationwide brand image, particularly through enhanced lighting concepts.

A critical aspect of this strategy involves clearer segmentation of Manor's fashion offerings, moving from a disorganised shopping experience to a well-defined lifestyle segmentation, focusing on classic, contemporary, and casual styles. This shift acknowledges the evolving nature of consumer preferences, where lifestyle takes precedence over age in fashion choices. To support this, Manor is introducing 20 new brands tailored to regional preferences, reflecting the diverse fashion tastes across Switzerland, sometimes in exclusivity (in Basel, American Vintage, Someday, Hugo, Michael Kors, Liu Jo, G-Lab or Ted Baker were not represented before). The accessories segment is also receiving significant attention, to offer consumers a complete lifestyle experience.

Manor's private label will align with these segments, ensuring coherence and appeal alongside premium international brands through astute in-store positioning. This strategic alignment extends into digital realms, where Manor is poised to take significant strides in retail media, leveraging digital assets to enhance brand communication and consumer engagement.

In the beauty sector, where Manor holds a strong market position, the focus remains on innovation and customer experience. Manor aims to maintain its leadership by continuously introducing new brands and services, particularly in emerging wellness and green beauty areas. Deeper collaborations with brands like Rituals and Sephora exemplify Manor's commitment to co-creating unique in-store experiences that cannot be replicated online, emphasising the value of personal service and exclusive offerings.

In the non-food categories, Manor is strategically refining its sports and toys offerings, focusing on key areas that align with customer interests. By concentrating on training and outdoor apparel instead of bulky items like skis, Manor adapts to the logistical realities of city centre locations. In toys, the opportunity lies in creating interactive, experience-driven spaces that serve as family-friendly destinations, enhancing in-store engagement and online growth.

The food sector remains a pivotal traffic driver for Manor's physical stores, distinguished by a market-like atmosphere offering personalised service and ultra-fresh, homemade products. This unique positioning helps attract a steady flow of customers, benefiting all store categories. Significant investments are planned for Manor's supermarkets and restaurants, particularly in major locations like Geneva, which will undergo refurbishments to enhance the food shopping experience further.

Marketing efforts are also being revamped, with a new centralized team and a fresh visual identity to deliver consistent brand expression across all channels. Manor is embracing a more modern, approachable aesthetic and plans to leverage brand ambassadors like Olympic champion Wendy Holdener to enhance local relevance and trust. Regarding technology, new investments in CRM have already bolstered customer acquisition by over 20% annually. Now, the focus shifts to customer activation, leveraging data to enhance basket sizes and customer engagement through targeted marketing based on purchase affinities. This approach is expected to double the value of CRM-linked customers.

Manor's strategic transformation: a call for enhanced partnership models

Manor is leveraging its unique market position to drive increased footfall in urban centres while enhancing brand value across physical and digital platforms. A 200+ million Swiss franc investment backs this strategic initiative to optimise its value proposition, including major store refurbishments in Basel and Lausanne (2024), followed by Lugano, Vevey, and Geneva (2025).

The strategy presents a compelling mutual benefit proposition: through co-investment, both Manor and its partners stand to maximise returns. While selective store closures are occurring in underperforming regions like Ticino, Manor's commitment to physical retail remains robust with over 50 locations maintained and enhanced. A cornerstone of this commitment is the planned 13,000 sqm flagship store in Zurich, set to open by 2027, featuring innovative concepts across fashion, home, beauty, and dining segments.

Manor also plans to invest in its sales teams, enhancing customer service skills and brand knowledge, provided partners play the game and decide to move in with new models (such as concessions) at Manor. This aligns with broader retail trends where transitioning from wholesale to concession models has shown a  25-30% sales increase. This is why Manor’s top brass tactically emphasised the importance of a collaborative approach, inviting partners to contribute meaningfully across three main pillars, offerings, story, and operations:

• Offerings improvement: ensuring premium product assortment in urban locations and digital platforms, primarily through concession models designed to optimise partner offerings,
• Brand storytelling: enhancing brand visibility across all touchpoints to strengthen consumer mindshare,
• Operational excellence: implementing seamless operations that showcase innovation while delivering powerful joint marketing messages through Manor's new Retail Media platform.

