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LVMH Is Struggling. Walmart Is Winning. What That Tells Retail Leaders | World Retail Signals · The Retail Podcast

• 0:21
  Hello and welcome back to another fabulous edition of
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  World Retail Signals. It's Monday.
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  We are pre recording this because if you're not in Berlin
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  at World Retail Congress right now, where are you?
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  And so without further ado, let's start with my fabulous
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  quick introductions. For those of you who may be the
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  first time tuning in Neve, who are you and what do you do?
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  Hi, it's lovely to be here again.
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  I'm the programme director of World Retail Congress, so I won
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  the corner agenda and with all our wonderful speakers.
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  Fantastic, Ian. Hi Alex, I'm Ian Mcgargle.
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  I'm Chair of the World Retail Congress, work obviously very
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  close to you with Neve. We both build the programme,
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  bring all the amazing speakers together, but but also oversee
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  kind of the all the many parts that make up the the World
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  Retail Congress that is about to to take place.
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  Fantastic. So as I said, you're hopefully
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  in Berlin watching this on your phone as as you're walking
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  around. So we're going to this is World
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  Retail Signals where we look at the signals that are shaping
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  retail. And this week, we're going to
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  start with you, Ian. What's top of mind?
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  Umm, first point I was just want to raise was the luxury sector.
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  I mean, umm, just a few days back, we had LVMH reporting
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  their first quarter figures, which everyone was watching and
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  waiting for, and they showed a 6% drop in sales, which is still
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  adding to the general sense that luxury is, you know, had gone
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  from being like 2 years ago, the absolute darling of the retail
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  sector that just kept growing and growing.
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  Caring Group similarly, sort of under real pressure.
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  But equally, what was sort of looking beneath the surface of
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  those numbers, they were highlighting the Middle East,
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  which is the first time now we've started to hear that the
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  impacts because, you know, Asia has been the driver of luxury
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  and still is a big, big part for LVMH.
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  But to see that, you know, it's really having an impact in a
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  short period of time because it was only the first quarter, but
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  it was already showing in, in those numbers.
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  And you know, they were sort of saying if things don't calm down
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  soon, then, you know, the Middle East again, been the real driver
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  for retail and retail growth around the world.
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  There's a real sort of question mark about that.
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  But but go back to luxury more generally.
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  It's interesting the the reporting I I saw the FT had a
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  really in depth piece following on from LVHS figures, just
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  again, questioning how luxury brands really work, looking up
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  to the situation they find themselves in.
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  That's, you know, prices have gone up and up and up and even
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  high net worth people and or new money, whatever.
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  You know, whichever category areas in the luxury sector, you
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  know, they're, they're drawing a limit, as it were, to what
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  they're prepared to pay and how often they will do.
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  And so, so it's going to be interesting to watch.
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  It's certainly something we'll be discussing here in in Berlin.
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  You know what, what luxury brands, as any retailer does in
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  this tough market, need to do. But I think luxury doesn't feel
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  like it's sort of working up to the the reality of the world
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  that they're now into. I I think so I mean I was in
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  shock talk lux earlier this year and I got a bee in my bonnet
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  because it just felt they put their head in the sand and
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  ignored the main problem in luxury, which is for the new
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  generation people, what does luxury actually mean right?
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  Forget high net worth freedom individuals in the past, it
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  meant products that are, that are made to last that, you know,
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  you hold that bag or that handbag or that and, and the,
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  the materials and everything. And because of TikTok and
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  Instagram, most of these inexpensive bags or handbags
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  have been ripped apart. And you're being told that this
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  product actually isn't larger. And I think I'll be, you know,
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  maybe I'll say no one else has to say.
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  People feel they've been ripped off and they've gone.
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  And I think LVMH and caring have been too dependent on AIPAC and
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  Asia's growth, and that's been driving their growth at home
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  where what's happened in APEC, you've got phenomenal luxury
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  brands now increasing real craftsmanship, real workmanship.
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  Yeah. Because in the past.
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  So no, you can only build it in Italy, right?
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  Or in France or in Paris. And, and so I, I don't think, I
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  don't think it's like fatal. I don't think there's not coming
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  back from it. But I just think you need to
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  accept that people are especially like the big middle.
