What: European retail sector faces unprecedented transformation pressure with 17% of companies needing significant change and 6% requiring restructuring, putting USD 300 billion in GDP and 3.5 million jobs at risk.

Why it is important: This widespread need for transformation reflects deeper structural changes in consumer behaviour and market dynamics, with 54% of Europeans expressing economic pessimism and significant shifts towards digital channels, forcing retailers to fundamentally rethink their business models.

BCG's third annual Transform and Special Situations Index reveals significant pressures across the European retail landscape, with 17% of companies requiring transformation and 6% facing severe restructuring needs. This comprehensive analysis of 1,700 publicly held European companies identifies vulnerabilities that could impact more than USD 300 billion in GDP and 3.5 million jobs. Whilst inflation and interest rates show modest improvement across the continent, with bankruptcy rates stabilising at a 10% increase compared to the previous year's 28%, significant challenges persist. Germany emerges as the market facing the most elevated restructuring risk, whilst Italy and the Nordics experience heightened transformation pressure. The UK and France show signs of stabilisation, though sectoral challenges remain. The analysis emphasises the need for companies to implement strategic transformation levers, including strengthening revenue footprints, optimising supply chains, and leveraging innovation as a strategic engine to ensure long-term resilience in an evolving retail landscape.

IADS Notes:Recent market analyses from June 2025 confirm the report's findings, with the European retail sector reaching its highest distress level since 2009 . This aligns with observed consumer behaviour shifts, as 54% of Europeans express economic pessimism . The transformation is particularly evident in channel performance, with online fashion retail growing 14.6% whilst physical stores declined 2.7% in March 2025 . Department stores have shown resilience with 5.8% growth , demonstrating how different retail formats are adapting to these pressures through strategic transformation.

Europe Spending Momentum Index

What: The 2025 B2B SaaS Rising 100 report showcases how lean, AI-powered software companies are reshaping business operations across Europe's technology landscape.

Why it is important: As organizations worldwide accelerate their digital transformation initiatives, understanding Europe's emerging B2B SaaS ecosystem is crucial for identifying innovative solutions that can drive operational efficiency and competitive advantage.

The fourth annual B2B SaaS Rising 100 report reveals a significant evolution in Europe's technology landscape, with AI-powered solutions taking center stage. These emerging companies are characterized by their lean operational models and sophisticated use of artificial intelligence to address complex business challenges. The report highlights how these next-generation SaaS leaders are differentiating themselves through innovative approaches to product development, customer engagement, and market expansion. Despite economic uncertainties, these companies demonstrate remarkable resilience and growth potential, leveraging AI to create more efficient, scalable, and customer-centric solutions. The emergence of these technology providers signals a broader shift in how businesses approach digital transformation, moving from traditional software models to more agile, AI-enhanced platforms.

IADS Notes: Recent market developments validate the report's emphasis on AI-powered SaaS solutions. March 2025 data shows that companies implementing AI-driven SaaS platforms achieved significant operational improvements, with 87% reporting revenue increases of 6% or more. However, integration challenges persist, with only 10% of organizations successfully scaling their AI applications. The transformation is particularly evident in enterprise software adoption, where 70% of companies plan to implement AI-enabled solutions, though 76% acknowledge the need for improved cybersecurity measures. This evolution is further demonstrated by the shift from traditional Excel-based systems to sophisticated cloud platforms, with the global SaaS market projected to reach USD 232 billion by 2025.

Meet Europe’s most promising B2B SaaS startups

What: Ikea pursues comprehensive 'real zero' carbon emissions strategy through operational transformation and infrastructure investment, moving beyond traditional offset-based approaches.

Why it is important: The shift from offset-dependent strategies to comprehensive operational changes provides a blueprint for retailers seeking to achieve meaningful environmental impact while driving business innovation.

Ikea is pioneering a transformative approach to sustainability by pursuing 'real zero' carbon emissions across its entire business operations. Rather than relying on carbon offsets, the global furniture giant is implementing fundamental changes throughout its value chain. The company has achieved 100% renewable electricity usage in its Australian stores, while over 70% of its delivery fleet now produces zero emissions. Lauren Sinfield, public affairs and advocacy lead at Ikea Australia & New Zealand, emphasizes the company's long-term mindset in embedding sustainability across all business aspects. The Marsden Park distribution centre exemplifies this commitment through its solar and battery project, demonstrating how logistics hubs can evolve from cost centres to sustainability assets. While the company faces challenges in regional zones where infrastructure gaps remain, its transparent approach to disclosure and climate governance, including reviewing 252 industry associations for climate alignment, sets new standards for retail sector transformation.

IADS Notes: Ikea's 'real zero' strategy exemplifies the evolving approach to retail sustainability observed throughout 2024-2025. As highlighted in Harvard Business Review's May 2025 analysis, successful retailers are moving beyond scattered environmental initiatives to implement focused, comprehensive strategies. This aligns with February 2025 data showing 47% of companies integrating sustainability into product development, while Euromonitor's research revealed 63% of consumers actively seeking environmental impact through purchases. The approach mirrors successful transformations seen in September 2024, when major retailers like Central Retail committed to net-zero emissions through practical operational changes. Ikea's transparent communication about regional challenges, particularly in delivery infrastructure, reflects the industry-wide response to March 2025's EU sustainability directives (CSRD, CSDDD, and ESPR), which demand comprehensive environmental reporting and due diligence. The company's investment in facilities like the Marsden Park distribution centre parallels Falabella's May 2025 strategy, demonstrating how infrastructure transformation can support both environmental goals and operational efficiency.

What retailers can learn from Ikea’s ‘real zero’ climate strategy

What: BCG outlines four critical success factors for building skills-based organizations, emphasizing strategic planning, business integration, technology enablement, and cultural transformation.

Why it is important: The findings are particularly relevant as the retail industry faces a critical skills gap, with 72% of workers using AI but only 36% feeling adequately prepared, highlighting the urgent need for systematic upskilling.

Boston Consulting Group's analysis identifies four key success factors for creating effective skills-based organizations. First, companies must focus on what helps the business most by creating strategic skills plans and launching targeted pilots before scaling initiatives. Second, skills-based work must be anchored in business objectives, ensuring initiatives meet clear demands rather than existing in isolation. Third, technology should be approached as a means to an end, with problem identification preceding tool selection. Finally, skills development must be connected to company culture and people agenda, encouraging lifelong learning and internal mobility. The research emphasizes that successful implementation requires cross-functional teams, clear governance structures, and measurable impact metrics. Despite potential challenges in execution, companies that take this methodical approach can create tangible value while building a more adaptable workforce.

IADS Notes: Recent retail industry developments validate BCG's framework. In March 2025, leading retailers achieved 4.5% annual productivity growth through AI integration, while maintaining focus on human capabilities. However, June 2025 data reveals only 51% of frontline employees actively use AI tools, with just 25% receiving adequate leadership engagement. The gap is particularly evident in luxury retail, where 60% of brands struggle with frontline recruitment and 93% with manager positions. Success stories like IKEA's comprehensive AI literacy program, launched in April 2024, demonstrate the effectiveness of balanced approaches, successfully training 3,000 workers and 500 leaders while maintaining traditional retail excellence.

Skills-based organisations aren’t reaching their potential. Here’s how they can succeed

What: Despite technological advances from internet to GenAI, companies must embrace end-to-end reinvention rather than implementing new technologies within outdated workflows to achieve meaningful productivity gains.

Why it is important: The gap between technology's potential and actual productivity gains represents a significant opportunity, as evidenced by top-performing retailers achieving 4.5% annual productivity growth compared to the industry's 0.3% average through comprehensive transformation.

BCG's research reveals that despite successive technological revolutions, productivity growth remains disappointingly sluggish, with European Union GDP per hour worked rising by just 0.6% annually. Organizations face two main barriers: implementing advanced technology within outdated workflows rather than rethinking processes entirely, and allowing departmental silos to override broader organizational objectives. The solution lies in end-to-end reinvention, which fundamentally transforms ways of working while breaking down organizational barriers. This approach generates three to four times the impact of traditional improvements by rethinking entire workflows, eliminating inefficiencies, and driving processes across departments. Success requires five key actions: reimagining value creation, eliminating legacy activities, enabling cross-functional alignment, addressing root causes of inefficiencies, and promoting cost-conscious growth in sales strategies. The research demonstrates that technology should serve as an accelerator of change rather than a mere problem solver.

IADS Notes: Recent retail sector developments powerfully validate BCG's findings on end-to-end reinvention. In March 2025, research revealed that while 84% of retail executives are planning increased AI investment, the stark reality shows only 10% successfully scaling their applications. By June 2025, top-quartile retailers who embrace comprehensive transformation were outperforming industry five-year TSR by 7 percentage points through integrated approaches. The urgency for change is driven by evolving consumer expectations, with McKinsey's February 2025 report showing 71% now demanding personalized interactions. Most telling is the cost of inaction: retailers are losing 4.5% in gross sales due to inefficient operations. Walmart's January 2025 successful processing of 850 million product data points through AI implementation demonstrates the potential when technology is properly integrated into reimagined workflows. These findings reinforce that true productivity gains come from fundamental process redesign rather than merely layering new technology onto existing systems.

End-to-end reinvention unleashes a technology's full potential

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Check out the photos of Three Tokyo Stores

Japan's retail performance has been buoyant in recent quarters, driven by rising wages, strong inbound tourism (especially from China), a competitive currency making prices attractive, and ongoing digital transformation.

Total retail sales peaked at 15.6 trillion yen in December 2023 (USD 105.6bn), then reached 14.2 trillion yen in November 2024 (USD 96bn), and 14.06 trillion yen in March 2025 (USD 85.5bn), indicating performance is cooling. However, Q1 2025 still grew year-over-year (+2.9%) and quarter-over-quarter (+1.5%). Overall growth is expected to moderate, with projections of 1.6% to 1.8% YoY for 2026 to 2027.

Japan’s luxury retail market is flourishing. The luxury goods market was estimated at USD 34.9 billion in 2024, with a projected compound annual growth rate (CAGR) of 4.42% through 2033. The luxury fashion segment alone was valued at USD 6.5 billion in 2024 and is expected to reach USD 10.7 billion by 2033, marking a CAGR of 5.3%. Tokyo, particularly the Ginza and Shinjuku districts, saw a surge in luxury flagship store openings: 24% of all new openings in 2024, up from 20% in 2022.

The IADS had the opportunity to visit Tokyo and review the iconic Isetan Shinjuku and the Ginza Six mall. Another standout location during the visit was Parco Shibuya. Below is a review of these store visits, focusing on how Japan animates stores by playing with adjacencies and brand associations.

Navigating Ginza, Shibuya and Shinjuku areas and their differences

Shinjuku is a major business and entertainment district, home to numerous skyscrapers and the world’s busiest railway station (3.6 million passengers daily). The area offers a variety of shopping options, from luxury department stores like Isetan, Odakyu, and Keio to electronics retailers such as BicCamera and Yodobashi Camera. Shinjuku’s entertainment district, Kabukicho, is one of Japan’s largest, with a concentration of bars, clubs, karaoke venues, pachinko parlours, and themed establishments. The district also includes drinking alleys like Omoide Yokocho and Golden Gai and Ni-chome, known for its LGBTQ-friendly venues.

Ginza, Tokyo’s historic upscale shopping district, is characterised by wide streets lined with flagship stores, luxury boutiques, and department stores such as Mitsukoshi, Matsuya, and Ginza Wako, along with upscale malls like Ginza Six and Tokyu Plaza. Beyond retail, Ginza is known for art exhibitions and cultural events, supported by a concentration of art galleries, boutique shops, and high-end dining establishments, including bistros and tea salons.

Shibuya is regarded as the centre of youth culture, fashion, and entertainment in Tokyo. In addition to landmarks such as the Shibuya Scramble Crossing, it features a wide array of retail spaces: department stores (Seibu, Takashimaya), malls (Shibuya 109, Parco), and shopping streets (Center-gai, Cat Street) popular for youth-oriented fashion and novelty shops. The area is also known for its nightlife, including large clubs, bars, karaoke venues, game centres, and live music spots. Shibuya is a focal point for contemporary pop culture and trends, attracting local and international visitors.

Visiting Isetan Shinjuku, Japan's premier department store

Historical insights: from a kimono shop to a department store chain

Isetan’s history begins in 1886, when “Iseya Tanji Drapery”, a kimono shop, opened in Tokyo’s Kanda district. In 1907, seeking to modernise its image, the store’s name was simplified to “Isetan Drapery”, combining the first two syllables of “Iseya” with the first syllable of the founder’s name, “Tanji”. The original Kanda store was destroyed in the 1923 Great Kanto Earthquake. It re-opened the following year, expanding its merchandise beyond kimonos to include children’s clothes, toys, cosmetics, household goods, and food, effectively becoming a department store. In 1928, the owners recognised that Kanda was no longer the optimal location, leading to the decision to relocate.

After considering other locations, Tanji Kosuge II (the founder’s son-in-law) chose Shinjuku. The area had begun developing after the opening of Shinjuku Station in 1875 and experienced significant growth following the earthquake. The Shinjuku flagship store opened in 1933, in a then state-of-the-art steel-reinforced concrete building featuring Art Deco elements. Shortly afterwards, the company was formally incorporated as Isetan Company Ltd. and began expanding within Japan and overseas, including in Singapore (1972), Malaysia (1990), China (1993), and other locations since closed. In 2008, the company merged with Mitsukoshi under a joint holding company called Isetan Mitsukoshi Holdings Ltd., creating Japan’s largest department store group, representing a 6 trillion yen business.

The Isetan Shinjuku Main Store is the group’s flagship and top performer. In the financial year 2023 (ended March 2024), the store recorded sales of 375.8 billion yen (USD 2.3 billion), representing a 14.7% year-on-year increase and far exceeding the pre-COVID ten-year average of 254.2 billion yen. The upward trajectory continued in 2024: Isetan Shinjuku surpassed 400 billion yen in sales (USD 2.43 billion) for the first time. The flagship is one of Japan’s most influential department stores, often the first to showcase new trends and products. The store comprises two interconnected buildings: the nine-floor Main Building facing Shinjuku Street (from - 2 to +7) and the Men’s Building opposite, also with nine floorsi (from -1 to +8). The proximity to Shinjuku station (including direct access to the stores) enables the store to attract considerable footfall.

Visiting the Main Building 

While Japan has long been perceived as slow to adapt to international clientele, much has changed at Isetan. Visitors are now invited to use a QR code to download the store map onto their mobile phones via the free Wi-Fi connection, while dedicated screens allow them to purchase and arrange shopping delivery. At the time of the visit, foreign customers could use these screens to pay in euros, US dollars, and pounds sterling, although the Chinese yuan was unavailable. Notably, tax-free sales at the store increased by 67.7% in 2024.