These collaborative initiatives are designed to maximise in-store and online opportunities for suppliers, streamlining the supply chain to enhance consumer-facing value. By ensuring high-quality products are delivered on time and optimising digital data exchanges, Manor aims to minimise time-to-store and reduce warehouse durations. This improves stock flow and accelerates product availability across all sales channels, leading to increased full-price sales and decreased discounts through shared inventory risk management.

Furthermore, they insisted that Manor is a solvent partner, facilitating sustainable investments in the retail sector. Unlike the market average payment period of 50 days, Manor has reduced this to just 25 days. Together with their parent company, Maus Frères, they have introduced a supplier financing option poised to enhance financial flexibility for partners further. That was also a way to kill the tenacious rumours that have spread for years suggesting that the company was for sale.

How is the Basel store delivering its promises?

The Basel location serves as a prototype for Manor's transformation under new artistic director Volker Kächele, who joined in February 2024. His 360° approach ensures brand consistency across all customer touchpoints—from store windows to digital platforms—creating a unified, customer-centric experience. Everything has been de-siloed: he also supervised the brand revamping, which is visible at the cash desks. The dynamic and relaxed seasonal campaign, displayed on kakemonos and in-store screens, also caught the eye.

Consequently, the first answer is yes, the promises are delivered. The new atmosphere is immediately felt when entering the store, thanks to the overall colours, the lighting, and how the new Manor brand identity is subtly present everywhere.

It also gives much more space for third-party brands to express themselves through 2 approaches:

• Either by maximising the visibility that concessions allow, as exemplified on the ground floor by the massive presence in entry-price jewellery given to  Phantasya, Pandora and Swarovski, or, in the cosmetics section, the hard-to-miss Sephora stand.
• Or through the work done with all furniture suppliers to rethink the display units, with lower, more accessible and perspective-friendly units that focus on products and brands.

Consequently, the gaze runs freely on all floors, and visitors feel that the space is clear, with visible and identifiable sections.

Some elements are thought out in detail and show to what extent Manor aims to be a place to visit and live, not only a place to purchase. For instance, the watch stand, operated with Hirsch, a watch strap manufacturer, is also a service point where customers can have their items revised, repaired, or customised. It also sells accessories, such as electric storage boxes for automatic watches, fully representing the watch universe.

Another point that caught the attention during the visit was the notion of partnership that Manor’s top management was calling for during the presentation. Some brands are already playing the game, such as Saint Laurent, which offers its “Vestiaire Olfactif” exclusive collection on the ground floor, in addition to the more commercial lines. For now, it is the only luxury brand to present its high-fragrance line, but it clearly shows the shift that Manor is making.

Finally, while Manor’s CMO tackled the topic without deep-dive into it, Manor’s private labels’ upgrade is also very visible now, not only through their increased coherence with the general store environment but also through astute zoning: for instance, Manor’s contemporary line is adjacent to Levi’s, while in sportswear, it is near Nike. The idea is clear: Manor’s private labels are not by-products or second thoughts but a desirable component of the store's offer.

Under Roland Armbruster's leadership, Manor is executing a rapid and comprehensive transformation that defies stereotypes about Swiss conservatism. The pace and scope of change demonstrate a bold vision for retail innovation, setting new standards in the Swiss market.

In the coming weeks, Manor will engage partners individually to explore transformation opportunities and review contributions. This means that the Basel and Lausanne renovations mark just the beginning of Manor's ambitious journey toward retail excellence, and more changes should be expected in every aspect of the business in the coming months and years. Stay tuned for news from Switzerland!