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  They're being squeezed. China's being squeezed.
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  And now as you're saying, S is being true.
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  So where's growth going to come from?
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  Because the Middle East was growth for a lot of retailers.
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  Absolutely. Super interesting point.
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  Did you have another one on that, Ian, as you like.
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  Did you Well, just to add to that, what what was interesting
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  though, when you dig into these LVMH numbers, the, the only the
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  main highlight was Sephora. I know we talked yeah last time,
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  but for growth and that beauty again, that whole sector.
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  But Sephora, you know that that's that format, that formula
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  is really working and it's expanding rapidly and that
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  that's absolutely shown in the numbers.
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  But it's, you know, it's, it's not luxury, but it, it delivers
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  a sort almost luxury customer experience in the store and
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  online. And I think they, they, they
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  really have sort of found that winning formula.
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  And but that whole sector, again, it's extraordinary what's
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  happening in health, Wellness and beauty.
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  I well, I mean, I've got AI mean you're being humble here because
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  you had the CEO of Sephora. Well kick well, we're till
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  Congress in Paris and I remember him getting his award on stage.
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  The thing that struck me, obviously we had that tour of
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  the branch, but it was how humble the guy was on stage.
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  You know, here's the CEO and just side note, his post on
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  LinkedIn for me was one of the most engaged posts by people
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  from Sephora, which tells me a lot.
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  You know, when people sort of get behind their leaders and
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  like or engage or comment and it's like, oh, wow, it was a
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  suit. I've got really cool guys.
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  The first time I've seen him since I've never seen him since
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  I don't know if he's still the CEO, but I did see him a world
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  retail Congress. OK, perfect.
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  Thank you, Nicky, coming on to. You.
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  Yeah. So one of the stories that I
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  wanted to talk about this week, Alex, is the ongoing struggle
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  department stores are facing globally.
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  And we've seen that in a few numbers coming out and in the
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  past couple of weeks. And for decades, they were those
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  anchors of city centres and big shopping destinations.
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  And today, many are still grappling with a model that just
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  simply isn't fitting to how consumers are wanting to shop.
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  I think given that we just were speaking about Sephora really
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  where they're competing with specialist retailers and digital
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  first brands that can really create that customer experience
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  that's so different and so unique.
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  Plus, as we've just spoken about about luxury spending, those
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  shifts in discretionary spends, footfall, pressure on consumer
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  choices, I think, yeah, department stores that are
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  continuing to face an uphill battle.
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  But I think it's interesting that survival isn't impossible.
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  And many of of the surviving department stores are really
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  approaching it with radical changes.
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  We have a few great examples speaking at World Retail
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  Congress this week. So how those resilient,
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  resilient players are rethinking that role of the department
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  store, what the department store really should be and, and their
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  new position to to create, curate brands and curate an
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  experience for shoppers investing in services,
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  hospitality and really sort of expanding that customer
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  experience. So yes, bit of bad news, bit of
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  good news. I think it's a mixed bag for
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  department stores. Yeah, no, I think, I mean, I
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  obviously you were listening to five things Friday last week
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  from the UK because obviously you listen to all the time, but
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  we we actually spoke about department stores and I and I
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  have it here and this is Selfridges 40 Duke at Selfridges
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  London and and you're like, what is this?
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  This is their new membership suite to get an key to access
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  this like you know, like we all fly.
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  Sorry, not we all for those people who fly and go to members
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  lounges in airports, you're very used to this concept of, you
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  know, loyalty and the more you spend so you get access to this
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  lounge, you have to be AVVA very I can't remember it's AVV thing
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  like 25,000 lbs Yeah, it's not just the VIP, it's AVV like a
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  very I can't remember what the other VS for Selfridges person.
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  And so for £25,000 yeah, you get access to this area, which is a
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  whole different thing. And, and again, because I spend
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  my time in the industry and I know that NRF are sending a
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  cohort to because you guys have got a good relationship.
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  So I just want to quickly, and it's, this is just by
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  coincidence. And when you were talking came
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  to me, I'm moderating a session in Singapore later this year and
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  we're talking about Serena. Serena, what?
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  I can't remember if it's Indonesia or Malaysia.
