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Selfridges is to join a stable of luxury department stores owned jointly by Thai retail conglomerate Central Group and Austrian property group Signa. Selfridges Group’s portfolio, which also includes Rinascente, Illum, Globus and KaDeWe, generated a pro-forma turnover of $5.6 billion in 2019 and is projected to grow to more than $7.9 billion by 2024.

But a recent study by Bain & Altagamma predicts that department stores will lose nearly half their share of global luxury goods sales from 2019 to 2025 as they face stiff competition from online players, specialty retailers and brands’ own direct-to-consumer channels. So what strategies are being deployed by the likes of Selfridges and its new owners to grow in a shrinking category?

In recent years, the American department store sector has been on a race to the bottom as players tried to retain customers through heavy discounting. The results were catastrophic, not only antagonising brands but also pushing stores into bankruptcy.

Many department store operators, including Selfridges, have shunned this strategy in favour of securing exclusivity with new brands or exclusive product drops with existing and more widely distributed brands thus giving shoppers a reason beyond price to visit their stores, online and off. A simple search on Selfridges’ website uncovers 1,129 exclusive items, and this is likely on top of the brands for which Selfridges is the exclusive retailer in London or the UK.

But exclusivity has its limits. Barneys was known to nurture fresh talent and for introducing the likes of Comme des Garçons, Yohji Yamamoto, Martin Margiela, Dries Van Noten, Prada, Ann Demeulemeester, Rick Owens and Alexander Wang to the US market, often in exchange for exclusive distribution rights. This gave the chain the allure of being cutting edge but often proved stifling for brands wishing to do more than stay stuck on the starting block. Producing exclusive drops for individual stores can also present challenges for brands depending on how easy it is for them to customise production and overcome minimum order requirements.

Traditionally department stores have sought expansion by rolling out versions of their flagship format to secondary and tertiary cities, albeit often on a smaller scale. Prior to filing for bankruptcy in 2019, Barneys had 22 stores including its Madison Avenue flagship. The company had also tested various formats including Barneys Warehouse and Barneys CO-OP, the latter to attract a younger and more fashionable but less affluent crowd. Nevertheless, the department store operator over-stretched its balance sheet by expanding with formats that offered few points of difference. In addition to a rent hike at its Madison Avenue flagship, one of the last nails in its coffin was an expensive investment in a downtown outpost in Chelsea.

The issue most prestigious department stores have with new formats is that their identity is so closely linked to their mothership. This is especially the case with Harrods and its Knightsbridge site. The company has made numerous attempts to open new locations, including one across the street called 102. The store, featuring concessions such as Krispy Kreme and Yo! Sushi as well as florists, an herbalist, a masseur and an oxygen spa, was opened in 2006 and shuttered in 2013. It also considered expansion to Shanghai and Dubai but nothing has materialised. Nevertheless, Harrods has opened cafés under franchise agreements in Japan and Thailand as well as duty-free shops at Heathrow, Gatwick and Doha’s Hamad airport.

But these are side shows, relatively speaking. What is more interesting is the department store’s recent foray into specialty beauty retail with its H Beauty format. The UK is one of the few markets in the world in which Sephora hasn’t murdered the department store beauty floor and Harrods Knightsbridge is already the biggest seller of beauty products in the UK, with 9.3 percent market share. The three locations selected thus far, though, are lacking in inspiration. Will Harrods venture further down this road or will it, like Harvey Nichols’ Liverpool Beauty Bazaar, be a cul-de-sac?

Concept stores are all the rage, with their roots initially in fashion-forward merchandising exemplified by Dover Street Market and Colette. Dover Street Market also likes to throw in some curveballs in terms of store design, such as corrugated iron and plasterboard dividers, the use of reclaimed shipping containers to construct shop-in-shops and changing rooms made out of portaloos. This all creates huge amounts of hype as well as a cult following. Whether the approach is always profitable for either the store operator or brands is another question.

Galeries Lafayette threw its hat into this ring with the launch of a concept store on Champs Elysées in 2019 with mixed results. The store has been successful with Millennials — the average customer is just 31, younger than the typical online shopper in France — drawing them in with sleek design, elaborate pop-up installations and weekly events.