Credits: IADS (Selvane Mohandas du Ménil)

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Singapore, officially known as the Republic of Singapore, is a member of the world’s exclusive club of city-states, along with Vatican City and Monaco. Singapore was even identified in 2015 by the Financial Times as “the world’s only fully functioning city-state”, with its currency, a large airport acting as a worldwide hub, one of the busiest maritime ports, and fully fledged armed forces (a feature that the other two do not have). Singapore’s numbers are astonishing: it was the 4th most competitive economy in the world in 2023, one of the world’s very few countries to be rated AAA by S&P, Moody’s and Fitch altogether (and the only one in Asia), the second densest city in the world after Monaco, the second country in the world in terms of being a business-friendly place. 100% of its citizens are equipped with smartphones (a feature that even South Korea, an ultra-connected market, does not reach).

Singapore’s reputation in terms of productivity is well-established. Still, combined with tourism (Singapore is the 5th most visited city in the world and the second in Asia, thanks to its “City in Nature” positioning promoting sustainable tourism), it becomes a natural destination for anyone versed in retail. The state in its current form is 107 years younger than the first department store to have opened there, Robinsons in 1858, when Singapore’s population was 80,000, of which 50% were Chinese.

Today, retail represents 3% of the national workforce and 1.4% of Singapore’s GDP, serving nearly 6m inhabitants. Most of its iconic department stores are located on Orchard Road, which gives visitors the feeling of seeing double, given the ubiquity of luxury and fashion labels there. This situation raises some serious questions regarding the still-operating department stores (Robinson’s closed for good in 2021): how are they differentiating? What is up-and-coming in such a competitive retail landscape?

Are department stores in Singapore a disconcerting picture of the past?

Strolling down the 2.2 km-long Orchard Road is an authentic luxury experience, in a literal way: the whole location and its street furniture were revamped in 2010 for a total of $40m, to be on par with the retail tenants: more than 50 luxury flagship stores, 5,000 fashion and retail lifestyle stores, 800 restaurants, bars and cafés, and at least 4 department stores, all over more than 8m sqft of retail space. It is a culture of plenty, and one might see the same logos repeatedly, from Louis Vuitton to Gucci, Chanel or Dior. Every retailer preempts as much visual space as possible to be louder and more attractive than its competitors, including luxury brands.

It is stunning to see so many different department stores in such a small area, in a densest way than in other international shopping hubs such as New York, Paris or London: customers have the choice between 4 different department stores, all located less than 3 minutes from each other. Differentiation is, therefore, key to making sure they stand out, and, in earnest, the mission is not accomplished: even though Tangs, the now-oldest Orchard Road department store, has implemented some very nice ideas to create loyalty and a sense of belonging, it is difficult to feel excited by the department store scene.

Among foreign operators, Indonesia-based Metro Department Stores is the oldest in Singapore. It opened in 1957 to sell overseas labels to wealthy housewives. The first store on Orchard Road opened in 1965 and relocated when the Paragon Mall (in front of the first location) opened in 1987. After having up to six stores in the 2000s, Metro now only operates the Orchard Road flagship and the suburban location of Causeway Point. It focuses on private labels to complete an international offering.

The Paragon Mall was refurbished in 2008 for $82m, including opening new retail spaces. This allowed it to go upmarket and attract luxury brands such as Tod’s, Prada, Miu Miu, and Gucci, as well as Marks & Spencer and Toys”R”Us. It offers upscale dining options such as the Imperial Treasure Peking Duck, a supermarket, and the expected array of services in such a location: concierge, free Wi-Fi, members’ lounge, and EV and phone charging./nbsp]

In such a context, anyone would expect an upscale experience when visiting the anchor department store, which is far from the case. A major issue comes from Metro's location within the mall, at the back and up one floor, forcing customers to use escalators to visit a store that lacks both efficient in-mall frontage and outside views and windows. Consequently, the department store has low visibility and cannot entice international visitors without prior knowledge of the mall to come in and visit.