The basement levels offer a diverse range of experiences. Level -1 houses a gourmet store and food court, which, shortly after opening, attracted considerable footfall during the visit. Nationally reputed as a “gourmet paradise”, this area allows visitors to experience the full spectrum of Japanese culinary culture. Notably, the department transforms throughout the day, creating vibrancy and an atmosphere reminiscent of a food festival. Each dish prominently displays calorie information, and the confectionery is artfully presented as cosmetics. Audio advertisements are played in Japanese and Chinese. On level -2, the beauty apothecary focuses on wellness brands such as Aveda, offering skincare, haircare, and body treatments in a health-oriented environment, including food supplements (10% of the floor).

The -2 level is peculiar: it does not have the same size and surface than the -1 level, and for that reason, all escalators going downstairs from the ground floor do not lead to -2, which can be a challenge for customers looking specifically for this category, as they will have to find the right escalators in the food court. Also, it is quite surprising to see that Isetan has made the decision to spread the cosmetics category on three level, as, in addition to the -2 display, cosmetics are also available on ground floor and first floor, which suggests that the Japanese cosmetics market is highly segmented with extremely different types of customers.

On the ground floor, the fine jewellery section is displayed in standard furnishings with brand reminders. Similarly, the eyewear section is fully built to Isetan’s concept; each brand has a standard brand marker. To the left, a sophisticated perfume and cosmetics area features semi-personalised points of sale from brands such as Byredo and Jo Malone, with central cash desks enhancing accessibility. The accessories zone, with brands like Saint Laurent, reinforces the luxury atmosphere, as most labels are presented in corners with discreet signage.

Two multi-brand locations (Chance Encounter and Isetan Seed) on this floor testify to the strong footfall. They offer accessible and reasonably priced products: textile accessories, home perfumes, incense, costume jewellery, and umbrellas. It is noteworthy that these categories, also found on the upper floors, are displayed near the entrance to encourage impulse purchases.

Ascending to the first floor, the focus is on women’s fashion, shoes, and accessories, complemented by a newly revamped Isetan beauty zone (refurbished in 2019). This floor is characterised by its bright, fresh, and brand-focused layout, with seating provided in every area. The make-up space features over 30 make-up brands, including an artist make-up zone where customers can receive personalised lessons and services from professional make-up artists representing 11 different brands. The cosmetics area showcases numerous Japanese brands, from the historic Shiseido to environmentally conscious newcomers such as Shiro.

The fashion area is understated in its branding, displaying a cohesive concept for the contemporary segment, including labels such as Westwood, Red Valentino, and Onitsuka, cleverly located alongside a café, The Stand, offering granola and juice, and a champagne bar, the Stand. The Japanese fashion section is articulated with a jewellery stand, facing a Dior Backstage and Louboutin make-up area. Each section is interconnected: fashion leads to shoes (from bespoke to trainers, and including a repair bar), and shoes lead to cosmetics. A fashion space, Isetan The Space, and a sizeable Astier de Villatte stand, complete this extensive offering, encouraging browsing and discovery.

The second floor specialises in luxury, young brands, women’s lingerie, and plus-size fashion, with a concept that blends brand-specific peripheries with central Isetan branding. The lingerie section is particularly effective, with dedicated mirrors, flooring, and lighting. A central space showcases emerging brands and curated collections, including Ganni and Victoria Beckham. An ultra-luxury zone presents various categories, including accessories, in a highly constructed and scenographic layout, while a smaller area behind features brands such as Mackintosh and Polo, leading through a tunnel to the Isetan men’s section and a café.

On the third floor, the emphasis is on formal wear and jewellery, with a unified concept for brands such as Theory Luxe, Icicle, Herno, and Yohji Yamamoto. An Isetan Select pop-up with a T-shirt brand adds a casual contrast. The formal section is meticulously detailed, encouraging customer engagement. Adjacent is the Michelin-starred restaurant Jacques Borie, near Chanel, offering a refined dining experience. Goyard and Chanel shoes, along with a selection of luxury shoes and accessories, are prominently featured. A second-hand space, Re-Style, is also included.

The fourth floor, dedicated to home goods, includes a sleep concierge service. The fifth floor caters to children, providing services such as gift stations, cafés, and juice bars. There is a central toy area and dedicated service zones for pushchairs with seating. The children’s fashion area is treated with the same sophistication as adult 1 This is the largest sales floor area in Asia dedicated exclusively to men's products. fashion, eschewing childish themes for a more concept-driven approach. The sixth floor integrates restaurants with traditional Japanese kimonos and optical offerings.

Each floor of Isetan is designed to offer a unique identity. However, floor segmentation and brand adjacencies are distinctive and quite different from standard practices in department stores worldwide.

Visiting the Men’s store

Thanks to its size and breadth of assortment, the men’s building is a true differentiator for the Isetan Shinjuku store. It has become a destination in its own right for fashion-conscious male shoppers from Japan and abroad.

The basement, which features shoes, luggage, and underwear alongside a Tomorrowland display gallery, connects directly with the gourmet section of the Main Building. The footwear department offers a wide range of styles in a generic layout, except Church and Weston, which have beautifully designed, dedicated concept spaces.

On the ground floor, the focus is on cosmetics, perfumes, small leather goods, hats, jewellery, and pop-up sections. The space is not limited to accessories; it includes another Tomorrowland gallery and an Ambush corner.

Ascending to the first floor, the emphasis shifts to men’s creators, where a vast Balenciaga space dominates the area near the escalator. Comme des Garçons also features a specialised concept. The remainder of the floor is occupied by more generic offerings from brands such as Thom Browne, Ann Demeulemeester, Versace, Balmain, and Acne Studios, in contrast to the women’s segmentation, which highlights Yohji Yamamoto, Undercover, and Rick Owens as ultra-fashion labels.

The second floor is dedicated to men’s designers, featuring high-end labels such as Celine, Jil Sander, Saint Laurent, Gucci, Givenchy, Dolce & Gabbana, Bottega Veneta, Dior, and Prada. The men’s building maintains a more homogeneous concept throughout, ensuring a consistent luxury experience, compared to the Main Store, which is more diverse.

On the third floor, luxury takes centre stage with immersive concepts, though the overall layout remains generic. Brands such as Fendi, Loewe, Berluti, Armani, Louboutin, Tom Ford, Zegna, Brioni, Brunello Cucinelli, and Dunhill occupy substantial spaces.

The fourth floor blends made-to-measure and formal wear, resembling a classic department store layout but with a clear focus on tailoring and materials. The formal section includes suits and smart-casual offerings (shortsleeve shirts, polos, and T-shirts).

Contemporary fashion is found on the fifth floor, with brands like Kenzo, APC, and Ami Paris presented without a specific overarching concept, particularly in the denim section. Despite the presence of trendy labels like Bathing Ape and Maison Kitsuné, the presentation places little emphasis on the brands themselves.

The sixth floor is dedicated to Polo, Brooks Brothers, Mackintosh, and Joseph Abboud, alongside Japanese-licensed and contemporary brands such as Boss, Tomorrow, Joseph, and Theory.

Finally, the seventh floor, known as “the residence”, offers an eclectic mix of ready-to-wear, accessories, writing instruments, and Santa Maria Novella products. The floor also includes a restaurant, flowers, eyewear with an outstanding concept, and home goods.

What to think of Isetan Shinjuku?

Isetan Shinjuku illustrates why it is considered Japan’s benchmark department store: meticulous visual presentation, comprehensive service at every touchpoint, and a merchandise mix that reflects the upper tier of global luxury. Notably, on every floor in both buildings, knowledgeable staff provide attentive service, from product selection to styling advice, including in English.

However, the arrangement of these elements can be unexpected for overseas visitors. Categories typically consolidated elsewhere—such as beauty, accessories, or children’s goods—are spread across multiple levels, and labels that compete in other markets often sit side by side without distinct hard-shop environments. This unconventional sequencing reflects two factors. First, Japanese shoppers are comfortable navigating vertical retail; logical adjacencies are less critical than curating a themed experience on each floor. Second, Isetan actively uses its layout to encourage discovery, treating circulation paths as part of the offer rather than simply a means to reach it.

As a result, the format can feel disorienting to visitors accustomed to Western department-store zoning. Yet it also highlights Isetan’s particular strength: translating global brands into a retail vocabulary that resonates locally, while still driving high productivity.

Visiting Ginza Six, Tokyo’s luxury hub

A luxury mall in lieu of the first Ginza department store

Ginza Six, a joint venture by Mori Building Company, J. Front Retailing, Sumitomo Corporation, and L Catterton Real Estate, is a shopping complex in Ginza 6-chome, which opened in 2017. The site holds historical significance, as the Matsuzakaya department store previously occupied itii . However, the redevelopment went far beyond repurposing the former store: the project spans two blocks, with a 115-metre-long frontage that allows six brands significant exposure on Ginza. Each contributes a distinctive façade, reshaping the Ginza skyline—some stores even span six floors. The building rises 56 metres and comprises 18 floors (including six basement levels), with approximately 148,700 square meters of floor space.

Alongside its 47,000 sqm of retail space (home to 241 stores), this mixed-use development features Tokyo’s largest office spaces across six floors, 24 dining establishments, a banquet hall, a 480-seat Noh Theatre, and a 4,000 square-meter rooftop garden. The complex provides facilities catering to tourists, including a bus terminal, currency exchange services, duty-free shopping, and multilingual concierge support.

In terms of market performance, Ginza Six has attracted a diverse range of visitors: in its first year, the complex welcomed around 20 million people, with a demographics from 20 to 60 and an even gender split. From the outset, Ginza Six targeted premium customers, offering premium lounges, valet parking (a first for Ginza), and cultural programmes. This strategy has paid off, with a customer base comprising affluent Japanese and international tourists.

The mall’s success is partly driven by its flagship store strategy: 130 brands operate their most spectacular Japanese stores in Ginza Six, ensuring sustained footfall. In addition, management ensures the complex remains relevant and appealing through a strategy of freshness and tenant rotation, with fixed-term leases allowing approximately 40% of stores to be refreshed over a six-year period.

Visiting Ginza Six 

Within the mall, the customer journey is layered and engaging, thanks to a skilfully curated mix of established luxury brands and emerging fashion and lifestyle concepts, all while ensuring footfall is channelled throughout the building.

As expected, the ground floor serves as the gateway to luxury cosmetics and accessories, with brands such as Saint Laurent and Loewe surrounding a vast atrium dedicated to pop-ups and seasonal events. Interestingly, Rolex and Jaeger-LeCoultre also have stores here, despite the fourth floor being devoted to watches and jewellery. While all brands on the ground floor are in the luxury segment, it is notable that they are not spatially segregated; fashion houses sit alongside watchmakers. This eclecticism is apparent across all floors.

The first floor is dedicated to luxury brands, including Dolce & Gabbana, Givenchy, Chaumet, Cartier, Delvaux, Clergerie, and Gucci. It offers a concentrated luxury shopping experience—again, mixing all categories within a single journey.

On the second floor, the emphasis remains on fashion, with a broad selection of international brands. Valentino is prominently featured in a double-height store, alongside Lucien Pellat-Finet, AMI Paris, and Patou.

The third floor transitions towards fashion and lifestyle, with brands such as Margaret Howell, Theory, and Lululemon, alongside high-fashion names like the upper level of Valentino, Helen Kaminsky (hats), Petit Bateau, and United Nude. The fashion multibrand store Parigot features Stella McCartney and Isabel Marant Étoile. Another concept store, Cibone, integrates lifestyle products and Japanese art.

Segmentation becomes even less defined on the fourth, fifth, and sixth floors, with a mix of Breitling watches, Lanvin Collection fashion, home furnishings by Bo Concept, and hi-fi from Devialet. These floors also showcase Leica cameras, Diesel apparel, a broad selection of handbags and bathing accessories, and an extensive range of golf brands. A Tsutaya bookshop occupies a large area on the sixth floor. The seventh floor is home to restaurants.

How Ginza Six is different from other malls? 

Ginza Six was conceived as a “vertical boulevard”, where circulation emulates a stroll along Chūō-dōri rather than a conventional ascent through stacked floors. A six-storey atrium, uninterrupted sight-lines of approximately 35 metres, and escalator banks positioned at opposite ends of the void require visitors to move laterally across each level before ascending or descending. Heat-map data released by the operator in 2023 show that average dwell time per floor exceeds seven minutes—two minutes longer than in comparable Tokyo malls. This confirms that, here also, the design succeeds in extending horizontal browsing behaviour into a vertical format.

Because the traffic pattern is deliberately non-hierarchical, pricing and brand prestige are distributed rather than tiered. Luxury flagships such as Saint Laurent, Cartier, and Rolex share ground-floor frontage with lifestyle labels like Lululemon; on the upper floors, Breitling watches, Lanvin Collection apparel, and Devialet audio equipment are adjacent to golf brands and a Tsutaya book lounge. Leases are allocated so that at least 30 per cent of units on every retail level fall outside the dominant price segment for that floor (a policy confirmed by Mori Building’s leasing brief). The result is a controlled form of category adjacency: shoppers entering for mid-market goods are routinely exposed to high-end names, and vice versa, without the psychological threshold created by traditional “luxury floors”. Footfall conversion studies conducted during the 2022 Golden Week period indicate that 18% of customers who began their visit in lifestyle or sports tenants transacted in luxury boutiques on the same trip. This illustrates how vertical flow and mixed merchandising combine to broaden the luxury customer base while maintaining brand exclusivity.

Visiting Parco Shibuya, a new generation urban catalyst

A lifestyle company from its roots

Over seven decades, Parco has repeatedly leveraged three core capabilities—urban real-estate development, cultural curation, and design-driven marketing—to stay ahead of consumer shifts. Its corporate origins trace back to Ikebukuro Station Building Co., Ltd., established in 1953 to operate a railway-adjacent shopping facility in northwest Tokyo. A year later, the company pivoted from landlord to retailer, rebranding the site as Tokyo Marubutsu, a department store aimed at the mass-market commuter trade. The store operated until 1969, before closing to reopen as Ikebukuro PARCO: a multi-tenant “young adults’ shopping centre” conceived by Seibu Department Stores, then Parco’s parent company.

The PARCO format combined fashion tenants with gallery space, live performance venues, and provocative avant-garde advertising campaigns directed by art director Eiko Ishiokaiii . Expansion followed in Japan—Sapporo (1975), Kichijoji (1980), Shibuya (1981)—and internationally with a Singapore location in 1991. The company diversified by launching a credit card in 1989, a side-business incubator in 2002, and a digital marketing company in 2017.