Downtown duty-free made a brief comeback before international travel was shut down by the spread of Covid-19. The concept had become huge in Asia, notably South Korea, Hong Kong and Macau, but struggled to find its footing in Europe and North America. Nevertheless, DFS has opened two stunning locations in Europe: Venice’s Fondaco dei Tedeschi (2016) and Paris’ La Samaritaine (2021), the latter of which aims to go beyond the traditional duty-free format and draw in a fashionable local crowd so as to give it the cachet to attract international tourists.

Online multi-brand retailers such as Net-a-Porter, Farfetch, Yoox and even Amazon have dealt life-threatening wounds to the department store sector by offering the same breadth and depth of selection from the comfort of a customer’s armchair. The deployment of AI tools will likely up the ante for online players who will be able to identify and meet customer demand with ever-increasing speed and accuracy.

Department store groups have invested heavily in online, especially since the pandemic forced them to shut their doors, but they are playing a game of catch up. Selfridges.com was launched in 2010 with the main purpose of supporting the brick-and-mortar experience, for example by offering to book appointments at some of the store’s concessions (for example, Dior) which are still reluctant to sell online via the store.

The pandemic did change this dynamic somewhat and Selfridges saw an almost 50 percent increase in online sales in the year ended February 2021. The share of Selfridges customers who shopped online more than doubled from 19 percent to 45 percent in 2020, and the company expects this to stick at 32 percent for 2021, even with stores open. Assuming that Selfridges’ turnover will recover to roughly its 2019 levels (c. £850 million), that would represent around £270 million in e-commerce sales. By comparison, Farfetch’s gross merchandise value in 2020 was over $3 billion.

The challenges facing department store operators wishing to compete in the digital space are the reluctance of some luxury brands to explore this route to market with them, the significant investment in technology required to make their websites stand out and the logistical headache of international pricing and fulfilment. Harrods has taken the bold step of outsourcing its dotcom business to Farfetch, thereby sidestepping two of these challenges.

But ultimately experiential retail and best-in-class customer service are the ways to maintain an edge over e-commerce platforms. Selfridges has experiential retail in its DNA. The department store created a scandal in 1913 when it exhibited the wreckage from a failed attempt at a transatlantic flight on its rooftop. That spirit remains alive and kicking today, thanks in part to Vittorio Radice’s radical revamp of the department store in the 1990s (Radice stands to be reunited with Selfridges under the umbrella of Central Group/Sigma). Selfridges customers can have lunch, catch a movie, skateboard and even get married, as well as shop, shop, shop. The department store also has two personal shopping lounges, though this is no longer much of a differentiator vis-à-vis online players and their own VIP services.

Nordstrom has adopted a different strategy to fend off online competitors. The US department store group offers online shoppers the option to browse through products that they can pick up the same day from their local store. The Nordstrom Local programme, launched in 2017 has been met with some success and is being rolled out with the group betting that the inventory-less locations will draw customers in with the convenience of pick-ups, returns, alterations and other offerings, such as free return services to other online retailers. The group also launched a resale shop which not only allows customers to buy second-hand products but monetise their wardrobes, a service that is likely to have appeal to cash- and ethics-conscious Gen-Z’ers.

The bottom line: department stores with a distinct point of view and unique offering are here to stay. Nevertheless, that comes with a steep price tag. Harrods forked out a reported £200 million on its Knightsbridge beauty hall. Selfridges spent $415 million on its new accessories hall; and it looks like a whole lot more money will be piled into Selfridges group by its new owners as evidenced by the Signa chairman’s statement that “together we will work with the world’s leading architects to sensitively reimagine the stores in each location, transforming these iconic destinations into sustainable, energy-efficient, modern spaces, whilst staying true to their architectural and cultural heritage.” Does anyone hear the sound of a ringing cash register?

The marketplace will allow Yoox to expand its product offer and enhance its customer experience, according to managing director Valentina Visconti Prasca.

MILAN — Yoox is taking a major step into a new hybrid model by introducing its first marketplace today.