The store is developed on three floors in a very classical manner: cosmetics, fragrances, and women’s shoes on the first floor, women’s and men’s apparel and accessories, and services on the second, while home, kids, and lifestyle can be found on the last floor.

When arriving in the store, the experience in the cosmetics and fragrances area is luxurious and efficient, with branded counters without walls, allowing a sense of space. The shoe area is similarly wide open, providing perspectives and a sense of plenty. The apparel floor feels less luxurious, as fewer luxury labels and many more mid-market names are displayed in a generic setting, therefore not providing a memorable experience. The feeling gets more present on the last floor, where the purpose is clearly to sell products rather than propose a special experience. Some decisions are surprising:

• The store is offering suitcases on every floor, even though they are officially displayed on the last one according to the floor maps,
• Similarly, the transitions between categories can sometimes be unsettling, such as the second floor, where lingerie is mixed with luggage and men’s apparel on sale.
• Lego is advertised on the floor plans and suggests a significant shop in the shop with a branded display, while in fact, the products are on shelves near other brands without a specific effort to promote the brand.

Traffic was satisfying at the time of visit, which suggested that the department store succeeds in attracting a crowd of loyal locals. However, it is difficult to understand Metro’s selling point to international customers apart from discounts and rebates.

Japanese department store Isetan entered Singapore in 1983 with a store on Parkway Parade (the store was closed in 2022), in Wisma Atria on Orchard Road in 1986 (Isetan closed the store in 2015 and converted it into rental units keeping the Isetan umbrella name), in Orchard Road’s Shaw House in 1993 (the current flagship), as well as in 2 other suburban locations in 1995 and 2010. Today Isetan operates 3 locations in Singapore.

The Shaw House was built in 1993 on the old Lido Cinema and sits at the crossroads of Orchard Road and Scotts Road, leading some locals to dub it “Isetan Scotts”. The store is expanded on 5 floors: a basement with a supermarket and gourmet restaurants, the first floor dedicated to cosmetics, beauty and jewellery, the second floor dedicated to women’s apparel and accessories, the third floor dedicated to “lifestyle” including men’s fashion and gadgets, as well as golf apparel, and the last floor devoted to home and kids. Like in the Shinjuku location in Tokyo, each floor offers food and beverages, which encourages spending time in the store.

Overall, the feeling is extremely luxurious, and the highlights are the spectacular grocery store in the basement (which could easily compare to the Isetan Tokyo experience or Le Bon Marché’s Grande Epicerie in Paris) and the atrium on the ground floor (first floor), which structures the whole building.

The first floor, dedicated to cosmetics and fragrances, is beautiful but empty at the time of the visit. However, the only moment when a salesperson initiated contact was on this floor, while it did not happen at any point in any other store visited on the same day. Store execution is spectacular, and a “Café de Muse” coffee shop completes the product offering.

This overlap of food and retail is also felt at the second floor and is quite effective. However, women’s fashion offerings are toned down by the fact that brands are not visible, creating a strange experience in which the food points stand up. The same feeling takes place at the third floor where the Sushiro restaurant feels almost part of the Bang & Olufsen stand and is almost too visible, shadowing interesting spaces such as the one dedicated to golf. Finally, the fourth floor (technically the fifth as there is an intermediary floor operated by another retailer and not accessible from within the store) displays kids and home. It gives access to the McDonald’s restaurant and the cinema.

While the overall experience was clearly more luxurious than in Metro, and the effort to provide a series of food options during the visit was notable, the feeling, here again, was that this store was selling products rather than experience, questioning the very reason why one would come specifically to Isetan and not another department store.

Its Nippon competitor Takashimaya entered Singapore in 1988 when they signed a joint venture deal with real estate developer Ngee Ann Kongsi, which opened the two-towers-strong Ngee Ann City building in 1993 on what used to be a cemetery. Takashimaya occupies 37,000 sqm in Tower B and used to compete with Tangs in Tower A until it closed for poor results and was replaced by a series of luxury flagship concessions.