Facing e-commerce headwinds and ageing flagships, Parco demolished the original Shibuya store in 2016, replacing it in 2019 with a ¥65 billion mixed-use tower (USD 437 million) comprising retail, theatre, and co-working floors. A month after this opening, J. Front Retailingiv made a tender offer to acquire all of Parco’s shares, making it a wholly owned subsidiary and the group’s specialist for youth-oriented urban malls. This integration enabled Parco to co-develop credit, omnichannel, and real-estate projects—most recently, the rollout of Zero Gate and mini-PARCO formats in secondary Japanese cities—while giving JFR exposure to a demographic its legacy department stores underserve, by treating retail as a social platform first and a merchandising venue second.

Visiting Shibuya Parco 

The Shibuya store is a mixed-use retail complex where consumption, culture, and technology converge within a building that is itself a piece of urban infrastructure. While the original store incubated a generation of designers, musicians, and artists, its second iteration, opened in 2019, quickly re-established itself as the gravitational centre of Shibuya’s fashion and creative economy.

The tower offers 64,000 square meters of gross floor area across nineteen floors above ground and three below. Retail occupies basement level 1 through to the eighth floor and part of the tenth; the ninth floor is dedicated to “PARCO Studio”, a flexible production and co-working space for fashion and entertainment start-ups. Circulation within the retail space is engineered around an outdoor, spiralling path that stitches the street to every retail level, allowing shoppers to move fluidly between the building and the neighbourhood. Beyond aesthetics, the structure incorporates seismic dampers, on-site emergency supplies, bicycle parking, and energy management systems designed to reduce lifetime CO₂ emissions.

Financially, Shibuya PARCO is one of four “key stores” (the others are Ikebukuro, Nagoya, and Shinsaibashi) earmarked for accelerated investment under the group’s 2024–2026 medium-term plan. The rationale is straightforward: the property delivers higher average sales per square meter than legacy suburban sites, benefits from a dense tourist catchment—Shibuya Station handles more than three million passengers a day—and provides a live laboratory for concepts that can later be rolled out to smaller community malls. Since reopening, the store has consistently outperformed internal KPIs for tenant revenue and footfall, with inbound duty-free sales rebounding strongly as border restrictions eased.

Merchandising follows a borderless, ageless, and genderless creed. The approximately 180 tenants range from Japanese avant-garde labels and luxury-street hybrids to pop-culture anchors such as Nintendo TOKYO (the brand’s first official store worldwide) and the expanded PARCO Theatre, which hosts live performances and film premieres. For example, Paris Saint Germain faces Japanese avant-garde brand Anrealage and phone accessories label Casetify, creating excitement and surprise. This deliberately eclectic mix is designed to attract customers who prioritise novelty and experience over traditional demographic cues, and has proved effective in sustaining shopper traffic throughout the week rather than concentrating it at weekends.

Digital infrastructure amplifies the experiential layer. In-store analytics, dynamic signage, and a proprietary smartphone app feed data back to both tenants and Parco’s central CRM platform, enabling managers to finetune layouts and events in near real time. These capabilities were showcased in 2023, when Parco launched a dedicated Gaming Business Department and partnered with content studio XENOZ to stage e-sports tournaments and game-themed exhibitions; floor sales and ticket revenues spiked, but just as importantly, the initiatives drew Gen Z consumers who now cross-shop fashion, food, and entertainment within the same visit.

In the basement, known as "Chaos Kitchen", visitors encounter a variety of food options alongside unique retail offerings. This area includes a sports card game shop positioned between a sushi belt conveyor and a craft beer bar, and a CD shop located between an insect-based restaurant and a fried pork specialist—offering an eclectic mix of dining and shopping opportunities.

A range of luxury brands on the ground floor present unique retail concepts. Shoppers can explore a Gucci arcade room and visit specialised stores like Dior Beauty and Hermès in colours, along with a florist.

The first floor, themed "Mode and Art", features fashion labels such as Marc Jacobs and Ami Paris, alongside avant-garde brands like Undercover and fragrance label Byredo. With additional offerings like Margiela Replica fragrances and an Officine Buly stand, the floor also houses art galleries, blending fashion with art.

The second floor, labelled "Advanced Contemporary", showcases an eclectic mix of boutiques, including Santa Maria Novella, MM6, Kolor, Ganni, Anrealage, and Paul Smith.

On the third floor, called "Fashion Apartment", visitors find the Parco Museum and a variety of Japanese brands, from the well-known Zucca to the lesser-known Kaneko Gankyoten optical frames.

The fourth floor, branded as the "Parco Outdoor Park", includes popular outlets such as Starbucks, Nordisk Camp supply store, Timberland, and Condomania, alongside a service counter.

The fifth floor, "Cyberspace Shibuya", is a treasure trove for gaming enthusiasts and pop culture fans, featuring the Pokémon Center, Nintendo, Capcom Store, and Godzilla Store.

The sixth floor hosts a diverse food court with seven restaurants, while the seventh floor offers theatrical and cinematic experiences. There is a public stage on the eighth floor, and the ninth floor is dedicated to production and co-working space.

What makes Parco Shibuya so special

Shibuya PARCO closes the loop between cultural programming and commercial performance. Management refreshes roughly a tenth of the tenant line-up each year, pairs long-term anchors (such as Nintendo and PARCO Theatre) with time-limited pop-ups, and monitors the impact using store-wide traffic sensors and CRM data. The result is a sales-per-square-meter figure well above the average for PARCO's urban stores, alongside consistently high occupancy and dwell-time indicators, as disclosed in the company’s FY2023 materials.

Maintaining this level of “controlled churn” while preserving a coherent identity requires capabilities that remain uncommon in global retail: a leasing team able to balance avant-garde labels with mainstream attractions, an inhouse events unit that can turn an e-sports tournament into incremental fashion spend, and an analytics platform robust enough to translate soft cultural signals into hard operational decisions. Shibuya PARCO demonstrates that when these elements are in place, culture becomes a quantifiable asset and continuous reinvention a repeatable—though rarely replicated—competitive skill.

Tokyo’s three headline stores—Isetan Shinjuku, Ginza Six, and Shibuya Parco—are frequently praised for their record sales, enviable footfall, and visual flair. Yet their true breakthrough runs deeper: each demonstrates that the most powerful floor plan is no longer a map of neat, product-based zones, but a sequence of curated encounters that deliberately scramble categories and price points. Isetan disperses beauty across three levels, Ginza Six mingles Rolex with Lululemon, and Parco juxtaposes Nintendo with avant-garde fashion and a craftbeer bar. This calculated eclecticism transforms vertical circulation into a discovery engine, keeping shoppers moving—and spending—far longer than orthodox layouts ever did.

Crucially, the curiosity these pairings spark is monetised, not merely romanticised. Michelin-star dining, atrium installations, and e-sports tournaments all turn “experience minutes” into incremental sales, pushing revenue per square metre well above historic benchmarks. Experience is no longer a halo around the merchandise; it is merchandise.

Yet the three stores prove there is more than one way to sustain such performance. Parco’s 10% annual tenant refresh relies on perpetual novelty, while Isetan’s century-old prestige floors trade on institutional trust. Both succeed because each has a clear, disciplined stance on how much to churn versus how much to preserve.

In short, Tokyo’s flagships point to a post-zoning future for department stores: one where curated surprise replaces rigid adjacencies, where experience has a measurable P&L line, and where either controlled churn or heritage stability can win—provided the choice is strategic.

i: This is the largest sales floor area in Asia dedicated exclusively to men's products.

ii : Matsuzakaya was the first department store to open in Ginza in 1924. It famously was the first retail location in the country to allow customers to enter all floors with their shoes on (so far, customers were requested to remove them and wear slippers).

iii: Ishioka is also known for designing Olympic uniforms for the 2002 Salt Lake City and 2008 Beijing games, in addition to winning an Academy Award for her work in Francis Ford Coppola’s Dracula movie.

iv: Owner of Daimaru-Matsuzakaya.

Credits: IADS (Selvane Mohandas du Ménil)

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The IADS attended the 2025 VivaTech conference in Paris to spot interesting startups and key technology trends relevant to the retail sector for our members. This year, the conference welcomed over 14,000 startups, 180,000 attendees and 3,600 investors. Being Europe’s largest start-up and tech event, VivaTech connects startups, technology leaders, large companies and investors.

At VivaTech 2025, Jensen Huang, co-founder and CEO of the semiconductor company NVIDIA, emphasised the necessity of digital sovereignty for countries and companies alike in his keynote speech. With AI technology driving results and becoming increasingly central to firms’ operations regardless of sector, NVIDIA announced collaborations with beauty conglomerate L’Oréal Group and French startup MistralAI.

Addressing a wide range of tech topics, spanning mobility, retail, defence, climate and finance, among others, startups and established companies provided a comprehensive overview of the key issues in the technology space across sectors. Two takeaways were clear:

-    Every company is looking at enhancing its AI and technology usage as a performance driver in real terms.

-    The significance of technological self-sufficiency was highlighted throughout various talks at the conference.

Digital sovereignty: What does it mean for retail?

Jensen Huang accounted NVIDIA's transformation from a PC-era chip company to an AI industry leader: starting in 1993 during the Windows 3.1 era, the company capitalised on the unique horizontal structure of the PC industry, which separated chip makers from system manufacturers and software developers. This structure, unprecedented in the history of the computer industry, enabled NVIDIA to establish itself as a chip company building sophisticated computing solutions. The company's journey from graphics, physics simulation, to eventually AI highlights the significance of constant innovation and adaptation to fill new gaps. Huang’s leadership philosophy, of setting modest expectations while maintaining rigorous work standards, has enabled NVIDIA’s evolution from gaming graphics to positioning the company at the forefront of the AI revolution.

Huang’s keynote at VivaTech 2025 underscored digital sovereignty as an urgent strategic priority for both nations and businesses in the age of artificial intelligence (i), warning that outsourcing core digital infrastructure risks losing control over economic competitiveness and security. A concept uncommon among big tech companies, yet gaining traction among early-moving startups in the tech sector, digital sovereignty refers to businesses independently controlling and protecting their digital assets according to their own rules. With tighter regulations, such as GDPR, the growing use of AI, and localisation demands, companies must manage their digital assets to comply, avoid penalties, and reduce their reliance on foreign providers. This strengthens resilience against supply chain and political risks, while robust data governance gives businesses a competitive edge as data security becomes a customer priority.

This message resonates powerfully in the retail sector, where the rapid growth of online transactions and the handling of sensitive customer data make comprehensive data management essential. Digital sovereignty is vital as digital transformation accelerates and most transactions move online. Retailers handle large volumes of sensitive data and face frequent cyberattacks. Controlling data storage and processing helps retailers comply with laws, avoid fines, and adapt quickly to market changes. Reducing reliance on external vendors builds trust, loyalty, and a competitive advantage in privacy-conscious markets, making digital sovereignty a strategic necessity for innovation and long-term success. L’Oréal Group’s partnership with NVIDIA, utilising its AI Enterprise platform for the rapid development and deployment of AI, announced at the event, showcases how companies are internalising these processes to maximise impact. L’Oréal-backed startup Noli, an AI beauty matchmaker, also unveiled the AI Refinery, in collaboration with NVIDIA and Accenture, built with NVIDIA AI Enterprise software.

During a separate presentation, Cohere showcased its secure, enterprise-focused AI platform that deploys solutions directly within client environments, prioritising data sovereignty, security, and multilingual support. Cohere’s platform offers flexible usage including Virtual Private Cloud (VPC), on-premises, and air-gapped systems.

IADS note: Recent cyberattacks at major retailers such as Marks & Spencer and the Co-op, and the industry’s ongoing challenges with data accessibility and scaling AI highlight the value of self-sufficient digital infrastructure. For retailers, embracing digital sovereignty not only ensures compliance with evolving regulations but also fosters consumer trust, reduces vulnerability to cyberattacks, and lays the groundwork for innovation and long-term resilience in a fiercely competitive market.

AI hyper-personalisation for online and offline customer experiences

The usage of AI technology for personalisation has been one of the most heralded applications for the retail sector. McKinsey’s Next in Personalisation report found that 71% of consumers expect companies to deliver personalised interactions, and 76% get frustrated when this expectation is not met (ii). Furthermore, fast-growing companies generate 40% more revenue from personalisation compared to their slower-growing counterparts.

Key retail use cases, many of which are already deployed or being augmented by large retailers, include personalised product recommendations, dynamic pricing and promotions, AI shopping assistants and chatbots, predictive analytics, augmented reality and virtual try-ons, and hyper-localised real-time marketing. As usual at VivaTech, French companies such as LVMH and L’Oréal showcased their latest developments, including

• L’Oréal’s ‘Beauty Genius’ that enabled visitors to experiment with personalised campaigns,
• Lancôme's ‘nano-surfacer’, a beauty device that boosts cosmetic penetration,
• La Roche-Posay’s dermatological suggestion device.

VivaTech 2025 also featured several startups focused on leveraging AI for enhanced online and in-store user experiences. Highly personalised and interactive customer journeys are no longer limited to digital shopping with solutions offering targeted insights irrespective of channel. Most startups utilise advanced technologies, such as machine learning and computer vision, to generate high-quality, hyper-targeted insights.

Here is a selection of interesting startups spotted during our visit:

• Kahoona: The winner of LVMH’s Best Business Prize at its Innovation Awards, Kahoona is a real-time predictive audience segmentation solution for anonymised online visitors.
• JARVIS: Leveraging advanced audio and video analytics software, JARVIS’ GDPR-compliant in-store camera platform delivers real-time insights that can power personalisation strategies for retail by tailoring customer experiences based on nuanced behavioural data.
• PulpoAR: Offering virtual try-ons for beauty products through augmented reality technology, this beauty tech startup enables customers to receive tailored product recommendations and interactive, individualised shopping experiences.
• NeuroPixel: Developing a suite of generative AI tools that use computer vision and deep learning to create photorealistic models and backgrounds for fashion e-commerce, this deep tech startup allows brands to tailor visual experiences and product recommendations to individual customer preferences.

As a result, bolstering AI personalisation to enhance customer experiences across channels for retailers is now a necessity, not an added benefit.

Second-hand categories: catalysts for transformation

IADS insights from recent meetings with its members have found that second-hand categories have emerged as powerful growth drivers in retail, offering brands the opportunity to reach new consumer segments and fuel expansion. The rapid rise of second-hand commerce has outpaced traditional retail, driven by younger, price-conscious, and sustainability-focused shoppers (iii). According to Consumer Edge, shoppers aged 25 to 34 are leading this trend with a large majority opting for pre-owned items due to their affordability, unique styles, and environmental concerns.

VivaTech 2025 showcased a few startups focused on integrating second-hand sales into retail applications. However, the focus on sustainability seems to be tapering off compared to the previous editions of VivaTech with the broader focus this year being on AI applications for user experiences.