While historically a mainly wholesale e-tailer, the new course at Yoox will “enhance the customer experience, allowing instant access to a wider product assortment including over 700 brands and 150,000 new items across jewelry, ready-to-wear, accessories and footwear,” Valentina Visconti Prasca, managing director at Yoox, told WWD in an exclusive interview. “The launch of the marketplace underscores our commitment to our customers. We are continuously evolving our offer and creating a unique shopping experience across fashion, design and art.”

Visconti Prasca underscored that the new marketplace will offer “a seamless and intuitive experience” for customers, as the Yoox mission is to help them “navigate new market trends and to meet the enhanced expectations for digital and e-commerce in the luxury space.”

The marketplace is being launched first in Europe through almost 30 countries in the continent with plans for further expansion across the U.S., the Middle East and North Africa and Japan, likely next year, the executive said.

This new operating model will also help further strengthen relationships with its brand partners, “ensuring greater flexibility in their logistical operations and product assortment, and allowing them to reach customers on the platform in a faster way,” Visconti Prasca said.

The increased assortment will comprise some of the best-known retailers in the industry, including Mengotti and Papini.

The marketplace integration will support small businesses and emerging brands, including Apple&Figs, CHPO and Siguelsol, among others, providing them with the opportunity to reach and connect with the e-tailer’s global customer base.

As reported, consumers are increasingly gravitating toward online marketplace formats for greater convenience, value and variety, according to a survey of 9,000 consumers around the world and, increasingly, brands and retailers are transforming their e-commerce websites into marketplace formats.

The survey, “The 2022 State of Online Marketplace Adoption,” was released last week by Mirakl, an SaaS platform for engineering online marketplaces, but conducted independently by the Schlesinger Group research firm.

With the support of the marketplace, the long-term goal at Yoox is to surpass 1 million products available on the online store.

Visconti Prasca said the marketplace will allow the product range to further expand into new categories, including pre-owned items and beauty.

The increased localization of the products through the marketplace format will allow Yoox to stay true to its sustainability goals, supporting the group’s Infinity strategy also through a selection of sustainable brands that will be available on the site’s marketplace. These will follow the “Good on You” brand rating system, which informs consumers about responsible fashion brands and the items they choose.

The executive said that “a key element Yoox offers and inspires our customers in 100 countries is our curation and our extensive offer. We want to be able to provide a shopping experience that is up to their expectations.”

Yoox is part of the Yoox Net-a-porter Group, controlled by Compagnie Financière Richemont. As reported in November, Richemont is in “advanced” discussions to merge its YNAP platform with Farfetch, building on a high-profile partnership forged a year ago, creating a neutral, industry-wide platform, built on the latest omnichannel retail technologies, to support the digitization of the luxury industry. Farfetch is a pure marketplace and does not own any inventory.

The national electrician ensures that the government measure limiting price increases to 4% will lead to a shortfall of 8 billion euros in 2022. A figure disputed behind the scenes by the state shareholder.

The government is bleeding EDF to moderate the soaring electricity prices and not alienate consumers a few months before the presidential election. This is the message sent by the EDF unions with the tacit silence, even the discreet support of management.

Message that is beginning to percolate into the public debate following the government's announcements last Thursday to divide the increase in the regulated sales tariff by ten and reduce it from 44.5% to 4% on February 1. This little music, more and more noisy, quite annoys the government, which does not want to pass for the bad guy while it divides by ten the increase in the price of electricity in February.

Thursday, January 13, the Minister of the Economy Bruno Le Maire announced the details of his measures to limit the rise in the price of electricity. The bill will be paid in almost equal shares by the State and EDF. The virtual abolition of the tax on electricity will eliminate 8 billion euros from public coffers in 2022. For its part, the national electrician will have to sell more terawatt hours of nuclear origin (20 terawatt hours in this case) to its competitors, the alternative suppliers. Unfortunately, it no longer has this volume in the hold: it has already sold all its 2022 production in advance and will therefore have to buy back these 20 terawatt hours on the markets at around 200 euros to resell them at 46.20 euros to its competitors.

The measure goes very badly at EDF. The day after the announcements, Friday at 6 p.m., the electrician convened an extraordinary board of directors. The representatives of the State are reprimanded by the independent directors and the representatives of the employees, who denounce the endangerment of the group. The representatives of the State, including the director of the APE, Martin Vial, do not lead far.

