FROM THE DESK OF DEBORAH WEINSWIG

Big Retailers Are Increasingly Sharing Their Space with Brands and Even Other Retailers There have been several recent announcements of brands launching a shop-in-shop inside other retailers’ stores—in department stores in particular. Most recently, Target announced that Mickey Mouse would join canine mascot Bullseye in keeping watch over its stores—i.e., the company is planning to triple the number of “Disney Store at Target” locations to 160. This announcement comes on the heels of Disney’s announcement at the beginning of 2021 that it plans to close more than 60 retail stores, out of a fleet of around 300. (These plans do not affect the roughly 600 stores operating in Disney theme parks and other theme-park locations.) On the topic of toys, Macy’s recently announced a partnership with Toys“R”Us to roll out more than 400 toy-shop locations in its stores in 2022. Although this date will seemingly miss the important holiday selling season, Toys“R”Us products are already available for sale on the Macy’s website. We note that Toys“R”Us filed for bankruptcy protection in September 2017 and announced that it would close all of its US and UK stores in March 2018, emerging from bankruptcy in January 2019 under the name of Tru Kids. Turning to beauty, Kohl’s and beauty retailer Sephora opened the first of 200 “Sephora at Kohl’s” shop-in-shops scheduled for 2021 in August, under a partnership announced in December 2020. This partnership is notable as Kohl’s locations are generally off-mall, which is more attractive to consumers who are reluctant to enter enclosed spaces in the current environment (see our most recent US Consumer Tracker report), and the relationship follows Sephora’s prior one with JCPenney, which is largely anchored in shopping malls. JCPenney filed for bankruptcy protection in May 2020. Kohl’s has been innovative in terms of developing new partnerships, offering space to grocer Aldi and accepting returns of Amazon products in its stores. In further news from the beauty segment, Target will open more than 100 “Ulta Beauty at Target” shop in-shop locations in August 2021, with the ultimate goal of opening 800 locations within the next few years. The Ulta Beauty merchandise is located near existing Target beauty sections and features more than 50 prestige beauty brands, in addition to specialized displays, discovery zones and seasonal products. So, exactly what is going on here, with retailers in disparate categories—sometimes even competitors—announcing plans to share retail space? Large retail stores likely have the space to share. In-store traffic had been declining annually for many years before the pandemic and took a sharp step down in 2020. Although the rate of decline has lessened in recent months, it remains negative, accelerated by the step-up in online shopping amid the pandemic. The combination of fewer shoppers in stores and stores increasingly operating fulfillment centers in their back rooms gives retailers space to spare. Rather than having stores look sad and empty, many retailers are offering space to others to have the remaining retail space look livelier. Adding retailers of other or compelling, even competing, categories can drive traffic, which only offers an upside versus not signing such agreements. One wildcard is reportedly entering the department store sector: Amazon. Whereas many department stores are effectively de-emphasizing their format through letting other retailers share their space, Amazon is rumored to make a splash with two new locations, as recently leaked by The Wall Street Journal. Still, these locations will not be traditional, as they are set to occupy smaller spaces and be full of technology and sensors for gathering data. Despite its ongoing challenges, the large-store multicategory retail sector is currently demonstrating a high degree of innovation, as retailers partner with brands and other retailers to drive traffic and interest in their physical stores.

US RETAIL AND TECH HEADLINES

Best Buy Reports Strong Second Quarter, Raises Outlook (August 24) Company press release

• Consumer-electronics retailer Best Buy has reported year-over-year comparable sales growth of 20% and year-over-year operating income growth of 40% for its second quarter of 2022, ended July 31, 2021. The company attributed the increase to strong demand for technology products and services during the quarter, strengthened by strong consumer spending ability due to government stimulus, improving wages and high savings levels.
• Best Buy forecasts sales of $11.4–11.6 billion in its third quarter. The company also has raised its outlook for the second half of its fiscal year: It now expects comparable sales to range from flat to down 3% versus one year ago compared to its previous expectation of a high-single-digit decline.

Nordstrom Reports Second-Quarter 2021 Results, Raises Revenue Forecast (August 24) Company press release

• Department store chain Nordstrom reported a net sales increase of 101% year over year for its second quarter, ended July 31, 2021. However, on a two-year basis, the company’s sales declined by 5.9%. Nordstrom reported a net income of $80 million, compared with a loss of $255 million in 2020. The company’s online sales rose by 30% year over year, representing 40% of Nordstrom’s total quarterly sales.
• Based on the better-than-expected results in the first half, Nordstrom expects its full-year revenue to grow by more than 35%—up from its prior projection of 25% growth.

Shipt Debuts “Preferred Shoppers” Feature (August 24) GroceryDive.com

• Hyperlocal delivery provider Shipt has introduced “Preferred Shoppers,” a feature that allows members to pair with their favorite Shipt personal shoppers. The new tool is the latest in a string of announcements as Shipt fights for dominance in an increasingly competitive grocery delivery landscape.
• Customers who rate a personal shopper five stars after an order is delivered will see an option to add that shopper to their Preferred Shopper list. If the shopper accepts the request, they will be prioritized to handle the customer’s future orders.

Urban Outfitters Reports Strong Revenue and Profit Growth in Second Quarter 2022 (August 24) Company press release

• Urban Outfitters reported a sales increase of 44.1% year over year for its second quarter, ended July 31, 2021. On a two-year basis, the company’s sales increased by 20.3% in the quarter. The company reported net income of $127.3 million, up from $34.4 million in 2020 and $60.3 million in 2019.
• Urban Outfitter’s flagship brand Anthropologie led the way, with sales growing 24.4% on a two-year basis, followed by Free People Group, with 21.3% sales growth.