• The Cloov: a platform that helps brands integrate resale, rental and repair into retailers’ core businesses.
• The PAAC: a fashion leasing, rental and resale platform that promotes circularity.

Second-hand categories are an untapped opportunity for retailers to access new consumer segments, especially younger, sustainability-focused shoppers, while aiding compliance with increasingly stricter regulations. Ultimately, sustainable startups enable retailers to adopt greener practices while staying competitive.

Conclusion: New technological priorities shaping the retail industry

Since its inception, VivaTech established itself as the European innovation hub for the retail industry and beyond, bringing together startups, tech leaders, investors, and policymakers to address the most pressing digital challenges and opportunities. IADS partner and retail innovation platform, RetailHub underlined the trend among startups at VivaTech 2025 focusing on using AI for operational efficiency and user experience which aligns with broader industry trends.

Digital sovereignty is becoming essential for retailers, as stricter data regulations and the need for secure, independent control over digital assets drive the industry to prioritise data security and reduce reliance on external providers. At the same time, AI personalisation has evolved into a core feature, with advanced algorithms enabling tailored recommendations and real-time online and offline engagement. While sustainability remains important for younger consumers, the current focus for many retailers is on strengthening data protection and harnessing AI to meet operational and customer expectations.

i: A topic also raised in London during the last World Retail Congress by Schwartz Digits, available here.

ii: The value of getting personalisation right—or wrong—is multiplying

iii: Reduce, Reuse, Resell: Resale growth outpaces traditional retail

Credits: IADS (Anchita Ranka)

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Check out the photos of New Jersey Malls here

Ah, New Jersey—the land of reality stars, endless highways, and the eternal debate over whether Central Jersey exists. But beyond the clichés of big hair, bad drivers, and diners on every corner lies a state where malls are not just shopping destinations but cultural landmarks. One of the smallest states in the country, it is also the most densely populated (410 inhabitants per sq km), logically leading to a high concentration of retail centres, which explains why New Jersey has long been known as the "Mall State".

Two modern retail and entertainment icons stand out: the American Dream Mall in East Rutherford and the Westfield Garden State Plaza in Paramus. Both destinations showcase the evolution of U.S. shopping malls and highlight the unique character of New Jersey's retail landscape.

The American Dream Mall, a sprawling 278,000 sqm complex, redefines the mall concept by blending retail with world-class entertainment. From an indoor ski slope and water park to luxury shopping, including a Saks Fifth Avenue branch, and family attractions, it offers an immersive experience that caters to visitors of all ages. Meanwhile, the Garden State Plaza, New Jersey’s first major shopping centre, has remained a cornerstone of the state’s retail scene since its opening in 1957. Constantly reinventing itself with high-end stores and modern amenities, it exemplifies resilience and innovation in changing consumer habits. It also houses three department stores, Macy’s, Neiman Marcus and Nordstrom, all very differently positioned.

These two malls represent different facets of New Jersey’s mall culture: a futuristic entertainment hub and a timeless retail institution. Together, they provide a glimpse into why New Jersey remains central in shaping the mall experience in America. The IADS visited both last January.

Westfield Garden State Plaza: history and context of a Jersey old lady

Westfield Garden State Plaza, situated at the junction of Routes 4 and 17 in Paramus NJ, just 15 miles west of Manhattan, is a landmark in American retail history. Originally adjacent to a 1930s-era drive-in theatre and known when it opened in 1957 as the Garden State Plaza, the site became one of the most significant shopping centres in the U.S.

In the early 1950s, discussions between Allied Stores and Macy's about a joint project on the site were abandoned, leading Allied Stores to develop the Bergen Mall nearby (now the Bergen Town Center). Meanwhile, R.H. Macy & Co. announced plans for Garden State Plaza in 1954, establishing a subsidiary to own and operate the property. By 1955, JCPenney committed to a 7,700-square-meter standalone building.

The open-air shopping plaza cost $26m ($291m in 2024 dollars). It was New Jersey’s first suburban mall, drawing 75,000 shoppers when it opened on May 1, 1957, featuring a 31,500-square-meter Bamberger's department store (a company created in 1892, sold to Macy’s in 1929, and renamed in 1986) and 60 other retail stores. The mall quickly expanded its offerings, adding Russeks in 1957, Gimbels and JCPenney in 1958. These additions solidified the mall's status as the largest shopping centre globally and attracted shoppers from New York due to New Jersey's lower sales taxes and exemptions on clothing.

In 1975, the mall embarked on a project to enclose its open-air design due to competition from newer malls. It added 37,000 square meters of retail space, followed by new retail floors between 1981 and 1984. Westfield Group acquired the mall in 1986 and launched the development of an "entertainment lifestyle precinct" featuring an AMC theatre and speciality retail stores in the early 2000s, and a "fashion district" in 2014.

Regarding tenants, in 1990, Nordstrom had opened a store on Gimbel’s former site (closed in 1987), followed by Lord & Taylor in 1991 (which closed in 2020). An expansion in 1996 introduced Neiman Marcus and a remodeled JCPenney, alongside new parking structures and a Venetian carousel.

Today, Westfield Garden State Plaza is the 16th-largest shopping mall in the US, with 196,800 square meters of leasable space. It is home to over 300 stores and is considered a “super-regional mall.” It offers valet parking, currency exchange, guest lounges, and diverse dining options. Its retail mix effectively combines upscale brands with initiatives supporting local and minority-owned businesses through flexible leasing programs.

The mall benefits from a high-income catchment area with over 2.1 million people residing within a 10-mile radius. Despite restrictive ‘blue laws’ limiting Sunday retail operations to 6 hours (vs. 11 hours the rest of the week), the city of Paramus generates over $6 billion annually in retail sales, more than any other ZIP code in the U.S., and sales per square meter consistently exceed national averages, thanks to its four anchors, Macy's, Nordstrom, Neiman Marcus, and AMC Theatres. The area's strong schools, low taxes, and vibrant commercial scene contribute to its economic vitality.

Visiting the Garden State Plaza

The first feeling when entering the mall is that, while it is spread in terms of surface, it is not impressive, especially when arriving from the car park. It directly leads to the mall’s ground floor, which is zoned paradoxically: while luxury brands are located on this floor in the “luxury zone”, the way brands are distributed in the rest of the mall suggests that the “étage noble”i  is the first floor, where the most attractive non-luxury brands (from Apple to H&M, Lululemon, Sephora or AMC Theatres) are located. All three department stores are spread vertically, including on a top floor that is specific to them, not a mall floor.

The mall is structured as follows:

• The luxury zone, where Neiman Marcus is, includes Louis Vuitton, Gucci, Tiffany & Co., Burberry, and Versace on the ground floor and Tory Burch and Michael Kors on the first floor.
• The “fashion district” is more budget-oriented on the ground floor, with the likes of Old Navy, Pink, Express Men, and PacSun, and aims to bring more inspiration to customers on the first floor, with Skims, Banana Republic (an old concept), Zara, Hollister, Gap, J. Crew, Sephora, or Abercombie & Fitch. Not far from these brands, Apple, Tesla, and Yeti (a recent addition) reflect the mall's focus on innovation and first-to-market concepts.
• Restaurants are strategically located, with fast-food options on the ground floor (Chick-fil-A, McDonalds…, etc.) and family-oriented or higher-positioned options on the top floor (Fogo de Chao, Grand Lux Café, Eddie V…, etc.), mostly between the AMC theatre and Macy’s.

The sections feel overly segmented; for example, luxury shoppers may not venture into mid-tier zones, limiting cross-category spending. Also, the mall's vast horizontal size can make navigation overwhelming: while natural light-filled glass entrances create a welcoming first impression, the sheer scale of the mall can lead to "decision fatigue," especially for new visitors unfamiliar with its layout.

Nordstrom: forget about the City’s glitz & pizzaz, go for functionality

Nordstrom presents an understated shopping environment, characterised by a moderate size compared to its competitors (due to the ceiling height and its structure, it feels smaller than Neiman Marcus, which is the smallest of all three). Its main entrance is adjacent to Intimissimi and Zara on the ground floor and luxury lingerie brand Honey Birdette and Laderäch Swiss chocolates on the first floor (two rather surprising adjacencies).

Ground floor: upon entering, shoppers are greeted by a welcoming bar area, setting a relaxed tone for their visit. The ground floor is a substantial open space dedicated to women's fashion, shoes, and children's apparel. Despite the ample space, the section between escalators to the first floor feels notably sparse, lacking decorative elements or thematic staging.

Sale signage was ubiquitous (the visit was in mid-January 2025): discounted items occupied almost a third of the floor space. The click-and-collect order pickup area is straightforward and highly visible, eschewing any elaborate concealment or branding. The design is fundamentally basic, with a uniform concept across the floor (no shop-in-shops) and minimal peripheral branding or signage.

First floor: it houses an array of shoes, cosmetics, accessories, and men's fashion. While the presentation is consistent, certain shoe brands are afforded a semblance of luxury, elevating their display. Cosmetics are organised into branded corners, allowing for targeted browsing, while designer handbags receive special attention, enhancing their appeal.

Accessories and shoes benefit from a more thoughtful presentation than the somewhat flat approach to men's fashion, which lacks vibrancy. During the visit, the visual merchandising team worked on the floor displays and ironed garments while shoppers were there.

Second floor: The second floor is dedicated to elevated women's ready-to-wear (WRTW), evening attire, activewear, and lingerie. The only brands made highly visible are Skims, Nike, and women’s fashion brand House of CB.

Overall, Nordstrom effectively leverages its space, offering a straightforward yet functional shopping experience. While the store lacks dramatic staging or decor, its layout facilitates easy navigation and access to diverse product categories. The focus on simplicity and functionality, complemented by select displays of luxury, makes the store accessible but somewhat surprising for anyone used to the sophistication of the New York stores.

Macy’s: the oldest store in the mall shows its age

Macy's, the oldest department store in the mall, is also the largest, divided into three floors of unequal sizes. Foot Locker and men’s suits brand Indochino flank the entrances on the ground floor, and Sephora and jewelry brand Gorjana on the first floor.

The ground floor is divided into several distinct zones, which can be a bit confusing. The children's section is notably integrated with Toys "R" Us, offering a separate RTW space dedicated to children's products up to age 20. Despite its broad range, this area lacks inspirational design elements and presents a straightforward, functional layout.

Adjacent to this is the home section, which straightforwardly presents its kitchenware, unlike the more typically staged displays. Though vast, the bedding area lacks character and offers a very sanitised shopping experience. A notable feature is the expansive coat and swim section, positioned past the bedding area.

A seasonal promotion space provides direct access to the main shopping corridor, ensuring high visibility for featured products.

The first floor houses an extensive cosmetics section, arranged in an atrium at the entrance, alongside a seemingly endless men's department. The layout here is more segmented, with specific areas dedicated to various product categories, including accessories, sportswear, and women’s shoes. Despite the abundance of products, the sheer volume can make it challenging for shoppers to locate specific items easily, compounded by frequent promotions and sales.

Certain brands like Boss, Levi’s, and Nike enjoy prominent wall displays within the men's section, while others are presented more generically. The ambiance is characterised by wooden flooring and focused lighting on lower ceilings, providing a distinct shopping atmosphere. Customer interaction is encouraged through technology, offering incentives for scanning customer reviews to make informed purchasing decisions. However, there is no specific merchandising around these devices to promote cross-shopping.

The second floor is dedicated to women's fashion, where organisation by brand is more pronounced than in the men's section. Despite visible brands, the floor suffers from a ceiling in disrepair, which detracts from the overall aesthetic.

This level features a substantial plus-size section, positioned across from a petite section, catering to a wide range of body types. Brands like Anne Klein and Karl Lagerfeld are prominently displayed as shoppers arrive via escalator, alongside Macy's proprietary brands like INC and On 34th Street.

Overall, the store targets too many customers simultaneously, reflected in the complex mix of abundant product offerings and overwhelming store layout. Also, despite technology-driven initiatives aiming to facilitate a seamless shopping experience, the store feels old, with spacious yet occasionally uninspired areas and some parts that would benefit from a refresh.

Neiman Marcus: a stark and seemingly effortless contrast with its competitors 

Compared to its two competitors and considering the neighborhood, the Neiman Marcus store most closely resembles a larger flagship typically found in central urban areas—one where tourists would likely feel at ease. It also appears the least “suburban,” thanks to its refined and sophisticated atmosphere.

Its entrance, in the luxury section of the mall, feels less cluttered than its competitors', thanks to an ideal location under a glass ceiling, in front of an atrium flanked by Tiffany’s & Co., Louis Vuitton, a Chanel store being refurbished at the time of visit, Gucci and Ferragamo just in front on the ground floor, and Tory Burch and Kate Spade on the first floor.

The ground floor sets the tone: the execution of the luxury concept is evident in the selection of brands and the meticulous attention to detail in their presentation. The cosmetics section, though relatively small compared to other areas, is nestled amidst high-end women's handbag brands such as Bottega Veneta, Chanel, and Loewe, creating a refined atmosphere. This section is positioned next to men's shoes and RTW collections.

Ascending to the first floor, shoppers are greeted with an elevated sense of style, focusing on women's designer fashion and jewelry. Carpeting defines these areas, offering a warm and inviting atmosphere that contrasts with the more utilitarian spaces of other department stores, such as Macy's.

The second floor caters to children and luxury fashion, featuring brands like Chanel and Moncler. Dedicated corners for each brand, such as Balenciaga and Casablanca close to Loewe, create distinct shopping zones that highlight the exclusivity and prestige of each label. The home section is cleverly integrated with children's offerings and conveniently located near a restaurant, the Rotunda, providing a pleasant and relaxing shopping environment for families, particularly appealing to women.

Overall, the thoughtful arrangement and execution of luxury at Neiman Marcus reflect a commitment to providing an upscale, cohesive shopping experience. The strategic placement of high-end brands alongside essential services ensures that the mall meets the diverse needs of its clientele, maintaining its status as a premier destination for luxury shopping.

The American Dream Mall: the cool new kid on the block

Located in East Rutherford, the American Dream is the second-largest mall in the U.S., surpassed only by the Mall of America. Its history has been shaky: everything began in 2003, under the name Meadowlands Xanadu, proposed by the Mills Corporation. Construction kicked off in 2004, but the project quickly encountered significant challenges. By 2007, Colony Capital had taken over, only to be stymied by the 2009 bankruptcy of Lehman Brothers, halting construction even though the project was leased at 70%. The Triple Five Group, the Mall of America’s developer, expressed its intent to take control in 2011, officially acquiring the mall and its surrounding site two years later. Yet, progress remained elusive, with construction ceasing again in 2016 due to financial and legal complications.