After the weekend, the tension does not fall. “After having fought it a lot, we experience this decision as a real shock, writes Jean-Bernard Lévy in a “letter to managers” sent to his executives on Monday. Many of you have expressed your support, even your indignation, and I share your emotion. Know that the executive committee and I remain very combative. The state shareholder says it was not made aware of this mailing to all senior EDF executives.

In the eyes of the executive, the bill of 8 billion euros advanced by EDF is considered somewhat inflated. The operation of purchase-resale at a loss of nuclear electricity should not cost more than 3 billion euros. "This is not a sale at a loss," said a source within the executive. The president of the energy regulation commission, Jean-François Carenco, made the same judgment Thursday morning on Franceinfo. Admittedly, EDF will buy electricity on the markets which it will have to resell four times cheaper to alternative suppliers. “But these 20 terawatt hours have already been sold and part of it was sold at very high prices, no later than the end of December 2021”, slips the same source.

According to this source, the electrician still had between 30 and 35 terawatt hours of its 2022 production to be sold on December 1. Despite tight negotiations at the same time with the government on a possible increase in the Arenh ceiling (the volume of nuclear electricity that EDF must sell at cost price to its competitors), EDF chose to dispose of all these electrons on the market. And this, even after the government confirmed on December 8 in the press that it wanted to increase the volume of Arenh, and this from 2022.

Despite everything, “EDF has closed all its positions until the end of December”, we deplore within the power. Clearly, EDF sold volumes of electricity which it knew it would have to buy back a few months later. The public company denies having had these 30 terawatt hours of volumes to sell in December. "We were in the process of closing all our positions, it is the group's risk policy which obliges us not to keep a significant open position", we explain.

In any case, the sale of these 20 terawatt hours will only cost around 3 billion euros and not 8 billion, underlines the executive, in unison with financial analysts following EDF. The other 5 billion euros missing from EDF's Ebitda can be explained by the lower tariff increase resulting from government action. "This is not a net loss, but a loss of opportunity," said a source familiar with the matter. Certainly EDF will not benefit from a 44.5% increase in its tariffs, but all the same by 19%, which has never happened before and when its production costs are far from having increased in these proportions. Clearly, EDF could not count on these 5 billion results from the moment the Prime Minister, on September 30, indicated that he would limit the increase in the electricity tariff to +4% in 2022 within the framework of its "tariff shield".

“The 8 billion put forward by EDF, it is without the increase in the volume of the Arenh and by letting the prices of consumers and companies explode”, summarizes one within the executive. Some analysts never really expected the government to let consumer and business prices slip away. Vincent Ayral, at JPMorgan, already wrote last summer that the gas and electricity sector risked a “winter freeze” in prices in the event of runaway markets.

Within the executive, we say we regret that everything is put on his back, because EDF is currently experiencing other concerns. Indeed, in parallel with tariff moderation measures, the electrician is facing a potential generic defect in its power plants which has already forced it to shut down or extend the shutdown of five nuclear reactors. This serial incident could cost him between 5 and 10 billion euros in additional results, according to analysts. Here again, EDF will indeed have to buy back on the markets these volumes that it has already sold in order to deliver them as planned to its customers.

Officially, the government plays appeasement and support for the injured company. “We will never let you down, wanted to reassure the Minister of the Economy Bruno Le Maire on Wednesday. Employees have no reason to be worried. We are alongside EDF. We will continue to invest in EDF with the project for new nuclear reactors”.

etaMeta may be the loudest company building AR and VR hardware. Microsoft has HoloLens. Apple is working on something, too. But don’t count out Google.

The search giant has recently begun ramping up work on an AR headset, internally codenamed Project Iris, that it hopes to ship in 2024, according to two people familiar with the project who requested anonymity to speak without the company’s permission. Like forthcoming headsets from Meta and Apple, Google’s device uses outward-facing cameras to blend computer graphics with a video feed of the real world, creating a more immersive, mixed reality experience than existing AR glasses from the likes of Snap and Magic Leap. Early prototypes being developed at a facility in the San Francisco Bay Area resemble a pair of ski goggles and don’t require a tethered connection to an external power source.

