Welcome back to The Spin! Today we examine the financial threat a no-deal Brexit could pose to Britain’s luxury sector, and check out the dramatic impact artificial intelligence will soon have on all aspects of life. There are also several new retail projects including the first Neiman Marcus flagship in Manhattan. Enjoy the read and feel free to share! Best, Ulrike


High-priced freedom. A “no deal” Brexit by March 29 could cause Britain’s luxury sector to lose up to a fifth of its exports, a value of about £6.8 billion. Currently, about 80 percent of Britain’s luxury goods by brands like Alexander McQueen, Burberry, Dunhill, Bentley and Rolls-Royce are exported - with continental Europe currently the largest market.

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Hey, big AI spender. With the increasing need for personalization, retailers are on track to lead global spending on artificial intelligence. Investments on AI technologies like service agents and shopping advisers are projected to reach $5.9 billion this year. The new book The Artificial Intelligence Contagion examines the dramatic social impact of AI and robotics on the world’s workers, governments and economies.


Reinforcing the experience. With the opening of its first physical store (paywall; image gallery) in New York City, Dallas-based luxury retailer Neiman Marcus intends to build a luxury platform that extends the walls of a retail box. Spanning three levels, the 188,000 sqft location at Manhattan's Hudson Yards is going to be a testing ground for new services and experiences including a pavilion to host fashion shows, book signings, customization and repair shops, three food concepts as well as a demo kitchen for tastings and classes.

The final countdown. Following its November bankruptcy and the unexpected withdrawal of a potential investor in February, Lesara has taken (paywall; translated by Google) its web shops in Germany, Switzerland, Austria, Italy, the Netherlands, France, Belgium, Sweden, Denmark and Spain offline. According to the Berlin-based company, which received a $40 million investment in 2017, existing orders will be delivered and customer service will be available until the end of March. About 350 employees are affected.

Modernize it! The Karstadt-Kaufhof joint-venture plans (paywall) to build a €450 million retail palace in Berlin. Designed by David Chipperfield, it will replace an aging Karstadt location. The Art Deco design will revoke the original department store from the 1920s, which was destroyed during World War II, with the selling area reduced (paywall; translated by Google) 30 percent to 20,000 m². Following last year’s merger of the German assets of Hudson’s Bay Co. and Austria’s Signa, the group is now Germany’s largest and Europe’s third-largest department store chain.


Cashless controversy. Philadelphia has just become the first major city in the US to ban cashless stores. A new law coming into effect in July sets a fine of up to $2,000 for retailers refusing to accept cash as payment. The move, which aims to be more inclusive of about eight million Americans without bank accounts, could also backfire since the handling of cash can be inefficient, expensive and even dangerous.

Risky business. Meanwhile, several retailers including Walmart and Forever 21 are targeting about 68 million US customers, who have extremely low credit ratings, with shop now/pay later programs. This includes consumers who are behind on credit card payments - a number that just reached a record 7 million. To minimize their risk, retailers rely on fintech companies like Affirm, Afterpay and Zebit which use algorithms to more accurately predict who will actually pay up.


Mourning Karen Greenberg. The president of Calvin Klein Sportswear at New York-based fashion company G-III died (paywall) last Monday from esophageal cancer. Greenberg started her fashion career in the early 80s at US department store chain Dillard’s and spent 26 years at Liz Claiborne before joining (paywall) G-III in 2012 to head the Calvin Klein Sportswear division. She was 60 years old.


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