Digital Malls: The Next Generation of Self-Service Shopping

Digital Malls: The Next Generation of Self-Service Shopping Joanne Bethlahmy, Howard Lock, Matt Maddox, Sharon Finke November 2012 @CiscoIBSG For more information: http://cs.co/ibsg-digitalmallsCisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 1

Retail Challenges: Urbanization, Growth, Customer Experience ChangingDemographics, Challenges for Developers, Economics, and Retailers, Vending Operators, Technology and CPG Manufacturers  Continuing urbanization  Reverseslowing returns from U.S.  Unemployment, economic mall, store, and vending assets uncertainty  Create enhanced customer  Growth of e-commerce and experiences mobile showrooming  Reduce labor and construction  Millennials’ digital shopping costs expectations  Deepen brand differentiation  Optimize small urban formats  Justify investment in equipment innovation Sources: U.S. Census Bureau; Reuters, 2012; comScore, 2012; Vending Times Census of the Industry, 2011Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 2

Beginning of an Opportunity: Three Trends in Self-Service Retailing Three trends are reinvigorating unattended retailing, creating a new retail opportunity: 1. Innovative vending: networked vending machines offering an array of consumer experiences and/or back-end efficiencies 2. Micro-markets:unattended small stores with open shelves of products, plus vending machines, coolers, and freezers. 3. Virtual stores: physical e-commerce sites where consumers can order via mobile for later delivery Digital Malls Source: Cisco IBSG, 2012Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 3

Trend #1: Innovative Vending Creating More Engaging Consumer Experiences Innovative Vending Examples Pepsi Be Kraft Temptations Art-o-Mat U*tique Social Product Sampling Small Artworks Fashion Vending is now at a technology and sales tipping point, as machines become smart, networked devices. Source: Cisco IBSG interviews, 2012Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 4

Trend #2: Unattended Micro-Markets Driving Growth in Workplaces  Micro-markets are unattended, small convenience stores in workplace locations —Open shelves —Self-service payment kiosks  Typically in workplaces with 250+ employees Need to get permission? http://www.skytopvending.com/ Source: Cisco IBSG, 2012Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 5

Trend #3: Completely Virtual Stores With No Inventory  Enabled by e-commerce, high-resolution and interactive screens or e-paper, mobile QR codes, and gesture technology  Consumers click and purchase goods for later delivery  Virtual stores can be stationary or mobile, permanent or pop-up Tesco @PG Mobile with Pão de Açúcar Gatwick Airport Walmart.com São Paulo, Brazil New York, Chicago Source: Cisco IBSG, 2012Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 6

However, These Trends Alone Are Not Enough To Combat Retail Challenges Challenges Why Trends Insufficient Alone Slowing  Still need retail destinations to create return traffic, Returns, sustainable excitement Urbanization Costs  Stand-alone components donot build the scale necessary to lower costs Enhanced  None of these trends provides both immediate Experiences, purchase gratification and the Branding assortment/convenience of endless aisle Differentiation  Today, none provides leading-edge, immersive technologies Source: Cisco IBSG, 2012Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 7

Cisco Vision: Combine Trends into Sophisticated Self-Service Digital Malls  Highly interactive, graphically exciting, self-service shopping environments  Combine innovative vending, next-generation virtual stores, and/or next-generation micro-markets to create digital retail destinations, with dramatic improvements in labor, real estate, construction, and technology costs Example: Digital Mall in Luxury Hotel Source: Cisco IBSG, 2012Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 8

Example: Public Transit Digital Mall with Innovative Vending, Virtual Stores Source: Cisco IBSG, 2012Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 9

Next-Gen Virtual Stores: Immersive Shopping and Entertainment Source: Facecake.com; Cisco IBSG, 2012Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 10

Next-Gen Micro-Markets Bring Retail to Offices, Apartments, Small Hotels  Enable retailers to expand without large-store investments  Go beyond food and beverage to offer immediate-need general merchandise, innovative vending and remote services using digital technology Source: Cisco IBSG, 2012Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 11

Digital Malls: Many Solution Combinations Depending on Location High Traffic/ Prestige Innovative Vending Virtual Stores Large Large airports, transit, universities, stadiums, malls, amuse hotels, resorts, frequen ment parks, festivals/events t-flyer clubs Medium Traffic/ Prestige Large workplaces, apartments/condos, smaller hotels Non- Secure Micro-Markets Open Shelving Secure Source: Cisco IBSG, 2012Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 12

U.S. Market Could Total $7 Billion in Annual Revenue Thousands of Possible Locations Across Three Scenarios Secure Prestige Luxury Large workplaces and  Large airports, transit,  Large luxuryhotels and residential complexes, shopping malls, resorts, top frequent- smaller hotels universities, stadiums, flyer clubs 94K locations, $5B amusement parks,  260 locations, $130M annually festivals/events  $504K per location $54K per location  3K locations, $1.9B  Payout 15-28 months Payout only 12-15  $602K per location months  Payout 16-34 months Source: Cisco IBSG, 2012Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 13

How Cisco Can Help Business Strategy and Co-Innovation  Develop Digital Mall vision and strategy  Conduct “big idea” brainstorming  Identify Digital Mall opportunities in a particular sector or geography  Create pilot business plan Architecture and Technology  Create technology architecture  Identify right components and partners  Lead proof-of-concept pilots Source: Cisco IBSG, 2012Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 14

http://cs.co/ibsg-digitalmallsBig Idea Session at NRF: Digital Malls

Digital Malls: The Next Generation of Self-Service Shopping

by Cisco IBSG (Internet Business Solutions Group) on Nov 14, 2012

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