Google’s headset is still early in development without a clearly defined go-to-market strategy, which indicates that the 2024 target year may be more aspirational than set in stone. The hardware is powered by a custom Google processor, like its newest Google Pixel smartphone, and runs on Android, though recent job listings indicate that a unique OS is in the works. Given power constraints, Google’s strategy is to use its data centers to remotely render some graphics and beam them into the headset via an internet connection. I’m told that the Pixel team is involved in some of the hardware pieces, but it’s unclear if the headset will ultimately be Pixel-branded. The name Google Glass is almost certainly off the table, thanks to the early blowback (remember “Glasshole?”) and the fact that it technically still exists as an enterprise product.

Project Iris marks a return to a hardware category that Google has a long and checkered history in. It started with the splashy, ill-fated debut of Google Glass in 2012. And then a multi-year effort to sell VR headsets quietly fizzled out in 2019. Google has since been noticeably silent about its hardware aspirations in the space, instead choosing to focus on software features like Lens, its visual search engine, and AR directions in Google Maps. Meanwhile, Mark Zuckerberg has bet his company on AR and VR, hiring thousands and rebranding from Facebook to Meta. “Metaverse” has become an inescapable buzzword. And Apple is readying its own mixed reality headset for as soon as later this year.

Project Iris is a tightly kept secret inside Google, tucked away in a building that requires special keycard access and non-disclosure agreements. The core team working on the headset is roughly 300 people, and Google plans to hire hundreds more. The executive overseeing the effort is Clay Bavor, who reports directly to CEO Sundar Pichai and also manages Project Starline, an ultra-high-resolution video chat booth that was demoed last year.

If Starline is any indication, Project Iris could be a technical marvel. People who have tried Starline say it’s one of the most impressive tech demos ever. Its ability to recreate who you’re chatting with in 3D is supposedly hyper-realistic. In an eye-tracking test with employees, Google found that people focused roughly 15 percent more on who they were talking to using Starline versus a traditional video call and that memory recall was nearly 30 percent better when asked about the details of conversations.

I’ve heard that Google is hoping to ship Starline by 2024 along with Iris. It recently hired Magic Leap’s CTO, Paul Greco, to the team in a previously unreported move. A pilot program for using Starline to facilitate remote meetings is in the works with various Fortune 500 companies. Google also wants to deploy Starline internally as part of its post-pandemic hybrid work strategy. A big focus for Starline is bringing the cost of each unit down from tens of thousands of dollars. (Like Iris, there’s a chance that Google doesn’t meet its target ship year for Starline.)

Bavor has managed Google’s VR and AR efforts for years, dating back to Google Cardboard and Daydream, a VR software and hardware platform that came out around the same time as the Oculus. He is a close friend of Pichai who has been at Google since 2005. Last November, he was given the title VP of Labs, a remit that includes Project Starline, Iris, a new blockchain division, and Google’s in-house product incubator called Area 120. At the time of his promotion, Google reportedly told employees that the Labs team is “focused on extrapolating technology trends and incubating a set of high-potential, long-term projects.”

Some of the other leaders working on Project Iris include:

Google’s interest in AR dates back to Glass and its early investment in Magic Leap. I’ve heard that the calculus for the Magic Leap investment was to have optionality to buy the company down the road if it figured out a viable path to mass-market AR hardware. In a 2019 interview, Bavor said, “I characterize the phase we’re in as deep R&D, focused on building the critical Lego bricks behind closed doors.” A year later, Google bought a smart glasses startup called North that was focused on fitting AR tech into a pair of normal-looking eyewear.

Most of the North team still works at Google. A recent slew of job postings related to waveguides — a display technology more suited for AR glasses rather than an immersive headset like Project Iris — suggests they could be working on another device in Canada. Google declined to comment for this story.

Last October, Pichai said on an earnings call that Google is “thinking through” AR and that it will be a “major area of investment for us.” The company certainly has the cash to fund ambitious ideas. It has top technical talent, a robust software ecosystem with Android, and compelling products for AR glasses like Google Lens. But it’s still unclear if Google plans to invest as aggressively as Meta, which is already spending $10 billion per year on AR and VR. Apple has thousands working on its headset and a more far-out pair of AR glasses. Until it indicates otherwise, Google seems to be playing catchup.