Walmart Launches White-Label Delivery Service GoLocal (August 24) Company press release

• Walmart has announced the rollout of its new delivery service GoLocal, offering its fleet of delivery drivers to small- and medium-sized businesses. Merchants can use the service for deliveries, including scheduled and unscheduled as well as same-day, and can expand delivery capacity and coverage as they require.
• GoLocal’s last-mile capabilities will be handled by gig workers from Walmart’s Spark Driver Program. The company also plans to use drones and self-driving cars as part of GoLocal’s infrastructure.

EUROPE RETAIL AND TECH HEADLINES

Boots Partners with Deliveroo To Launch Health and Beauty Range (August 24) Company press release

• Boots, one of the UK’s largest health and beauty retailers, has entered an exclusive partnership with Deliveroo, launching over 400 products on the food-delivery platform. The company aims to deliver orders in as little as 20 minutes.
• Boots is launching the program at 14 stores across the country, with scope for expansion in the future. The initiative comes as a response to increased demand for online orders: The company saw orders on Boots.com climb by 85% from March 2020 to March 2021.

Chanel Acquires Italian Knitwear Company Paima (August 25) UK.FashionNetwork.com

• French luxury brand Chanel has acquired a majority stake in Italian knitwear brand Paima for an undisclosed sum. It is the fifth Italian business that Chanel has acquired in the last two years.
• Chanel stated, “This partnership aims to support a sector which is essential both for its own activity and that of the luxury industry as a whole.” Additionally, the company seeks to offer skills training for staff and support network partners with their operations.

Edeka Teams Up with European Retailers To Launch Purchasing Alliance Epic Partners (August 24) RetailDetail.eu

• German supermarket chain Edeka has launched an international purchasing alliance, Epic Partners, with seven major European retailers. Based in Switzerland, the alliance aims to strengthen the companies’ negotiating power with brand partners.
• Epic Partners includes the supermarket chains Biedronka (based in Poland), Jerónimo ICA (Sweden), Magnit (Russia), Martins (Portugal) and Migros (Switzerland), as well as online supermarket chain Picnic (the Netherlands).

Lidl UK To Implement Eco-Store Labeling Trial in Scottish Stores (August 24) RetailGazette.co.uk

• Germany-based discount retailer Lidl has announced the launch of a new initiative allowing customers to assess products’ sustainability.
• The store will introduce a traffic-light system, color-coding products to provide an “eco score”, based on carbon footprint and production methods. The pilot will launch in 105 stores in Scotland.

Tesco Rolls Out Soft-Plastic Collection Points at All Large Stores (August 23) Company press release

• British supermarket chain Tesco has introduced soft-packaging plastic bag recycling points at all large Tesco stores across the UK, following trials at 171 stores earlier this year.
• The company stated that it expects to collect over 1,000 tons of plastic per year and that the plastic will be recycled and used for products and packaging sold at its stores.

ASIA RETAIL AND TECH HEADLINES

AirAsia Super App Revamps Its Grocery Platform in Singapore (Aug 24) RetailAsia.net

• AirAsia has revamped its grocery delivery platform in Singapore. The platform “AirAsia Fresh” has been rebranded “AirAsia Grocer,” now aiming to offer a “holistic grocery shopping experience” rather than just fresh produce.
• Customers now have access to the complete list of products on the company’s grocery website via the app. As part of the revamp’s launch, the company is offering S$10 ($7.40) discounts on orders until August 31, 2021.

Amazon India Increases Seller Logistics Fee by 5% (Aug 25) ETRetail.com

• Amazon India has announced that it will increase the logistics fee it charges sellers by 5%, effective September 1, 2021.
• Amazon stated that the changes are part of its annual process of “seller fee revision.” The fee is based on the distance traveled and the weight of shipped goods.

Coach Singapore Launches First Concept Store, “Tomorrow’s Vintage” (Aug 25) InsideRetail.asia

• Coach, an American luxury design brand specializing in handbags and luggage, has opened its first concept store in Singapore to celebrate its 80th anniversary. Named “Tomorrow’s Vintage,” the store showcases the company’s history and houses a collection of its bag designs.
• The store will also offer leather cleaning, monogramming and other customization services from artisans trained by Mauricio, the company’s master craftsman from New York.

Convenience Retail Asia To Expand Its Premium Specialty Brands to Greater Bay Area (Aug 24) RetailAsia.net

• Hong Kong-based food and bakery chain Convenience Retail Asia has announced plans to expand its high-end and premium specialty brands to the Greater Bay Area (which encompasses Guangdong, Hong Kong and Macau), beginning in the second half of the year.
• The company plans to expand its premium patisserie business Mon Cher, its bakery chain Saint Honore and its franchisee-led Japan-based fast-fashion eyewear retailer, Zoff.

IKEA Set To Unveil India’s First City Store in Mumbai (Aug 24) ETRetail.com

• Swedish furnishing retailer IKEA has announced plans to launch its first Indian city store in Worli, Mumbai, by the end of this year. The new store will be IKEA’s third in the country.
• The store will house a restaurant and offer remote planning, personal shoppers and click and collect services. It will measure around 50,000–100,000 square feet, significantly smaller than its large-format blue-box stores, which measure 400,0000–500,000 square feet.