Construction didn't resume until 2017, thanks to the injection of $1.67bn in the project, even though it experienced a series of "chronically delayed" openings. The initial building phases finally opened in 2019, with the Nickelodeon Universe theme park (the largest indoor theme park in North America) and the Big Snow American Dream indoor ski slope (the first of its kind in North America), only to be closed in March 2020 due to the COVID-19 pandemic, just as it was poised for a broader unveiling, including the DreamWorks Water Park (the world’s largest indoor wave pool). It took seven months, in October 2020, for the mall to fully reopen and unveil its newest attractions. By 2021, the complex had introduced several new attractions, including Sea Life Aquarium, Legoland Discovery Center, and The Avenue luxury wing. Despite these expansions, financial challenges continued, with reported losses due to the pandemic, the local “blue laws” related to opening hours during the weekend, bond payments, and other setbacks.

Nowadays, the mall has an occupancy rate above 80% and hosts approximately 450 retail tenants, offering everything from high-end retail to innovative entertainment experiences. Approximately 55% of the space is dedicated to attractions, designed to make the most of the catchment area (and generate additional revenue) characterised by:

• A densely populated region with affluent households in northern New Jersey.
• Access to over 65 million annual visitors to the tri-state area.
• An estimated annual footfall of 40 million visitors, with half projected to be tourists interested in the unique experiences.

However, the financial strain from delayed openings, debt obligations, and high operational costs contribute to skepticism regarding its profitability. This skepticism is also based on its power to attract Manhattan residents (VIP amenities include helipad access for affluent customers traveling from Manhattan or the Hamptons) while the luxury shopping options it offers already exist locally. Also, critics raised the issue that the retail offerings might be underwhelming compared to the entertainment options, and the same goes for the dining options.

Finally, the mall is just under 20 minutes by car from Garden State Plaza.

Visiting the American Dream Mall

Spanning three levels, the American Dream Mall emphasises a horizontal layout over verticality, allowing for expansive floor space dedicated to its myriad attractions and retail offerings. But international visitors beware: the experience can be underwhelming when comparing the mall to international references, such as The Dubai Mall or malls in Asia, even though the American Dream claims to compete with them in terms of surface and array of experiences. While the sheer scale of the mall can make navigation confusing for first-time visitors despite signage, some areas feel disconnected due to stark contrasts in design or audience focus (e.g., luxury vs mass-market zones).

The mall emphasises experience, which is central to its appeal. It differentiates from the Garden State Plaza with unique experiences that seek to go beyond traditional shopping. Despite the ongoing presence of hoardings indicating areas under development or renovation, the mall remains a dynamic and engaging environment for visitors. The luxury wing, "The Avenue," features stores designed to evoke an open-air shopping experience, providing a fresh and upscale environment that contrasts with the much more conventional Garden State Plaza.

In addition, there are some details that give a unique flavor to this mall: for instance, with Tesla charging stations conveniently located in its parking areas, the mall caters to the needs of eco-conscious visitors while enhancing the overall accessibility and convenience for shoppers.

Visiting Saks Fifth Avenue

The Avenue, the luxury segment of the American Dream Mall, aims to offer shoppers an elevated retail experience reminiscent of open-air shopping streets. The design is ambitious, and branded stores, such as the Saint Laurent or the Hermès ones, are truly spectacular, to the point of making the Saks Fifth Avenue anchor almost invisible.

The department store is situated at the far end, making it less visible and accessible to casual visitors, and spans two floors.

The first floor is dedicated to men's and children's fashion and also features a gallery and a café that remained unopened at the time of visit (January 25). Despite its aesthetic appeal, the space lacked foot traffic and engagement, with entire sections remaining unlit and devoid of greeters, contributing to a sense of emptiness.

The Saks Club and a small lingerie section are present, but their placement feels inconsistent with the overall design, creating a disjointed shopping experience.

The ground floor offers women's RTW, cosmetics, shoes, and accessories. The cosmetics section, centrally located with various stands, disrupts the visual flow, while the periphery hosts luxury leather goods, including Louis Vuitton and Saint Laurent. The latter has a prominent double-decker store opposite the main area, which raises questions about the brand saturation in the mall.

Despite these high-end offerings, the ground floor was noticeably deserted when visited. Cash registers are tucked away in corners, making them difficult for shoppers to locate. Eyewear stands are flashy yet incongruous with the surrounding decor, with flashing lights that clash with the luxury theme.

In fact, lighting is a significant issue, particularly in the RTW section, where poor illumination hampers product visibility. Sale racks are pushed to the back, further diminishing their appeal. The jewelry section, intended to be a highlight, remains mostly empty, lacking the vibrancy one would expect from such a luxurious setting. The absence of visible staff exacerbated the feeling of desolation, leaving shoppers without guidance or assistance.

While The Avenue at American Dream has the infrastructure and branding to direct high-end shoppers towards Saks Fifth Avenue, its execution falls short and feels somewhat disconnected from the grand ambition the mall itself is trying to provide to its visitors.

These two New Jersey malls reveal something far more profound than just retail spaces - they represent a uniquely American contradiction. In a country that birthed modern consumer culture and exported it globally, these suburban retail cathedrals expose a striking disconnect between America's self-perception and the international standard.

The stark contrast between New York City's sophisticated retail environments and these suburban counterparts is jarring. What's particularly remarkable isn't just the quality gap but the American consumer's apparent acceptance of this disparity. While Westfield Garden State Plaza generates over $6 billion in annual sales and boasts impressive statistics, the experience feels outdated, fragmented, and fundamentally utilitarian rather than inspirational.

This phenomenon speaks to a broader cultural characteristic: American suburban retail often prioritises functional consumption over experiential excellence. The emphasis on volume, convenience, and accessibility has created environments that would be considered subpar in many international markets, particularly in Europe and Asia, where retail design has evolved to blend commerce with culture and aesthetics seamlessly.

Even American Dream Mall's attempt to innovate through entertainment-focused retail feels like a compensatory mechanism—an acknowledgment that the traditional American mall needs extraordinary attractions to remain viable in an era when pure shopping no longer suffices. Yet despite its ambitions, it struggles to deliver a cohesive, sophisticated experience.

Perhaps most telling is the Saks Fifth Avenue at American Dream, a luxury retailer whose presentation undermines its premise. The poor lighting, confusing layout, and absence of attentive staff reveal a fundamental misunderstanding of what luxury retail should deliver. It's as if the concept of luxury has been reduced to brand names alone, divorced from the experiential elements that define true luxury elsewhere in the world.

This disconnect reflects America's complex relationship with class, consumption, and identity. In a society that simultaneously celebrates wealth while maintaining an egalitarian self-image, these suburban retail environments embody a peculiar compromise - spaces that offer luxury brands but within environments that remain fundamentally accessible and unpretentious, even when this undermines the very experience they aim to deliver.

For international visitors accustomed to the seamless integration of commerce, culture, and design found in retail destinations worldwide, these New Jersey malls offer a fascinating window into American consumer culture - one that reveals how the birthplace of modern retail has, in many ways, fallen behind the global standards it once established.

Credits: IADS (Selvane Mohandas du Ménil)

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Generation Alpha Infographic

Generation Alpha, born between 2010 and 2024, is emerging as a significant consumer group. With an estimated USD 5.46 trillion economic footprint by 2029, Gen Alpha’s spending power is almost as much as that of Millennials and Gen Z combined. The demographic is now closer to working and shopping independently, requiring the retail industry’s attention.

Caught off guard by Gen Z, brands and retailers are already implementing several strategies with “tweens” to effectively appeal to both Generation Alpha and their parents. Social media, climate change, and efforts in prioritising transparency and inclusivity shape Gen Alpha’s world. They value authenticity, sustainability and brands that align with their social values. Similar to Gen Z, their loyalty to brands is not a given.

As a consequence, marketing to them requires a different approach, as they are strongly influenced by peer recommendations on social media and gaming platforms and expect stores to be amusement parks.

The below illustration shows how Gen Alpha differs from the others.

![GEN ALPHA

McCrindle – Decoding Gen Alpha

At the crossroads of tech maturity, social media and gaming

Technology as a way of life

Millennials grew up with personal computers, leading the way in internet usage and technological adoption. Gen Z was raised in the era of smartphones and social media, with limitless information always within reach. Gen Alpha has grown up with advanced technology and has never known a world without AI, AR, or gaming. No single technology or platform defines Gen Alpha. Instead, their distinctiveness lies in their overall tech-savviness and ease with emerging technologies. This generation naturally navigates new tools and technologies in ways we’ve never seen before. They interact with AI tools like ChatGPT and virtual assistants, making spatial computing and augmented reality their norm.

Unlike previous generations, and seeing technology as an integral part of life, they blend physical and virtual experiences, from gaming and socialising to shopping. As a result, they expect seamless integration between online and offline shopping experiences, pushing retailers to focus on creating personalised interactions and ensuring a smooth omnichannel presence. This includes user-friendly websites, mobile apps, and in-store technologies that enhance the shopping experience.

Social media platforms are crucial, but gaming platforms get traction

Retailers should create content that resonates with Gen Alpha, utilising popular platforms and collaborating with influencers. According to the Harvard Business Review analysis of Generation Alpha, unlike Millennials who favoured Facebook and then Instagram, Gen Alpha prefers TikTok and engage in popular trends such as "get ready with me" videos and "shelfies" (videos showcasing products on bathroom shelves). But more than the usual social media platforms, Gen Alpha is investing time in gaming. According to the Business of Fashion, they now spend a bit more time on gaming platforms (Roblox, Fortnite, Minecraft) than on social networks, with 5.2 hours vs. 5.1 hours per week. User-generated gaming is rising, with kids preferring to create their game environments and avatars rather than just playing pre-made ones. Gen Alpha even asks parents for virtual currencies instead of traditional allowances. For example, Robux, the Roblox currency, allows users to customise their avatar or to buy additional functionalities.

Also, according to retail consulting firm J.C. Williams Group, Gen Alpha is used to creating relationships through technology. Unlike Gen Z, they are comfortable with never meeting people and may develop friendships online. So, Gen Alpha interactions with friends are shifting toward the metaverse, where WhatsApp groups, Discord servers, and Roblox DMs are replacing traditional platforms like Instagram and Snapchat.

Current and future shopping patterns

It’s a family business: targeting parents

Gen Alpha and their parents influence each other’s purchases. Gen Alpha is impacting their parents' shopping habits and has USD 300 billion in spending power through parental influence, so brands need to have a dual-focused marketing approach and keep on marketing to adults, as parents greatly influence their purchases. Trends extend beyond Gen Alpha and resonate with older generations as well. For example, Gen Alpha greatly influences their family's entertainment choices, preferred food and delivery services, home technology adoption, and hygiene products. Their emphasis on health, wellness, and sustainability significantly shapes their parents' purchasing decisions.

A generation focused towards adult brands

Due to social media and digital influence, Gen Alpha is more brand-aware than other generations but doesn’t have many dedicated spaces or brands targeting their specific needs. Unlike previous generations who had “tween” brands catering to their needs (for example, Tammy Girl in the UK in the '90s’), Gen Alpha tends to gravitate towards adult brands, preferring to shop where their Millennial parents shop, such as at Lululemon and Sephora. Also, many young shoppers share the same favourite brands as their parents, like Amazon. As a result, the concept of a “tween” market is fading, and brands prefer to expand product sizes instead of creating separate lines. As a result, many retailers now market to parents, knowing Gen Alpha influences their spending decisions. Gaming platforms become brand discovery spaces as 60% of Gen Alpha discover new brands through gaming experiences. Success stories like Fenty Beauty's Roblox contest,  which led to real product launches, demonstrate effective gaming engagement strategies.

Trends are now popular with multiple generations, often based entirely on trying and reviewing different products. This phenomenon is visible with skincare and makeup, but also with clothes, accessories, furniture, and more. Brand audiences are no longer defined by narrow demographics: everything is for everyone. Millennials and their Gen Alpha kids are likely to share the same viral cult products, such as the Stanley the tumbler for example.

Will Gen Alpha be the first generation to prioritise CSR concerns?

Like every other demographic, younger consumers are price-conscious, which is evident in Shein's success. Among Gen Z, 52.6% of 16-24 year-olds in the UK ordered from abroad in 2023, of which .

Will it be different with Gen Alpha? They will feel the growing impacts of climate change more than any previous generation. Also, they will have to cope with massive social and geopolitical shifts, widespread mental and environmental health crises, and ongoing struggles for equality. Under such circumstances, like Gen Z, Gen Alpha declares is a key concern. Retailers should continue their sustainability efforts, offer eco-friendly products, reduce waste, and support ethical practices. Creating second-hand or resale programmes can also appeal to this demographic's eco-conscious concerns. Gen Alpha values inclusivity and diversity. Retailers should ensure their products and marketing campaigns reflect various cultures, identities, and experiences. However, it’s uncertain if what Gen Alpha declares will reflect in their purchases once, freed from their parents’ choices, they can fully decide what they buy.

What does Gen Alpha want? Customisation, entertainment and curation

Experience, personalisation and co-creation

Offering customisation options allows Gen Alpha to express their individuality as they engage with technology as creators and world builders. They ‘build together with’ or ‘play with’. Also, they are truly “the builders and users of the metaverse.” Gen Alpha might finally give true value to this technology. This is mainly due to platforms like Roblox, Minecraft, and Fortnite, which have revolutionised gaming by enabling players to design their own worlds, characters, storylines, and rules. Gen Alpha has embraced this creative freedom, using it as a means of self-expression and innovation. Their deep connection with experiential technologies also shapes their engagement with the physical world. In the US, while their parents might visit attractions like the Museum of Ice Cream to take Instagram-worthy photos, Gen Alpha prefer experiences like Meow Wolf, an immersive art experience that blends storytelling, technology and exploration, focusing on participation rather than documentation. With their enthusiasm for these interactive spaces, retailers who build experiential attractions and provide personalised products or services can capture young consumers' attention and wallets.

Stores are entertainment parks: beauty retailers ahead

Physical shopping experiences like visiting Sephora or big-box retailers feel like amusement parks for Gen Alpha as they enjoy interactive retail environments. Already aware of the fact, beauty retailers Sephora and Glossier are hosting children's birthday parties, transforming stores into experiential celebration venues. These events combine educational elements, such as age-appropriate skincare tips and makeup tutorials, with entertaining activities like store scavenger hunts. At Sephora, makeup artists teach young guests about "dewy skin" techniques, while staff create beauty sample goodie bags as party favours. Glossier's flagship locations accommodate planned events and impromptu celebrations, seeing increasing demand for beauty-themed gatherings. The trend signals a significant shift in beauty retail strategy, where stores are evolving from pure shopping destinations to true experiential venues that forge emotional connections with future consumers. The trend extends beyond major retailers, with specialist brands like Rile, a teen beauty brand, offering skincare education parties led by teen ambassadors. This approach allows retailers to engage with both parents, who appreciate the structured learning environment, and children, who enjoy the interactive experience. For brands, it represents a significant opportunity to build brand loyalty during formative years. Beauty seems to lead the way for entertaining Gen Alpha, but toy retailer Camp in the US was a pioneer with their family experience combining retail with interactive play, offering shop/play hybrid experiences and rotating themes.