The store is structured according to Japanese retailers’ playbook: a basement with a Japanese supermarket and a food hall, a ground floor dedicated to cosmetics and accessories, international designers on the first floor, ladies’ and men’s apparel and accessories on the second floor, then kids on the third, and home appliances on the top floor./nbsp]

The second basement, which includes Japanese food and restaurants, was bustling when visited at 3 p.m. on a weekday, suggesting that the place is recognised as a meeting point and a landmark for locals. A selection of international and Japanese food labels completed the offering and gave a sense of elevated shopping despite the noise, excitement and intense crowd. The first basement, dedicated to homeware, home appliances and kitchenware, offered a stark contrast, as the traffic was lower and the experience poorer: just like at Metro, products are stacked rather than desirably displayed.

The first floor (ground floor) is Japanese department store retail at its best, with a series of international luxury cosmetic brands alternating closed-wall units and open ones, all surrounded at the periphery of the floor by mid-market accessories brands shop-in-shops such as Kate Spade, Coach, Bally or Marc Jacobs. Luxury names can be found on the second floor, where the likes of Bottega Veneta and Manolo Blahnik neighbour Issey Miyake, Ba&sh, Ganni and Kenzo, and regional names such as Bora Aksy and Maryling. A section was under refurbishment at the time of the visit, with Mulberry and Burberry due to open and the Hermès space temporarily relocated to the third floor.  The first floor also houses a Club 21 multi-label boutique, a legendary name in Singapore regarding fashion, with 7 locations in the city, including a second one on Orchard Road.

The third floor is dedicated to women’s and men’s fashion, accessories, a selection of tech, and luggage. The space is much more fragmented regarding retail units and feels more crowded. While the women’s section could claim to be the most agreeable experience, thanks to a mix of international brand stores (Maje, Sandro, the temporary Hermès unit), the floor felt overall rather poor in terms of experiences, with a strange floor plan, locating customer services near lingerie and men’s gadgets, and a very significant and unappealing luggage area near the escalators in a very high-traffic zone. The service area (which includes the VAT refund) works with a ticket system, and customers wait on tired seats, making the experience unappealing.

The fourth floor is dedicated to sports, kids, and restaurants. Toys are appealing (all units are branded), childrenswear does not stand out (most brands are in generic display), and the sports section is spectacular, thanks to a space operated under ‘Sports Central’. Again, some store zoning choices are questionable, such as the fitting rooms near the lifts. The shopping options are completed with the top floor offering home appliances sold by a business partner, “Best”, under different branding.

The experience at Takashimaya ranges from exciting and bustling at the food level to classical and “déjà-vu” on the ground floor and disappointing on the top floors.

The notable exception of Tangs…

Tangs, an iconic name often compared by locals to Bloomingdale’s and Selfridges, was founded by C.K. Tang, a Chinese national, in 1932 on a first location in Singapore. He was one of the first to identify the potential of Orchard Road, from an old dirt road to a major traffic magnet. He relocated there in 1950, opening his store in front of what used to be a cemetery and initiating a spectacular real estate boom in that part of the city. Today, the group also operates a 7,900 sqm unit in another mall, VivoCity, that opened in 2006 and was fully renovated in 2022.

The Orchard Road location, which spans five floors and more than 15,000 sqm, was renovated in 2012 for $35m and is currently undergoing a new set of renovations announced last July, starting with the basement. The store is modelled after the Chinese Imperial Palace and is flanked by a tower, the Tang Plaza, which was purchased in 1982 and houses a Marriott hotel.

The basement is dedicated to home, wellness and gifts, while the first floor (ground floor) accommodates beauty, the second floor women’s and kids, the third floor homeware, gadgets, tech and men’s, and the fourth floor beauty services. Food options are available across the building except for the third floor.

