🌀 Shopping centers defy retail apocalypse myths

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🌀This week’s maze:

1. The Big Story 🧠
Shopping centers defy retail apocalypse myths

2. Data 📊
AI enhances holiday ads

3. News on E-commerce players📖
🛒 Amazon pressures sellers to match Temu's pricing
🛒 Walmart expands digital edge with faster growth than Amazon
👗 Shein joins CBP pilot for transparency
👗 Perfect Corp. buys Wannaby to boost luxury tech
🍔 Uber's $950M Foodpanda deal blocked by Taiwan
🍔 DoorDash study finds drivers prefer contractor status

+ over 15 other hot news from the last week you need to know 🔥

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Vacancies at US open-air centers hit record lows as rents rise due to scarcity. Meanwhile, discount retailers and big-box stores fuel expansion plans.

🌞 Open-air centers thrive amidst scarcity

Vacancies at US open-air shopping centers have hit a record low of 6.2%, the lowest since 2006, according to CoStar. This scarcity allows landlords to raise rents significantly as leases expire, with construction of new retail spaces stymied by high interest rates and soaring costs. Brandon Isner of Newmark debunked the "retail is overbuilt" myth, noting that demand for physical retail is growing. Meanwhile, discount chains like TJX (parent of Marshalls and TJ Maxx), Burlington Stores, and Ross have added 339 new US stores this year, driven by inflation-weary consumers seeking bargains.

🏗️ Limited new construction boosts rents

While open-air centers thrive, malls are seeing higher vacancy rates. Analysts at Green Street estimate rents in top markets need to increase by 65% to justify new construction. Physical stores remain vital as hubs for online orders and returns, helping traditional retailers bridge the gap between in-store and online shopping. This trend has turned existing shopping centers into powerful profit engines for landlords, further boosting their pricing power.

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Consumers say 40% of ads feel irrelevant, yet 45% like relevant ones. With CPM up 15% in holidays, AI boosts ROAS by 10%-25% through better personalization.

🎯 Consumers Want Relevance in Ads

A Bain survey found that 45% of shoppers are open to sponsored ads if they are relevant. Yet, 40% of them feel that most ads today fail to resonate. This disconnect leads to wasted budgets, annoyed shoppers, and fewer conversions. Poorly targeted ads, like showing products already purchased or irrelevant sizes, dilute customer trust. However, when done right, personalized ads can enhance shopping experiences, making consumers feel valued and understood. AI now enables this level of personalization, helping retailers deliver ads that feel timely and useful, fostering engagement and loyalty.

📈 Rising CPMs and AI's Holiday Impact

Holiday ad costs are surging, with cost-per-thousand impressions (CPM) on social media rising by 10%-15%, according to Sensor Tower. Retailers are responding by embracing AI-powered personalization to increase efficiency and boost returns. Generative AI can analyze vast data sets, segment customers more precisely, and deliver real-time tailored content like ad copy or festive offers. Bain reports that retailers using AI are achieving 10%-25% higher return on ad spend (ROAS), making their campaigns more effective even as ad costs spike. This innovation is setting a new standard for profitable, customer-first holiday marketing.

Amazon pressures sellers to match Temu's pricing. Amazon is asking Chinese sellers to stop listing cheaper products on Temu. Sellers with higher prices on Amazon risk losing access to its lucrative Featured Offer program.

Walmart expands digital edge with faster growth than Amazon. Walmart’s e-commerce sales grew 27% YoY, far outpacing Amazon’s 7%. With Walmart Connect ads and Walmart+ perks, the company reshapes its retail strategy for long-term gains.

Shinsegae and Alibaba to form $4.1B e-commerce venture. Shinsegae and Alibaba join forces to dominate Korea’s e-commerce scene. The $4.1B deal merges Gmarket and AliExpress Korea for global reach and advanced tools.

Allegro sues Alphabet for $568M over unfair practices. Allegro's subsidiary Ceneo claims Google's search practices caused $567.6M in losses. The lawsuit seeks damages tied to EU's $2.7B antitrust fine on Google.

TikTok faces ban, ending $8B U.S. social commerce market. Analysts warn TikTok Shop's U.S. ban, set for January 2025, will disrupt e-commerce, ending its $8B dominance in social commerce and reshaping the industry.

Alibaba starts Moroccan operations to boost exports. Alibaba has launched operations in Morocco, its first site in Africa. The goal is to help Moroccan firms expand exports to North America via its platform.

Shein joins CBP pilot for transparency. Shein is sharing shipment data with U.S. Customs to improve border safety and streamline imports. This follows scrutiny over labor and tariff practices.

Perfect Corp. buys Wannaby to boost luxury tech. Perfect Corp. acquired Wannaby to expand into luxury segments like shoes and bags. This move enhances digital shopping for Farfetch and 30+ luxury brands.

Zalando revamps loyalty programme, cuts annual fee. Zalando switches its Plus Programme to a free points-based system. The change rewards purchases and activities, reaching over 2.5M members across eight markets.

The RealReal boosts sales with AI and tech innovation. The RealReal’s sales grew 11% to $148M as shoppers embrace luxury resale. AI innovations have improved efficiency and boosted customer confidence in authenticity.

Zalando’s 2024 Trend Rewind spotlights key fashion styles. Zalando unveils its 2024 Trend Rewind, highlighting top trends like Mob Wife and Brat Summer, based on soaring searches (+5,000%). Available in 25 markets now.

Shein’s hiring of Castaner sparks backlash in France. The French fashion sector condemns Shein’s recruitment of ex-ministers, citing greenwashing and disruption to responsible practices. Industry calls for urgent legislative action.

US textile waste surges 50% in two decades. The rise of fast fashion and limited recycling infrastructure fuel a 50% increase in US textile waste since 2000, per EPA. Experts urge coordinated federal action to curb damage.

Sephora reveals 2025 Accelerate program cohort. Eight BIPOC-founded beauty brands join Sephora’s 2025 Accelerate program, offering mentorship, funding, and a chance to launch at Sephora stores by year-end.

Uber's $950M Foodpanda deal blocked by Taiwan. Taiwan's regulators stopped Uber's $950M Foodpanda purchase, citing anti-competitive risks. Uber argued the deal would benefit consumers and local markets.

DoorDash study finds drivers prefer contractor status. Over 70% of DoorDash couriers in Pennsylvania prefer staying contractors, even with benefits offered in a pilot program. DoorDash has paid $802K to 4,400 drivers so far.

Zepto to launch stand-alone Cafe app amid growth. Zepto Cafe clocks 30,000 daily orders and plans a separate app. CEO Palicha predicts $120M ARR by 2026, doubling down on 10-min food delivery wars.

Klarna partners with Flink for flexible payments. Klarna and Flink now offer quick commerce customers flexible payment options, enhancing convenience in Germany’s $273B grocery market transformation.

Ocado orders fail during key Christmas deliveries. Ocado faced backlash as a malfunction at its Erith warehouse left customers missing key Christmas food items. The company apologized but damage to trust lingers.

That’s all. See you next time in the 🌀Maze!