2. 2
DEBORAH
WEINSWIG
• Executive Director and Head of Global Retail & Technology for
the Fung Business Intelligence Centre
• Award-winning global retail analyst and a specialist in retail
innovation and technology
• 12 Years at Citi Research where she served as Head of the
Global Staples & Consumer Discretionary Team
• #1 ranking analyst by Institutional Investor for nine years
• Mentor to Silicon Valley accelerators including Alchemist
Accelerator and Plug & Play
• Certified Public Accountant, with a Masters of Business
Administration degree from the University of Chicago
3. 3
FUNG
BUSINESS
INTELLIGENCE
CENTRE (FBIC)
• Established in 2000 and headquartered in
Hong Kong
• FBIC (formerly known as the Li & Fung
Research Centre) has served as the
knowledge bank and think tank for the Fung
Group
• New York–based Global Retail & Technology
research team follows broader retail and
technology trends
6. 6
THE STATE OF
SHOPPING
• Internet shopping is about functionality,
not fun
• As more shoppers move online, in-store
shopping will increasingly focus on leisure
shopping and the quality of experience
• Online/offline division is becoming artificial
as consumers browse, compare and buy
across channels
• More complex than simply “showrooming”
• Click & collect provides the functional
transaction coupled with in-store experience
• Stores must be set up to deliver a quality
experience
10. 10
RETAILERS STILL
USING OLD KEY
PERFORMANCE
INDICATORS
Top KPI’s that retailers
measure
Sales/
channel 82%
Customer
satisfaction
Average
margin
57%
45%
Customer
Lifetime
Value
22%
Share of
wallet
Customer engagement
across channels
8%
Source: RIS-EKN Customer Engagement Study, 2014
KPI’s that they need to
pay more attention to
11. 11
B&M STORE:
THE OMNICHANNEL
H U B
1 in 2
have deployed digital coupon
reading in-store
66%
of retailers have currently
deployed store specific social
media initiatives
46%
have store specific websites
75%
will use their store as a delivery
hub for online orders by 2015
Sources:
RIS-‐EKN
Customer
Engagement
Study,
2014;
EKN
Future
of
Store
Study,
2013
12. 12
AMAZON:
GOLD STANDARD
OF EXECUTION
Mobile Commerce
and Engagement
1 Amazon (56%)
2 Starbucks (9%)
3 Apple (7%)
Unified Commerce
1 Amazon (28%)
2 Macy’s (9%)
3
Nordstrom/Wal-
Mart/Best Buy (7%)
Customer
Engagement
1 Amazon (33%)
2 Nordstrom (8%)
3
Best Buy/
Starbucks (5%)
Source:
RIS-‐EKN
Customer
Engagement
Study,
2014
14. 14
UBIQUITY OF
MOBILE DEVICES
• Constant connectivity enables shoppers to
find product details, compare prices and buy
anything anywhere
• Digital devices are essential part of any
shopping journey
• 94% of global internet users go online to
research purchases in at least one category
16. 16
WEBROOMING
BEATS
SHOWROOMING
• Webrooming, or researching online and then buying
in a store, has become the norm and more common
than showrooming
• 69% to 46% respectively according to Harris Poll
• Amazon remains top destination for both showrooming
and webrooming
Millennials
Prefer
Webrooming
17. 17
WEBROOMING
BEATS
SHOWROOMING
Why Shoppers webroom?
• Don’t want to pay for shipping
• Don’t want to wait for delivery
• Like to touch and feel a product before they buy
• Like to ask store to match better prices found online
• Like the option to return to store if needed
18. 18
BRICK-AND-MORTAR
INVESTING IN
TECHNOLOGY
• B&M retailers using tech for
– Delivery & pickup
– Personalization
– Inventory tracking
– Beacons
– Wearable tech
• More than 40% used a smartphone or tablet
for Black Friday activities (NRF)
19. 19
RETAILER TECH
SPENDING
• Capex of selected retailers was approximately
3.3% of sales in 2014, flat with 2013
• Technology capex:
– CVSHealth: 37% of 2014 capex on technology and
other corporate initiatives
– Nordstrom: 35% of 2014 capex; plans to spend $4.3B
(5% of sales) over next five years
– Walmart: 29% of 2014 US capex; spending “$1.2-1.5
billion in e-commerce Web sites and mobile commerce
applications”
– Home Depot: “Tilting investments towards
interconnected retail and technology”
0%
1%
2%
3%
4%
5%
6%
7%
Nordstrom
Macy's
Kohl's
TJX
Walmart
Target
JCPenney
Home
Depot
CVS
Sears
Capex/Sales
Average
2014 Capex/Sales for Selected Retailers
Average = 3.3%
20. 20
GAMIFICATION
STIMULATES
NEW CUSTOMER
BEHAVIORS
• Gamification is the use of elements from
computer and video games in real-world or
other activities
• These elements stimulate our psychological
needs for desire, incentive, challenge,
achievement and rewards, feedback, and mastery
21. 21
SOCIAL MEDIA AS
NEW MARKETING
PLATFORM
• Internet now ruled by pictures and videos
• Consistent but slowing growth in social media usage
expected worldwide over the next 5 years
• Most of the growth in Asia
• Growth in the number of users is decelerating
• Many social media experiences now on a mobile phone
22. 22
MOBILE APPS BURY
THE BROWSER IN
SHOPPING
The browser is dead …
BROWSER
1999-‐2014
… long live app nation!