Curating relevant product offer: the example of Nordstrom

Department stores are also launching strategies to attract Gen Alpha. In October 2024, Nordstrom demonstrated this shift by launching dedicated in-store "young adult" beauty kiosks and a new online category dedicated to this segment. Reminding of the likes of Galeries Lafayette’s unprecedented “Club 20 ans”,i opened in 1969 and gathering several product categories (fashion, trinkets, music, etc) for teenagers, Nordstrom’s kiosks are located on teen apparel floors, feature popular brands like Kiramoon and Kaja beauty brands, alongside clothing from brands such as Pacsun and Asos. Currently available in six locations and online, the initiative offers over 850 products. Nordstrom's strategy involves leveraging data from TikTok and its website to identify trending categories, such as the "everything shower” trend (products to use in the shower beyond soap and shampoo), which has led to successful product additions like Oui The People shaving brand. The key to success here is to focus on youth-coded but not overly juvenile products.

These strategies reflect retailers’ understanding that today's experiences are shaping tomorrow's consumers, with retailers balancing entertainment, education, and brand awareness. Also, these Gen Alpha recruitment tactics seek to offset challenges in the luxury market by tapping into alternate revenue streams. This trend toward early customer engagement was further evidenced in 2024 when Ulta Beauty introduced collectable miniature replicas of popular products targeting children as young as six.

The rise of Gen Alpha as a key consumer group represents a significant shift in retail strategies, as this generation’s tech-savviness and unique shopping preferences reshape the retail landscape. Prioritising authenticity, digital influence, experiences seamlessly blending digital and physical retail, customisation initiatives, and interactivity presents new opportunities for retailers to engage and retain their loyalty. Retailers must adapt by offering personalised experiences, leveraging immersive technologies, and emphasising sustainability. Additionally, as this generation has an increasing influence on family purchasing decisions, brands must align their marketing efforts to resonate with both Gen Alpha and their parents, ensuring they are well-positioned to capture future market share.

i : Galeries Lafayette’s « Club 20 ans » was featured in the Paris Cité de l’Architecture exhibition “La Saga des grands magasins”whose contributions include Galeries Lafayette, Magasin du Nord, El Palacio de Hierro, SKP and the IADS

Credits: IADS (Christine Montard)

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Check out the photos of small format stores here

Department stores and big-box retailers have traditionally believed that larger spaces and inventory would make them more appealing to shoppers, which was true for many decades. For many reasons, including consumers favouring e-commerce and more convenience and the challenge of finding and supporting the cost of operating big-box locations, a significant shift is taking place as US department stores Macy's, Bloomingdale’s and Nordstrom* open smaller-format stores. This approach isn't about scaling back, as these small stores are not about limiting customer options. Instead, retailers break away from the stereotypes often associated with big stores: overwhelming layouts and product selections offered in inconveniently located stores. The small format concept is designed to provide a more curated selection of products, focusing on convenience, services and localised shopping experiences, concepts that have gained traction since Covid.

Seen as an opportunity to get closer to where the customers are with a smaller investment, Nordstrom Local opened its first location in 2017, and Bloomie’s in August 2021. Both companies have been expanding their footprint in these formats since then. Outside of the US, Magasin du Nord opened two small formats in 2024. This article will focus on these three companies’ journey and efficiency.*

What is a small-format store anyway?

A small-format store could be defined as follows:

• Curated product selection: a carefully selected assortment of products tailored to the local market's needs and preferences. It allows retailers to focus on specific demographics and provide a personalised shopping experience.
• Location and accessibility: these stores are often located in urban areas and densely populated neighbourhoods. This strategic placement maximises convenience for local shoppers and allows retailers to penetrate markets that may not support larger store formats.
• Omnichannel integration: many small-format stores integrate online-to-offline services such as in-store pickup, returns, and kerbside pickup. This enhances the customer experience by providing flexibility and convenience.
• Cost efficiency: with a smaller footprint, these stores are easier to find and typically have lower operating costs, allowing retailers to expand their reach in high-priced real estate markets while securing profitability.

The shrinking storefront: Bloomie’s rethink scale, relevance and reach

In response to mixed reviews of its traditional stores, Macy's has adopted small-format stores to simplify shopping and enhance integration with its digital shopping ecosystem. At about 20% of the size of traditional locations, these smaller stores, Market by Macy’s and Bloomie’s, provide a curated selection of private label and national brands tailored to local markets, along with various online-to-offline services. Early results were encouraging, with Macy's reporting that these stores open for at least a year were achieving sales growth on par with full-size locations. Back in 2023, Macy’s was planning to open 30 additional small-format stores by the end of 2025, in addition to the existing 15 small-format Macy’s and Bloomie’s stores already in operation. However, in early 2025, they announced that they would close four of their 24 Market by Macy’s small-format stores, a shift from the acceleration announced in 2023.

On its side, Bloomingdale’s has been experimenting with small-format stores since August 2021. Their Bloomie’s locations are:

• Fairfax, Virginia, on 2,000 sqm, opened in August 2021,
• Skokie, Illinois, on 4,600 sqm, opened in November 2022,
• Seattle, Washington, on 1,800 sqm, opened in November 2023,
• Shrewsbury, New Jersey, on 1,900 sqm, opened in November 2024i.

These openings reflect the three possible approaches underlying each decision:

• Filling a void when Macy’s Inc. closes a department store, but there are still loyal customers in the area. Bloomie’s Skokie store illustrates this approach. In this specific case, a Bloomingdale’s store closed and was replaced by Bloomie’s.
• Entering a market untapped by Macy’s Inc. The Bloomie’s Seattle store is a perfect example as it enters the Nordstrom land without Macy’s Inc. stores.
• Densifying its presence in a market where Macy’s Inc. already operates a department store and sees an opportunity to fill in with another store to serve customers better and capture new ones.

Bloomie’s store in Fairfax reflects this approach since it supports the two existing Bloomingdale’s stores in the region. In November 2024, Bloomingdale’s opened the fourth Bloomie’s store at The Grove Shopping Centre in Shrewsbury, New Jersey. It is designed to complement Bloomingdale’s presence in the state, which includes four full-line shops and three outlet stores.

This latest store features services like styling, alterations, gift wrapping, and a grab-and-go food spot. Rachel Abeles, Bloomingdale’s SVP of Customer and Revenue Growth, said that “Bloomie’s is a perfect example of how our brand continues to evolve with our shoppers’ needs and preferences.” Reflecting this, the store is the first to offer an all-women’s assortment, which includes contemporary RTW, accessories, beauty and fine jewellery.

Bloomie’s store design is flexible, allowing the company to grow or reduce presentations of brands and trends depending on their success. Store assortments stick to local preferences as exemplified in the Seattle location, which offers women’s, men’s, beauty, accessories, home and gifts, with a strong focus on contemporary labelsii.  However, it also introduced new brands, Sandro and Maje, which were their first-ever brick-and-mortar presence in Seattle at the time of the opening. The Seattle store also has a space for rotating pop-ups and trend presentations. Despite limited surfaces, Bloomie’s product offer is not as small as it looks, as Bloomie’s can source merchandise for shoppers from other Bloomingdale’s stores and the NYC flagship.

Contributing to the halo effect of online activities in the regions where the stores are located, Bloomingdale’s plans to open more Bloomie’s locations. They will probably open another couple of them to prove further the viability of the format and the relevance of a possible rollout across the country, with the next one to open in Texas in 2026, a major and untapped market.

i : By comparison, Bloomingdale’s department stores are usually 14,000 sqm to 19,000 sqm.

ii: Intimates, kids, furniture, food and designer labels are not part of the mix

Strategic compactness: Magasin du Nord’s small stores drive loyalty and synergy

In the Fall of 2024, the Danish department store opened two small-format stores. The concept brings a “taste” of Magasin du Nord to local customers with good-quality products at reasonable prices in a convenient format, also introducing the brand’s full online offerings. Magasin du Nord aims to fuse physical presence more tightly with its online platform as part of their omnichannel strategy. As a result, these stores serve as both a point of contact for e-commerce customers and an animation space, enhancing customer engagement and operational flexibility.

The first opening was in Slots Arkaderne shopping mall in Hillerød with a concept targeting both local consumers and tourists, providing goods that are not widely available elsewhere. The second, in Odense's Rosengårdcentret, Denmark's largest shopping centre, spans 700 sqm. Magasin du Nord expects this new format to create synergies with their existing Odense city centre store, supporting each other in sales, experiences, and staffing. DKK 2.5 million capex were invested in each store.

Both stores focus on offering a curated mix of women’s fashion, women’s accessories, lingerie, beauty, food and home products along with services:

• With the most important surface, Women’s Fashion dominates sales in both stores.
• Cosmetics & Beauty performance varies from one store to another, but the category is well-positioned in terms of sales.
• The Home & Decor categories might expand as they exceed expectations and sometimes beat Cosmetics & Beauty with similar surfaces.
• Other categories (Lingerie, Women’s Accessories, Food) together represent a small part of the total sales. In the future, they should give each category a permanent space and increase the surface given to gifting during peak seasons, especially as these stores are positioned as top destinations for convenient, seasonal, grab-and-go gifting options.
• Within product categories, both stores carry Magasin du Nord Collection private label, presenting a full seasonal assortment. The stores are prioritised for stock options and deliveries, focusing on best-selling and best-value permanent styles like NOOS (Never Out Of Stock) products.
• Customer service is a key pillar, offering click-and-collect, order from store, complimentary coffee, spacious fitting rooms with lounge areas, gift wrapping, and product return.

Magasin du Nord noted that weekly replenishment and delivery of new products have positively impacted the NPS and footfall. Hillerød sees traffic spikes on delivery days (Wednesdays), and the store achieved an NPS of 70.6 in 2024, showing customer satisfaction. From analysing online sales from customers’ zip codes, there’s room to expand assortments by adding successful online products and top-performing brands not yet stocked in-store.

The layout is designed around fixed category zones with flexible space allocation depending on performance, and newness is emphasised through a bi-weekly product rotation. The optimal layout is 700 to 1,000 sqm on a single floor with box-like proportions and the following features:

• A unique payment point near the entrance with four cash desks,
• A clear flow from entrance to exit,
• Four to six fitting rooms,
• Flexible, generic fixtures,
• High-density merchandising,
• A commercial yet inspirational ambience.

The primary customer base is from the shopping centres’ footfall, mostly women aged 35-70, with a secondary target of younger females aged 15+, often daughters of the primary target. Magasin du Nord sees success in growing customer loyalty, exemplified by the Hillerød store, where 600 new loyalty members have joined since the store’s opening, marking a 66% increase in that area. Marketing is hyper-localised through shopping centre apps and Facebook, targeting stores’ zip codes. The model de facto saves on customer acquisition costs or, in other words, these stores could be considered an investment for online performance.

The strategy behind the new format is to utilise smaller, more specialised retail spaces to quickly adapt to market changes and consumer trends. While it is in a testing phase with a very small team for strategy and operations, the company plans to unveil more locations for similar local stores in the future. Several potential locations are under review, including possible ventures in Sweden and Norway.

Retail reversed: how Nordstrom Local takes the store to the customer

One of the many questions retailers always have on their minds is how to attract more people to their stores. Instead of focusing on bringing people to the store, Nordstrom Local reversed the question to “how do I get more of my store to where the people are. It’s a switch worthy of attention because it gets retailers away from the idea of a central, fixed location as the driver of their businesses.”

The Nordstrom Local retail concept was launched in Los Angeles in October 2017 and has developed since then. These commercial spaces are not stores per se, but rather merchandise-free service hubs operating as support units to Nordstrom stores located in the same area. Nordstrom Local now accounts for four locations in California (instead of five a few months ago) and two in NYCiii.  Nordstrom Local service hubs are relatively small, usually between 100 sqm and 300 sqm. Considering their size, such locations are relatively “easy” to find and to run, and most importantly, to fund. Units are located where the population is wealthy and/or very young and very active.

The concept harkens back to an idea at the core of Nordstrom's value proposition: service. From a customer’s perspective, Nordstrom Local provides easy access to personalised services. The format is mainly relevant in areas where distances and traffic are important factors: the convenience of picking up merchandise nearby is a game-changer for customers. The store design and services are adapted according to the neighbourhood atmosphere and needs. Depending on local needs, Nordstrom Local offers a wide array of services, including BOPIS, kerbside pick-up and easy returns, alterations, personal shopping and virtual styling, but also gift wrapping, leather goods and shoe repair, and a community meeting space. Some locations offer more unusual services, demonstrating how Nordstrom Local sticks to the local needs: tuxedo rental in Los Angeles, stroller cleaning in NYC’s Upper East Side location, and sneaker cleaning in NYC’s West Village.

In 2019 Q1, company representatives said that Nordstrom Local customers spend more than two-and-a-half times as much at Nordstrom as regular customers. The launch of the two NYC service hubs led to a 400% increase in local shoppers taking advantage of its BOPIS service. Also, Nordstrom Local performed above average compared to flagships during the pandemic. In general, Nordstrom said its customers in Nordstrom Local spend more and return goods faster, giving the retailer a better chance of reselling returned products.

Nordstrom hasn’t opened more Nordstrom Local stores since 2020, raising questions about the concept’s long-term success as is. In February 2025, while creating a new Director of Luxury Styling role for Neiman Marcus veteran stylist Catherine Bloom, Nordstrom converted the Melrose Place Local store into Catherine Bloom for Nordstrom luxury service space. Bloom will bring extensive experience serving high-profile clients, including Hollywood stars, executives, and international elites. The appointment leverages Bloom's expertise in curating personalised wardrobes and made-to-measure services. The Nordstrom Local transformation demonstrates a bigger focus on high-value customers, reflecting the luxury sector's increased emphasis on personalised experiences and customer relationships. Will it serve as a blueprint for other Nordstrom locations?

iii: California locations are in Brentwood, Manhattan Beach and Newport Beach. NYC locations are in the Upper East Side and the West Village.

Small format, big debate: are small-format stores the future or a distraction for department stores?

Retail experts’ opinions are mixed on how smaller format stores can really improve department store results. In the case of Nordstrom, the units are relatively small and don’t involve inventory, “only” supply chain capabilities (delivery and reverse logistics), a few fixtures and limited staff. Nordstrom Local stores can consume resources, though, as NYC rents are incredibly high.