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  And I should know that because I'm moderating the session, but
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  we only have the call yesterday. But one of the, and the reason I
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  mentioned this is how in A and Asian, I remember seeing this in
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  Shanghai, how culture, like tradition culture is coming into
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  departments as in they're trying to fold in some form of deeper
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  meaningful connections. And for me, just following on
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  from what you said, I just find these two examples, one in
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  London, one in Malaysia. Just out curiosity, who who have
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  you got speaking this year? And Andre Major, the group CEO
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  of Selfridges is actually speaking.
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  Hope you will hear all about 40 Duke.
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  Richardson Oh, that's good. I didn't actually know that, so
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  I'm I'm ready, chuckled with. You lined that up perfectly,
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  Alex. Thank you very much.
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  So he'll be talking about that and I really, we have to ask him
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  whoever's interviewing him about VVSPS.
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  OK, final one from me, although I've done a lot of talking
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  already, it's a theme that I mentioned.
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  I think 2 shows ago we spoke about the major themes that are
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  shaping retail in the US. Walmart has gone strength to
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  strength. It feels like Amazon's moving
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  more into physical, Walmart's moving more into digital.
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  So there's this all like they're trying to be a, you know, better
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  in all rounds. But this is something I remember
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  actually, a technology company, sorry, electronics company in
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  the UK, me having a conversation with them and saying, why are
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  all your products desperate? So imagine I want to lose a
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  little bit of weight, which I may do every now in time, and I
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  come in to buy some, you know, fitness tracker.
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  Why do you not have your blenders that help or your other
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  products that help me on my journey as some sort of
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  connected journey? And they were like, well, that's
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  a really good point. We'll have to do that.
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  Well, here you go. Walmart's actually doing that
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  around GOP ones. It's a massive movement.
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  It's only gonna continue to get bigger.
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  And they've created a whole ecosystem from supplying your
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  GOP ones to, you know, taking you on a journey with it, which
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  I find incredibly interesting that yeah, that that they
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  released this week. So that's my little one on that.
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  I mean, building on that, Alex, I mean, certainly conversations
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  I'm having a certain retailers, they are now talking about
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  building a ecosystem as people want to call it.
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  Like, you know, funny thinking out-of-the-box, literally, you
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  know, as you, as you're talking about, you know, building
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  adjacencies in store, but have adjacencies services, you know,
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  that go out beyond the store, you know, whatever that might
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  be, but sort of thinking about who your customs are and, and
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  the services that they want that, you know, really start to
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  open up, you can be really invitive.
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  And we're starting to see that from retailers.
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  You know, that's a great example you've mentioned, but I was
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  talking to the founder of Fresnap, the, the pets retailer
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  in Germany that's now operating from many markets in, in Europe.
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  And he was talking about exactly that, that, you know, they have
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  to they, but also other retailers need to start thinking
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  differently. And how do you build on your
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  brand basically into new, new areas?
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  Because I think, you know, that's where the market is going
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  And, you know, think of your customers not as the some that
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  comes to your website or your, or walk through the door.
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  They, they, you know, they want to interact with you or could
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  interact with you in many, many different ways.
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  I think that's a really, really powerful point.
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  You might. Yeah, I think the the a jade, a
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  decency. I obviously I forget my retail
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  lingo, but it's something that I think it's it's a miss, you
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  know, and I remember actually some it was I think it was
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  PetSmart or someone in the UK or even Petco.
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  They were talking about how, you know, people only come in to
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  buy, for example, dog food and they forget the whole ecosystem.
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  There's dog grooming, there's dog insurance, there's, you
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  know, there's all the other elements.
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  And it feels like that's really what needs to happen for this
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  deeper relationship. OK, it's been fast-paced.
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  We are at time of thank you again.
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  I know you're have you got any nails left?
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  I don't know if you bend them all off because it's like
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  literally D-Day 2 days until we'll fly out to German.
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  Sunday. When are you flying out to South
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  Curiosity? Sunday.
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  Sunday. OK.
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  Well, I look forward to seeing you in.
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  Absolutely. See you in Berlin.
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  Yes. Take care.
• 13:03
  Thanks, Alex. Bye.