Source:
Flurry
AnalyDcs
88% 82%
12% 18%
Smartphone Tablet
Mobile App vs. Browser Split
App Browser
24. 24
DIGITAL
ADVERTISING
TO DOMINATE
• Digital receiving new money because
marketers can prove that digital works
(Forrester)
Sources:
Forrester,
PWC,
and
eMarketer.com
40
60
80
100
120
2012
2013
2014
2015
2016
2017
2018
2019
Radio
Digital
TV
25. 25
CLICK & COLLECT
IS COMING
• Digital receiving new money because
marketers can prove that digital works
(Forrester)
5
13
35
0
5
10
15
20
25
30
35
Germany
US
UK
%
of
shoppers
saying
they
"currently
use
click
&
collect"
Source:
Planet
Retail,
2014
Survey
Base:
15,000
respondents
across
10
countries
26. 26
THE LINE WITH
CLICK & COLLECT
IS BLURRING
• More than two-thirds of UK shoppers used click &
collect services in 2014
• 76% of UK shoppers will click & collect by 2017
• Amazon launched its lockers in Sept. 2011
• Only 17% of US consumers used click & collect
in 2013
• Walmart started testing a drive-through grocery
pick-up service in Oct. 2014
Walmart
Drive-‐Through
27. 27
Brick-and-Mortar vs. Click & Collect
A shopping facility where consumers can
buy or order goods from the store’s website
and then collect them from a store location
convenient to them
Brick-and-mortar refers to
businesses that have physical
stores that offer face-o-face
customer experiences.
Consumer can visit and enter
physically to see touch and
purchase merchandise
28. 28
E-COMMERCE
OPENING
BRICK-AND-
MORTAR STORES
• Excluding Amazon, most online pure-plays hit a $1
billion revenue ceiling
• Establishing a brick-and-mortar presence aids in
brand building and growing consumer awareness
• Easier to get VC funding with technology connection
in the apparel/retail business model
• eBay UK offers collection through Argos general
merchandise stores
• ASOS offers collection through Collect+, a network
of 5,800 local shops such as newsagents and
convenience stores serving as collection points
• Amazon signed up to Doddle, a new network of
collection-only stores concentrated on railway
stations
• More in 2015
29. 29
SUBSCRIPTIONS
NIBBLING AWAY AT
BRICK-AND-MORTAR
• Consumers love the convenience and
dependability of the services
• Retailers love subscription models as a source of
recurring revenue
• Consumers find value in avoiding the drudgery of
shopping for everyday commodity items
• They appreciate the benefits of curation
• Many consumers use subscriptions to treat
themselves to a monthly gift
31. 31
ONLINE GROCERY IS A
NEW GROWTH AREA
• Global Grocery Market: $4 Trillion
• U.S. Grocery Market: $600B
• Percent Online: 1.2%
• Approx. 12% of Internet users have bought
grocery items online
32. 32
TAP & PAY
POISED FOR
HUGE GROWTH
$3,737
$6,815
$10,451
$16,240
$23,472
$34,160
2014
2015
2016
2017
2018
2019
CAGR
=
50%
US
Contactless
Mobile
Payment
Market
($
Millions)
%
of
All
Mobile
Payments
7%
10%
13%
16%
20%
24%
Source: Forrester Research, October 2014
33. 33
Beacons and
Location-Based
Marketing
• What is a beacon?
• The best solution for
improving the in-store
retail experience
• 2016 is expected to be the year of the Beacon
• US installed base expands rapidly, but consumer
response is key to further penetration
$41.0
$444.0
2015 2016
Beacon-Influenced In-Store Retail Sales ($ Billion)
Source: Bi Intelligence, Feb. 9, 2015
35. 35
UBERFICATION
ENBODYS THE
SHARING
ECONOMY
MODEL
• Uber is the most visible player (and driver) of
the “sharing economy”
• Changing consumer mindsets will challenge
retailers
• Opportunities for retailers: How much is
convenience worth?
36. 36
CYBERSECURITY
DEMANDS
SMARTER
INVESTMENT
• Important decisions will have to be made
regarding how to address privacy and
security
• Retailers need to spend smarter, not
necessarily more on cybersecurity
• Holistic, enterprise-wide cyber-risk detection
and prevention are critical first steps