The basement, while not dedicated to gourmet food like in its Japanese competitors, feels very luxurious regarding how products are displayed, with an effort given to VM and product visibility. Consequently, brands seem more desirable because they have more space for expression, such as Miele or the large Dyson space in front of the escalators. The atmosphere is quiet, without music, which allows operators to diffuse promotional advertising without being too oppressive. What also stands out is the TANGS-branded space dedicated to glassware, tableware and appliances, emphasising the notion of curation and selection.

The first floor (ground floor) feels extremely luxurious and quiet during the visit, despite the passing crowd in front of the store (and even when compared to the traffic in the basement). Brands are organised by semi-closed units, creating perspectives but avoiding giving the visitor a sense of the (relatively) small surface of the store. A bakery producing croissants on site is available, and interestingly, it is completely glass-walled to allow visitors to see but avoid spreading smells in the store.

The second floor is dedicated to women and kids. Again, the presentation is extremely luxurious. Similarly to the basement, a TANGS-branded space proposes a curated offer with exclusive brands such as Suncoo or By Malene Birger. It is strategically located near the food point, allowing here again to create synergies. Messaging is all about caring for the community: wall advertising mentions that “TANGS loves local” and promotes Singaporean-based fashion.

The third floor is well executed, especially regarding homeware and beds. Some product zonings are surprising (men’s underwear is located between luggage and beds). Still, overall, the feeling of luxury remains present, even if the visitor is now on the higher floors. A large Sunglass Hut stand and an overrepresentation of luggage also stand out on this floor. The shoe concept is very coherent, and when it comes to sports, it makes it obvious that Tangs has managed to maintain its partnership with Adidas but lost Nike. A common point to the second and third floors is that Tangs seemingly focuses on mid-market brands, which are often private labels or new and unknown names when it comes to fashion.

The fourth floor is dedicated to beauty salons, including a Chanel Privé, and a “museum,” which is a wall displaying historical pictures of C.K. Tangs, his belongings, the company's history, and repeating the company’s commitment to serving the local community.

There is a clearer path towards more experience at Tangs. It does not go only through the offering of many food and beverage points but also through the expression of the retailer’s name in a very specific (and desirable) way from the point of view of the community, emphasising its local commitments and rooting, as well as real attention given to details and execution at all floors of the store. It is therefore telling that a new round of upgrades is starting to increase the level of experience during the visit even more.

…but wait, there is more!

In Singapore, department stores might not be the ones writing the future of the retail experience, as they are entangled in a competition to retail the best brands (which are otherwise tempted to go solo), in a declining market (retail sales decreased by 2.3% in July 2024 and department stores slid by -11%), where customers are strangled with inflation and ask for more promotions, while leases and rents are increasing. As a consequence, innovation is coming from unexpected places.

In the Isetan Wisma Atria mall, on Orchard Road, a bank, OCBC, has opened a remarkable space worth visiting. The OCBC space is a whole retail unit, accessible both from the atrium (connected with the food court) and the escalators, and is special in the sense that it is much more than a bank.

While customers have access to a series of ATMs at the entrance and dedicated desks for all customer tiers (from personal to private and “premier” banking), as well as a customer service desk, OCBC offers them to spend more time on-site by offering retail activities:

• A visually appealing and functional spectacular library allows people to spend time reading books. They can also purchase them, which echoes OCBC’s cultural positioning since the bank also offers to view a part of their private art collection in a gallery next to the library.
• A café is based in the library space, where customers can enjoy vegan food,
• A retail space offering sustainable and locally produced items allows to shop from a variety of categories, from tableware to gadgets or clothing,
• Finally, a sushi restaurant is also available.