In the case of Macy’s Inc., Market by Macy’s and Bloomie’s stores are certainly an interesting evolution of the department store concept. Still, they are not a solution to Macy’s planning to close 150 stores, as they represent a small part of Macy’s Inc.’s business. However, as Neil Saunders, GlobalData Managing Director said, Bloomie’s stores are “strategically important as they are a future vehicle for growth. It is much easier to open a smaller format as there are more locations where these stores are viable, and expanding the concept is less capitally intense.” Besides, in the case of Bloomie’s replacing a larger-format store that was not ideally positioned (this was the case in Skokie), the change showed impressive results: despite reducing the footprint to about 25% of the original store's size, they maintained roughly 100% of the sales, demonstrating the format's efficiency.

Still, not all analysts are convinced by small formats. In 2023, retail analyst Walter Loeb criticised Market by Macy's plan for rapid small-format expansion, comparing it with Bloomie's more measured approach and methodical expansion of well-edited stores, suggesting the latter's strategy may be more sustainable. This strategic divergence highlights the risks and opportunities in department store transformation, where rapid expansion must be balanced against maintaining brand value and operational efficiency. While Macy's aims to penetrate new markets rapidly, critics argue this approach could divert attention and resources from improving flagship locations.

Finally, according to Nick Egelanian, president of retail development firm SiteWorks, opening small-concept stores may be a good idea. Still, it won’t take away from the fact that Macy’s, with its traditional large locations, has been highly challenged: “everything else Macy’s does] consumes critical resources and focus that should be laser-focused on the primary task at hand — coming up with a viable business in their core markets,” Egelanian said. In [Q4 2024, Macy’s comparable sales were down 1.9% on an owned basis, Bloomingdale’s owned comparable sales grew by 4.8%, and Bluemercury net sales increased by 6.2% on an owned basis.

*The rise of small-format stores signals a significant shift in how department store operators rethink their presence, purpose, and profitability. Whether positioned as service hubs, curated local experiences, or omnichannel support centres, these formats reflect a broader desire to reconnect with customers on more relevant, agile, and cost-efficient terms. Nordstrom, Bloomingdale’s, Macy’s, and Magasin du Nord each approach the model differently, yet all seek to solve the same equation: how to remain visible, valuable, and viable in a world where footfall is unpredictable and digital expectations are high.

While the format shows promise, whether through Bloomie’s near-equal productivity on a fraction of the space, Nordstrom Local’s customer engagement metrics, or Magasin du Nord’s local loyalty growth, questions remain about scalability, long-term efficiency, and strategic alignment. Other department stores have tried small-format stores such as Falabella in Chile and Peru. The strategy is paused for now due to the local market structure. In fact, growth is difficult in cities without stores, as there is no halo effect, contrary to Bloomie’s and Magasin du Nord's small stores. Ultimately, small-format stores are not a universal fix, but rather a strategic instrument whose performance depends on execution, contextual relevance, and alignment with broader company goals.*

Credits: IADS (Christine Montard)

What: The US Senate's Genius Act of 2025 paves the way for banks, fintech firms, and major retailers to issue stablecoins, while industry experts debate their potential impact on retail payments.

Why it is important: The convergence of regulatory clarity, major retailer adoption, and growing consumer interest in stablecoins (65% according to recent surveys) indicates a significant shift in retail payment infrastructure that could fundamentally alter transaction economics.

The retail industry stands at a pivotal moment as the US Senate's passage of the Genius Act creates a regulatory framework for stablecoin adoption. This groundbreaking legislation enables banks, fintech firms, and major retailers like Amazon to issue their own stablecoins or integrate them into existing payment platforms. Unlike volatile cryptocurrencies, stablecoins maintain a steady value pegged to fiat currencies, making them practical for everyday transactions. Major players are already embracing this technology, with Shopify implementing USDC payments and both Amazon and Walmart exploring stablecoin solutions to reduce transaction fees. Consumer sentiment appears favourable, with recent studies showing that 21% of American adults own cryptocurrency, and 39% of crypto holders use it for retail purchases. However, experts like CI&T's Melissa Minkow caution that consumer trust and interest will ultimately determine adoption rates. The potential benefits for retailers include lower transaction costs and enhanced loyalty schemes, though implementation will require significant resources and careful consideration of consumer preferences.

IADS Notes: The retail payment landscape has undergone significant transformation throughout 2024-2025, with stablecoins emerging as a potentially revolutionary force. In January 2025, a16z reported that stablecoins could increase retailer profitability by up to 60% through reduced transaction fees, a finding that supports the article's emphasis on cost reduction benefits. This potential was demonstrated in practice when Printemps became Europe's first department store to accept cryptocurrencies in November 2024, followed by Shopify's integration of USDC payments. Consumer interest has grown substantially, with a December 2024 Capital One survey revealing that 65% of consumers desire cryptocurrency payment options, particularly for daily retail purchases. The regulatory environment has also evolved, from the March 2024 Visa-Mastercard USD 30 billion settlement over swipe fees to the recent Genius Act, indicating a shift towards embracing digital currency innovation. With mobile payments reaching 70% of global sales by January 2025, and cross-border transactions during the 2024 Black Friday weekend totaling USD 3.2 billion, the infrastructure for stablecoin adoption appears increasingly robust.

Are stablecoins the future of retail payments? Experts weigh in

What: McKinsey research reveals new 'attention equation' that transforms understanding of media monetisation, combining time spent with focus and intent metrics.

Why it is important: The research demonstrates how traditional metrics of time spent are insufficient for predicting consumer behavior and spending, requiring a more sophisticated approach to media strategy.

McKinsey's research introduces a groundbreaking 'attention equation' that combines commercial quotient with attention quotient to measure media value. The study reveals significant disparities in monetisation across 20 major mediums, with live sports generating $33 per hour compared to podcasts at $0.05 per hour. Traditional commercial factors explain only two-thirds of monetisation variance, with attention quality accounting for the remaining third. The equation identifies five primary consumption purposes, from "enjoying something loved" to "background ambience," with varying monetisation potential. Consumer segmentation based on attention reveals three high-value groups: "content lovers" (13%), "interactivity enthusiasts" (16%), and "community trendsetters" (10%). The research shows that focused attention correlates strongly with spending, as consumers in the top quartile of focus spend twice as much as those in the bottom quartile.

IADS Notes: The transformation in consumer attention patterns is reshaping retail media strategies. According to Euromonitor's November 2024 report , 67% of consumers seek ways to simplify their lives, while 42% prefer livestreaming for better product understanding, highlighting the importance of focused attention in retail engagement. Publicis Media's April 2024 analysis revealed how macroeconomic factors and technological advances are forcing retailers to adapt their strategies to evolving consumer behaviors and attention patterns. Forbes' February 2025 coverage showed how retail media networks are integrating traditional shopper marketing expertise with digital capabilities, with 70% of retail media spend being diverted from traditional advertising channels. Forbes' May 2025 report highlighted how AI solutions are addressing attention measurement challenges, as the industry faces a growth slowdown from 25.1% to 15.6%. The research's attention equation, combining commercial quotient with attention quotient, provides retailers with a new framework for measuring and monetising customer engagement, particularly valuable as traditional metrics of time spent become less relevant in predicting consumer behavior and spending patterns.

The ‘attention equation’: Winning the right battles for consumer attention

What: Early talent programs are strategic drivers of long-term business value, with internship-to-hire conversion rates of 66.4% and significantly lower recruitment costs compared to mid-career hiring.

Why it is important: With 10,000 Baby Boomers retiring daily and 51% of retail employees considering leaving their positions, building strong early talent pipelines is crucial for maintaining operational continuity and institutional knowledge.

Early career hiring represents a critical but often overlooked driver of business success. While many organisations treat internship programs and entry-level pipelines as optional during budget constraints, this approach creates significant long-term gaps. The financial case is compelling: recruiting an early-career hire costs approximately $4,700, compared to 50-200% of annual salary for mid-career replacements. When sourced through internships, these hires show a 66.4% conversion rate to full-time employment. Beyond cost efficiency, early talent programs build future leadership benches, enhance hiring effectiveness, and increase representation across teams. Success stories demonstrate the impact: at staffing firm ALKU, interns-turned-hires generated 21% more revenue in their first six months compared to external peers, and 14% more in their first year. These programs also promote fairer hiring practices by reducing overreliance on pedigree and expanding candidate pools through skills-based assessments.

IADS Notes: Recent market evidence underscores the urgency of strategic early talent development. In February, research revealed that 50% of Gen Z professionals reject traditional middle management roles, viewing them as high-stress and low-reward positions. This shift coincides with March data showing that AI-enabled teams reduce work time by 16% while maintaining performance quality, highlighting the need for tech-savvy future leaders. The challenge is particularly acute in retail, where December data showed 51% of customer-facing employees planning to leave their positions. However, success stories demonstrate the potential: IKEA's spring AI literacy program successfully trained 3,000 workers and 500 leaders, while companies implementing systematic talent development achieved 21% higher returns through balanced technological and human capability developmen

Early Talent Strategy: How to build a scalable, high-impact talent pipeline

Learn how a culture-first approach can transform employee relations by reading the guide below:

From Reaction to Resolution: A Smarter Way to Handle Employee Relations Complaints

What: Marketing leaders demonstrate growing confidence in GenAI, with 83% expressing optimism and concrete improvements in customer experience.

Why it is important: With 60% of CMOs expecting 5%+ revenue gains, this trend indicates a fundamental transformation in marketing strategies and capabilities.

The latest BCG survey reveals a significant surge in CMO confidence regarding GenAI implementation, with optimism rising from 74% in 2023 to 83% in 2025. Despite economic volatility, 71% of CMOs are committing to substantial investments exceeding $10 million annually in GenAI over the next three years, marking a notable increase from 57% last year. The technology's impact is particularly evident in customer experience and content quality improvements, with over one-third of CMOs reporting positive outcomes. Looking ahead, CMOs are prioritising video generation, with 30% identifying it as their next focus area, alongside AI-powered personalisation and agentic AI deployment. While B2B companies show stronger interest in AI agents, with one-third of their CMOs citing it as a high investment priority, the trend spans both B2B and B2C sectors. Notably, CMOs are shifting focus from ROI measurement to talent development, addressing the challenge of GenAI expertise through internal upskilling initiatives rather than external hiring.

IADS Notes: Recent market evidence strongly supports this transformation in retail marketing. In March 2025, Adobe reported unprecedented growth in AI-powered shopping, with 38% of global consumers actively using AI tools and 80% reporting positive experiences. This aligns with McKinsey's February 2025 findings that 71% of consumers now expect personalised interactions. The business impact is particularly noteworthy, as demonstrated by Google Cloud's October 2024 survey showing 87% of AI-adopting retailers experiencing at least 6% revenue growth. However, implementation challenges persist, with December 2024 data revealing only 10% of companies successfully scaling their GenAI applications, highlighting the importance of strategic execution.

How CMOs are scaling GenAI in turbulent times

What: Leading retailers achieve superior performance by transforming into data-driven platforms, integrating marketplaces, retail media, and B2B services.

Why it is important: The emergence of new revenue streams is creating a growing performance gap between digital leaders and laggards in the retail industry.

Leading traditional retailers are reinventing themselves as data-driven business platforms by integrating online marketplaces, retail media, data monetisation, and B2B digital services. This transformation is driving sustainable growth and competitive advantage, with top-quartile retailers significantly outperforming the industry's five-year TSR (16% versus 9%). Approximately one-third of this outperformance comes from new revenue streams. The combination of these initiatives creates a powerful business flywheel, where each element reinforces the others, enabling core business growth and increased profitability. Success requires excellence in core shopping missions, expanded offerings through e-commerce and marketplaces, traffic monetisation through advertising and data insights, and reinvestment in core operations. While larger retailers can experiment broadly, mid-sized and smaller retailers should focus on specific initiatives like retail media or accelerated online operations.

IADS Notes: The transformation of traditional retailers into data-driven business platforms represents a fundamental shift in retail strategy. According to Forbes' March 2025 coverage, retailers are rethinking their approach to retail media and shopper marketing, with 70% of retail media spend being diverted from traditional advertising channels. BCG's February 2025 analysis revealed that only five economies are fully AI-ready, highlighting the critical importance of technological infrastructure in retail transformation. Inside Retail's February 2025 report showed how Asian retailers are leading this evolution, with major players like Central Retail investing $665 million in AI integration and ecosystem development. Inside Retail's March 2025 coverage emphasised how 71% of consumers now expect personalised interactions, driving retailers to develop more sophisticated digital capabilities. This convergence of new revenue streams, technological innovation, and changing consumer expectations is creating a clear divide between digital leaders and laggards, with top-performing retailers generating significant value from these new business models.

How new revenue streams are transforming traditional retail

What: Cyprus-based startup DISPL transforms brick-and-mortar retail with AI-powered audience analytics and smart digital signage, serving over 3,500 touchpoints globally.

Why it is important: As retail media growth decelerates to 15.6%, DISPL's AI-powered solution addresses the industry's urgent need for measurable offline marketing and enhanced customer analytics in physical retail spaces.

DISPL, a Cyprus-based retail technology startup, has emerged as a significant player in the retail media sector after raising over $2 million in just 2.5 years. The company's platform, which combines AI-powered audience analytics with smart digital signage, helps retailers, brands, and distributors generate new revenue streams by monetizing physical spaces. Currently powering over 3,500 touchpoints globally, DISPL serves major brands including Kotsovolos, Domino's Pizza, and Bang & Olufsen. The company's technology enables real-time customer demographics and behavioural data collection while ensuring compliance with global data protection standards. Through strategic partnerships, particularly in Latin America with companies like GlobalTera, DISPL has expanded its presence across multiple markets. The company is now considering relocating to Los Angeles to tap into the U.S. market, where retail media ad spend is expected to reach $98 billion by 2028. Looking ahead, DISPL aims to launch an AI-powered analytics agent that will transform physical retail spaces into programmable marketing platforms.

IADS Notes: The retail media landscape has undergone significant transformation since July 2024, when Coresight research revealed the potential to double grocery retailers' margins through in-store opportunities. This potential was quickly demonstrated by Intime Department Store's 15% boost in counter sales through AI integration that same month. The industry's evolution accelerated in November 2024 with Majid Al Futtaim's launch of AI-powered Precision Media across 450 stores, setting new standards for technology integration in physical retail. By March 2025, McKinsey's report showing 71% of consumers expecting personalised interactions validated this technological shift. However, April 2025 brought new challenges as the retail media industry experienced growth deceleration from 25.1% to 15.6%, prompting further innovation in AI-driven solutions. DISPL's emergence in this context, with its AI-powered audience analytics and smart digital signage, represents a timely response to the industry's need for more sophisticated retail media solutions that can deliver both personalisation and measurable results.