The soaring price of road haulage exposes wider problems in the US economy

When America’s Bureau of Labor Statistics released data this month showing that consumer price inflation had surged to 7 per cent, many investors were shocked. No wonder: this marks the fastest jump since 1982.

But here is another number that should spark concern: 17 per cent. That was the annual inflation rate for overall trucking costs last month, according to a (deeply buried) section of the bureau’s data. For the long-haul trucking sector, the number was even scarier: 25 per cent.

That is bad news for business — and consumers — given that almost three-quarters of freight in America is moved by trucks. Or to put it another way, if you want to understand what lies behind that scary 7 per cent inflation number, don’t just track raw material, energy or cross-border shipping costs; watch those oft-ignored truckers too.

So is this price explosion just a “transitory” glitch, to cite the phrase employed by Federal Reserve officials last year? It would be nice to think so. After all, basic economics would suggest that a surge in trucking demand — of the sort seen in America as the economy rebounded from the pandemic slump — should prompt red-blooded capitalist businesses to increase supply (by finding more trucks and truckers), curbing inflation. Indeed, at the start of the pandemic, economists at the BLS released a lengthy study that argued the trucking market was a place where labour supply could indeed adjust to demand, just as free-market enthusiasts might expect.

But these days it is proving strikingly hard to expand capacity, due to so many underlying structural impediments in the market. What the current economic boom has revealed, in other words, is a host of shortcomings around trucking that were previously either concealed — or ignored. And that makes trucking a potent symbol of America’s wider problems in its political economy. The problems revealed in the transit world are anything but “transitory”.

To understand this, consider the issues behind that price surge. One is the rise in oil prices, and the fact that chaos in global supply chains has thrown domestic trucking cycles awry. But the bigger issue seems to be a lack of human truckers.

Chris Spear, head of the American Trucking Associations, said this week that the sector (with around 3m hires overall) is currently short of 80,000-odd workers. Some of this shortfall reflects a Covid-linked delay in people returning to their jobs. However, Spear reckons this figure will double in the coming years.

At first glance, that might seem odd. After all, a few years ago pundits were predicting that blue-collar trucking jobs would be wiped out by robot drivers.

But in reality, any widespread switch to automation is unlikely to happen for many years, because of political opposition and regulatory constraints — voters and politicians are terrified of those robot truckers. Meanwhile, young workers seem to be shying away from the job; four out of five truckers today are over 45.

That might be because of all the robot chatter. However, there are practical — short-term — reasons for the trend. On paper, truckers can earn around $100,000 a year, a high wage for blue-collar work. But entrants need state licences, both costly and time-consuming to acquire.

Moreover, these days most drivers work as self-employed contractors, and “bear the burden of gas, insurance, and maintenance costs, which reduces their take home pay”, as a White House paper noted last month. Even in normal times, this makes the job precarious, particularly since “long-haul full-truckload drivers only spend an average of 6.5 hours per working day driving despite being allowed to drive a maximum of 11 hours” — and are not paid for their idle time.

During the pandemic, however, the insecurity has become worse due to medical risks and unpredictable supply-chain delays. As a result, other blue-collar jobs — like construction — seem increasingly attractive. As trucker Omar Alvarez recently declared in an opinion piece: “The real shortage is a shortage of good, union jobs that fairly compensate workers and treat us with the dignity and respect we deserve.”

Is there any fix? The White House is trying to use industrial policy tweaks: last month it pledged to reduce the minimum age for trucking to 18 from 21, target veterans, force states to simplify their licensing system and work with states to subsidise training. Trucking companies are trying to embrace innovation, using artificial intelligence platforms to manage schedules or Spanish-speaking recruiters to tap the Hispanic market for more workers. Companies are also paying more, causing take-home pay to jump by some 7-12 per cent this year, according to the White House.

But this is unlikely to plug the driver gap soon; or not without even more dramatic rises in wages, a better driver safety net or a sudden decline in economic demand. The latter might emerge; December’s month-on-month trucking inflation data was lower than in November.

Since the monthly series is not seasonally adjusted, however, it is dangerous to read this as a trend. Right now, the key point is this: those truckers are a potent sign of how hard it will be to halt inflation with monetary policy alone. Therein lies the dilemma for the Federal Reserve — and the White House.