Interestingly, OCBC is very clear about the notion of customer data: every credit card holder has priority over other customers for all categories and a 10% discount, while non-holders, including foreign ones, are invited to choose between either opening a bank account on the spot or simply apply to the loyalty programme. The space overall stands out in terms of experience and creates a true attraction: during the visit, many bank customers were coming from all parts of the mall to settle a bank question and stayed there, having a snack or reading a book, in a relatively quiet, relaxing and welcoming environment. Isetan owns the space: leasing it to OCBC is a smart way for a retailer with a non-productive space to rent it to a new operator, bringing a fresh perspective on the retail experience.

At the Singapore Changi airport, another approach was taken at the Jewel Airport mall to generate interest and curiosity. This mall is not just another airport mall: it was clear since its opening in 2019 that, to be profitable, the 137,000 sqm-large, $1.2 bn-worth mall should address local customers first, well before tourists: the plan involved having 60% of local customers and 40% of international ones. In 2023, footfall increased 26% over 2022, and 70% of it was from local customers. The Jewel is extremely special as a mall:

• The mall focuses on new-to-market brands, such as the first Shake Shack, Burger & Lobster, Pokemon, or Make Hero, a Japanese make-up brand, stores and restaurants.
• Also, well-known brands are invited to display a distinctive experience: Apple has developed a store centred around photography, given the picturesque, inverted fountain that has become The Jewel’s most famous picture. Bacha Coffee, a new coffee chain, has developed a truly experiential store, while Bengawan Solo, a Singapore-based bakery, has opened its largest store (out of more than 50) in the airport. Overall, local brands are invited to show off and are given prime locations in order to showcase Singapore to the world.
• The Jewel has also managed to become a landmark thanks to their Rain Vortez and Forest Valley, which have become places to visit when staying in Singapore in the same way that tourists want to come and see the world-famous Gardens by the Bay. The Jewel has become more famous than the Gardens by the Bay and Universal Studios.

In addition to these retail essentials, The Jewel offers a double reward programme through a collaboration with CapitaStars: both travelers and local residents can capitalize on points and enjoy benefits that can differ according to the population: travellers are offered early check-in, baggage storage or access to the lounge, while locals can enjoy attractions such as the Changi Experience Studio, the Canopy park, or even behind-the-scenes experiences such as Backstage, which explains how the airport works.

Singapore's department store scene on Orchard Road presents a paradoxical landscape. While the area boasts an impressive concentration of luxury retail and diverse shopping options, the department stores struggle to provide truly differentiated experiences. Despite their long-standing presence, Metro, Isetan, and Takashimaya face challenges in creating memorable shopping environments beyond their ground floors. They often fall into the trap of merely selling products rather than curating experiences, with inconsistent zoning and a lack of cohesive brand narratives throughout their multi-level spaces. Tangs emerges as a notable exception, demonstrating a clearer path towards experiential retail. Its focus on local community engagement, curated offerings, and attention to detail across all floors sets it apart. The ongoing renovations at Tangs suggest a commitment to further enhancing the customer experience.

However, the future of retail experiences in Singapore may not lie within traditional department stores. Innovative concepts like OCBC's multifunctional space in the Isetan Wisma Atria mall and The Jewel at Changi Airport are redefining customer engagement. Both sides of the same coin give access to the future: retail spaces can be redesigned to bring something new and unexpected to customers while not often having to go with a decrease in direct revenue (however, the nature of the revenue will change). In the same manner, even in a 100% concession model such as an airport, brand curation, rooting in the local ecosystem and being able to provide distinct privileges to both locals and tourists remain key to being attractive and interesting.

Department stores have always excelled at those activities, so there is no reason for them not to catch the train while it is still there. Singapore is, in that sense, the perfect reminder that, while it is possible to be swamped by the “business as usual” and the necessity to be profitable today, the mere idea of still being around tomorrow requires a strong vision and will to move the lines in a very significant manner. The path forward for department stores involves reimagining their roles as curators of unique experiences rather than mere product sellers.

Credits: IADS (Selvane Mohandas du Ménil)