How ‘Minority Report’ gave birth to DISPL, an AI-led in-store retail media platform

What: BCG's first Personalization Index reveals that only 10% of companies are leaders in personalisation, despite the potential for $2 trillion in value creation through AI-enhanced customer experiences across sectors.

Why it is important: The gap between leaders and laggards in personalisation is widening, as demonstrated by only 10% of companies successfully scaling their AI applications, making it imperative for businesses to act now or risk falling behind.

The BCG Personalization Index introduces a comprehensive framework for measuring how companies deliver on five key promises of personalisation that customers expect. These promises - Empower Me, Know Me, Reach Me, Show Me, and Delight Me - form the foundation for evaluating customer experience across sectors. The research reveals that while personalisation leaders achieve compound annual growth rates 10% higher than laggards, only 10% of companies qualify as leaders. The study examined 200 brands through mystery shopping, customer surveys, and financial analysis, identifying a $2 trillion opportunity in the next three years. Different sectors face unique challenges, from retail's struggle with discretionary spending to healthcare's need to balance personalisation with privacy. Success requires viewing personalisation as a strategic mandate, with clear leadership and measurement through dedicated profit and loss statements.

IADS Notes: Recent market evidence validates the urgency of personalisation transformation. In March, research showed that 71% of consumers now expect personalised interactions, while only 32% of retailers keep pace with customer behavior. By February, Selfridges demonstrated success through their innovative 'Unlocked' loyalty program, combining AI-powered personalisation with experiential engagement. The transformation's impact is significant: retailers implementing AI solutions report 15-30% improvements in customer service efficiency, while Walmart's processing of 850 million data points showcases the scale of potential optimisation. However, the challenge remains substantial, as December data revealed that over 35% of loyalty program members plan to cancel traditional memberships, highlighting the need for more sophisticated, personalised approaches.

The 2025 BCG Personalization Index Report

What: Research shows that successful return-to-office strategies depend on creating meaningful workplace connections rather than enforcing traditional office mandates.

Why it is important: The findings highlight how companies can transform traditional office spaces into community hubs that enhance both employee satisfaction and operational effectiveness.

The traditional approach to office work is undergoing a fundamental transformation, with companies recognising that physical presence alone doesn't guarantee productivity. Recent studies reveal that successful return-to-office strategies prioritise meaningful connections over mandatory attendance. Companies implementing structured hybrid models are seeing positive results when they focus on creating purposeful in-person experiences. The integration of wellness spaces, collaborative zones, and technology-enabled environments demonstrates how workplaces can evolve beyond conventional office settings. This transformation is particularly evident in the rise of enhanced office experiences, with some locations achieving over 90% occupancy through innovative amenities and community-focused design. The emphasis on connection rather than control is reshaping how organisations approach workplace strategy, proving that when employees want to be present rather than feel forced to attend, both engagement and productivity flourish.

IADS Notes: The retail industry's approach to return-to-office strategies reflects a broader transformation in workplace practices. As highlighted in May 2025, major retailers like Galeries Lafayette and John Lewis have successfully reimagined their workplace cultures, demonstrating how traditional operations can be enhanced with modern practices . The industry's success in achieving 4.5% productivity growth through AI integration, reported in March 2025, validates the argument that technology should augment rather than replace human interaction . Furthermore, the HR Central conference findings from May 2025 revealed how companies are prioritising value alignment and human-centric approaches , supporting the assertion that connection, not command, will ultimately drive workplace success.

Rethinking the workplace: Innovative strategies to lure employees back to the office

What: A healthy corporate culture, built through defined beliefs, strong leadership, and consistent behaviour modeling, is crucial for corporate venture success, with 26% of failures linked to cultural issues.

Why it is important: As retail companies increasingly launch new ventures, understanding how to build and maintain healthy cultures becomes critical for success, particularly as recent data shows successful cultural transformation can increase EBITDA by 18% within one year.

Building and maintaining a healthy culture in corporate ventures requires systematic effort and careful consideration of the unique corporate context. Research shows that companies with top-quartile cultures achieve three times higher Total Shareholder Return than those in the bottom quartile, while also demonstrating significant improvements in EBITDA and Return on Invested Capital. The challenge intensifies as ventures grow from small teams to larger organisations, necessitating deliberate steps to shape and maintain cultural health. Leaders must focus on three key areas: defining underlying beliefs, establishing strong leadership practices, and consistently modeling desired behaviours. The article emphasises the importance of balancing parent company values with venture independence, particularly in hiring practices and organisational structure. Success requires creating direct policies and support structures while allowing the venture to develop its own unique cultural elements. This balanced approach helps ventures leverage parent company advantages while maintaining the agility and innovation typical of start-ups.

IADS Notes: Recent retail transformations powerfully validate the article's emphasis on cultural impact. Just this spring in March 2025, Macy's "First 50" pilot locations showed how strong cultural alignment drives financial success, achieving significant EBITDA improvements through systematic transformation. The momentum for cultural change was already building six months ago in December 2024, when Neiman Marcus's "Magic Makers" program achieved a remarkable 34-point increase in employee engagement, proving that culture directly impacts performance. Last month's Financial Times' Best Employers ranking recognised four major department stores, highlighting how cultural excellence drives both talent retention and business success. Back in February 2025, El Corte Inglés demonstrated the power of successful parent-subsidiary cultural alignment, investing €428 million in modernisation while preserving core values - a prime example of how companies can balance innovation with traditional strengths.

When building new businesses, culture matters

What: A comprehensive analysis reveals how unbalanced multipolarity, economic battlegrounds, and ongoing global shocks are fundamentally transforming how companies operate and compete globally in 2025.

Why it is important: With BCG projecting massive disruptions to global trade and supply chains, companies across sectors must urgently adapt their strategies to navigate unprecedented complexity.

The global business landscape faces transformation through three interconnected forces. Unbalanced multipolarity emerges as Trump's America First policies, China's economic pivot, and the Global South's rise reshape international commerce. Meanwhile, economic battlegrounds intensify around trade, technology, and nationalism, creating new competitive dynamics. Ongoing shocks from conflicts, climate change, and societal polarization add further complexity. Companies are responding by establishing geopolitical nerve centres and implementing AI-driven analytics to navigate this new reality. The stakes are particularly high as traditional market assumptions evolve - from supply chain configurations to stakeholder relationships. Success increasingly depends on developing sophisticated approaches to cross-border operations while maintaining agility in an uncertain environment. This shift demands not just technological adaptation but a fundamental rethinking of how businesses create and protect value in a fragmenting global economy.

IADS Notes: Market data from early 2025 validates these strategic shifts. Companies implementing AI-powered analytics for operations have seen significant improvements, though successful scaling remains a challenge with only 10% achieving full implementation. The Global South's emergence as a powerful economic force is reshaping trade patterns, with new corridors emerging as businesses adapt to geopolitical pressures. BCG's projections of massive trade disruptions are already materializing through regulatory changes and market access barriers. These developments are forcing companies to adopt more nuanced approaches to international operations, balancing local requirements with global efficiency.

Ten forces reshaping global business

What: New research shows 83% of C-suite leaders advocate maintaining or expanding DEI efforts despite political pressure.

Why it is important: With 76% of employees more likely to stay with DEI-supportive companies and Gen Z showing even stronger preferences, the research demonstrates how DEI decisions directly impact talent retention and business performance .

The landmark study by Catalyst and NYU Law's Meltzer Center presents compelling evidence for maintaining diversity initiatives, based on responses from 2,500 participants across U.S. companies. Beyond legal risk mitigation, the research reveals strong generational preferences, with 86% of Gen Z employees favouring DEI-supportive employers. The business case is equally persuasive, as executives report positive correlations between DEI programs and financial performance (77%) and customer loyalty (81%). However, a notable perception gap exists between leadership and employees regarding DEI's future workplace integration. The study emphasises that successful implementation requires strategic, long-term approaches focusing on measurable outcomes rather than symbolic gestures. Organisations maintaining authentic commitments while adapting to current challenges are better positioned to attract talent, retain employees, and build lasting trust.

IADS Notes:The retail industry's approach to DEI has evolved significantly since late 2024. Walmart's successful strategy of maintaining inclusive practices while modifying terminology  contrasts sharply with Target's experience of declining traffic and substantial valuation loss following their DEI retreat . The emergence of the FAIR framework  has offered retailers a new path forward, while luxury brands demonstrate how maintaining firm DEI commitments can align with premium positioning .

New study finds risks of scaling back DEI - press release 

Risks of retreat: The enduring inclusion imperative- full report

What: Major retailers including Cartier, The North Face, Adidas, and Victoria's Secret face unprecedented cybersecurity challenges in 2025, with attacks causing significant operational disruptions and financial losses.

Why it is important: These coordinated attacks highlight the retail industry's systemic vulnerability to cyber threats, as evidenced by the GBP 5.4 billion in losses from a single security update failure and the subsequent 10% rise in cyber insurance premiums across the sector.

The retail sector faces an unprecedented wave of cyber attacks in 2025, with major brands including Cartier, The North Face, Adidas, and Victoria's Secret falling victim to sophisticated digital assaults. Victoria's Secret's Memorial Day sale disruption, resulting in a US$10 million hit to operating income, exemplifies the significant financial impact these attacks can have. The vulnerability extends beyond American retailers, with British giants like Marks & Spencer and Harrods also experiencing substantial breaches. Industry expert John Walsh emphasises that retailers have evolved from mere product sellers to custodians of sensitive data and digital trust. However, despite substantial digital investments, only 2% of businesses have implemented comprehensive cyber resilience measures. This gap is particularly concerning in retail, where a 17% confidence disparity exists between security officers and CEOs regarding AI and resilience compliance. The rise in attacks reflects converging trends of automation, AI, and opportunism, with tools once reserved for advanced threat actors becoming mainstream. As retailers expand their digital footprint across social platforms, they face new vulnerabilities in endpoint security and third-party relationships.

IADS Notes: The recent wave of cyber attacks on major retailers underscores the article's emphasis on cyber resilience as a competitive differentiator. In April 2025, the Scattered Spider group's attack on M&S demonstrated the severe financial implications of cyber vulnerabilities, wiping £700 million off their market value and disrupting GBP 3.5 million in daily digital sales. This incident triggered a chain reaction, with both Harrods and Co-op suffering breaches by May 2025, the latter exposing data of up to 20 million customers. The retail sector's vulnerability was dramatically highlighted in March 2025 when a single security update failure resulted in GBP 5.4 billion in losses across Fortune 500 companies. Industry research from April 2025 reveals that ransomware now accounts for 30% of retail security incidents, with average losses reaching GBP 1.4 million per attack. These incidents have transformed the cyber insurance landscape, driving a 10% increase in premiums across the sector by June 2025, reinforcing Walsh's assertion that cyber resilience has become a crucial factor in retail competitiveness.

The reality of retail cybersecurity: Why resilience is the new competitive edge

What: Forward-thinking CMOs are transforming marketing from a cost center to a self-funding growth engine by leveraging AI and strategic budget reallocation.

Why it is important: This evolution in marketing strategy addresses the dual challenge of resource constraints and growth demands, particularly significant as 83% of CMOs now recognise AI's potential to transform traditional marketing operations into revenue-generating centers.

In today's challenging economic environment, CMOs face mounting pressure to deliver growth while operating with constrained resources. The solution lies in repositioning marketing from a cost center to a self-funding source of business growth. Through careful analysis of both working and non-working spend, marketing organisations can unlock 10% to 30% of their total budget for reinvestment in growth initiatives. Working spend, which comprises 55% to 80% of marketing budgets, can be optimised through dynamic channel allocation and advanced analytics, while non-working spend can be streamlined through AI implementation and process improvements. The impact is substantial, with potential savings of up to $30 million per $100 million in marketing investment. Success stories, such as a global apparel company's comprehensive four-part program, demonstrate how this approach can generate significant bottom-line impact while maintaining brand equity and market performance. This transformation requires CMOs to become "growth architects," leveraging GenAI at scale and reinventing operational processes to drive measurable business impact in a flat-budget environment.

IADS Notes: Recent market evidence strongly validates the article's emphasis on marketing budget optimisation and AI integration. Last summer, the retail industry emerged as a leader in AI deployment, with nearly half of retailers reporting increased revenue and cost savings from their initiatives. This trend accelerated significantly, as by March, 87% of retailers implementing AI witnessed revenue increases of 6% or more. The urgency for such transformation was highlighted in November when Coresight Research revealed that retailers lose 4.5% of gross sales due to inefficiencies. Success stories abound across the sector: in May, Estée Lauder's AI implementation reduced analysis time from weeks to minutes, while in December, Mango's AI-generated advertising campaigns showcased the potential for creative automation. Consumer expectations are driving this change, with February data revealing that 71% of consumers now expect personalised interactions. The industry's response has been decisive, as evidenced this June by BCG's survey showing 83% of CMOs expressing optimism about GenAI implementation, while by early spring, 32% of consumer goods companies had already fully implemented generative AI.

For CMOs, the future starts with smarter spending

What: Aggressive AI automation in entry-level retail positions threatens long-term business sustainability by undermining talent development, institutional knowledge, and customer relationships.

Why it is important: The rush to automate entry-level retail positions overlooks the strategic value of human capital development, contradicting evidence that successful AI implementation requires a balanced approach maintaining human capabilities while leveraging technological advantages.

The wholesale replacement of entry-level retail positions with AI technology presents a critical threat to long-term business sustainability. While the promise of cost reduction is appealing, this approach undermines essential aspects of retail operations. Research shows that successful retailers achieve 4.5% annual productivity growth through strategic AI integration that augments rather than replaces human capabilities. Entry-level positions traditionally serve as training grounds for future managers and executives, making their elimination particularly dangerous for leadership development. Front-line workers possess invaluable understanding of daily operations and customer needs; their removal can create operational blind spots and reduce service quality. This becomes especially critical when 71% of consumers expect personalised interactions. The article demonstrates that successful retail innovation requires a careful balance between technological advancement and human capital investment, ensuring organisations maintain the resilience and adaptability necessary for future growth.

IADS Notes: Recent retail industry data provides compelling context for the article's warnings about AI automation. As of March 2025, leading retailers have achieved 4.5% annual productivity growth through strategic AI integration , demonstrating that success lies in augmentation rather than replacement. This aligns with January 2025 findings showing that while 67% of executives are considering autonomous AI systems, 76% acknowledge significant cybersecurity and privacy challenges . The implementation gap remains substantial, with February 2025 data revealing only 10% of retailers successfully scaling their AI applications despite 70% planning implementation . The human element remains crucial, as evidenced by March 2025 research showing 71% of consumers expect personalised interactions . These findings validate the article's central argument that while AI offers significant potential, its successful implementation requires a balanced approach that preserves human capabilities while leveraging technological advantages.

The AI automation trap: Slashing entry-level jobs bill Break your company (and maybe you)